Thinking of starting a taxi business? You may be interested in the thought of setting your own schedule and being the boss. Here’s what you need to know to start your own taxi business. We’ll cover the essentials such as what you can expect to earn and how to get the best private hire insurance.
How much does it cost to start a taxi business?
If you’re planning to start a new taxi business, your largest initial cost will most likely be how much you spend on your car. You’ll need a vehicle that is both suitable and highly reliable. Similar to a personal vehicle, the amount you will spend will depend on a range of factors such as make, model, age and mileage. You may decide to spend more because you’ll need a car that you can rely on daily.
You don’t have to buy a new taxi outright. There are other options such as hire purchase or leasing available to you. There are also great deals to be found on second-hand cabs, try to avoid a very high mileage. If you want to work in London, a hybrid or fully electric vehicle may be a good option. You’ll pay a lot more for the car but you could save a significant sum on fuel costs. Also, consider the type of car you’ll need for the job. Planning lots of airport drop-offs, ensure you have a vehicle that has larger storage capacity and can accommodate extra passengers.
A suitable car isn’t the only thing to consider when planning your budget. You’ll need to consider fuel costs, insurance, and regular maintenance. You’ll also need a work phone for bookings and perhaps a payment option facility for customers paying by card. Note: accepting contactless payments is essential as more and more people are using their mobile phones and contactless credit/debit cards to pay. Accepting cash only may mean you’re missing out on big business.
How to get your taxi license
You will need to pay for your taxi license, the cost can differ depending on where you are based. Here’s a breakdown of tests that you may need to pay for:
- Medical test
- Language test
- Knowledge test (if working in London)
- Disclosure and Barring Service (DBS) check
Additional costs you may need to consider
Marketing and advertising will be an important consideration for many new business owners, and this also applies to new taxi business owners too. How will you inform potential customers about your business? Set aside an amount for advertising in local directories. Printing leaflets and business cards and dropping them off through people’s letterboxes is still another relevant option in today’s age.
Social media has changed the way we do business and is also now a minimum requirement for many. Think about setting up your own Facebook and Twitter page to reach customers, these platforms also provide targeted advertising to reach whoever you want from a specific demographic such as location. If you’re providing a specific taxi service such as airport drop-offs and collections, make your customers aware. Perhaps even your own company website would help set you apart from your competitors. First impressions are extremely important, the right professional image could make or break your brand-new taxi business.
How much can I earn as a taxi driver?
The amount of money you’ll be able to earn as a new taxi driver will ultimately depend on how many hours you work and where you are based. The National Careers Service estimates that taxi drivers on average can earn up to £30k per year. You’ll also need to consider reducing your expenditure, so saving money on taxi insurance will help greatly.
How much does taxi insurance cost?
On average, taxi drivers will pay an average insurance premium of £1,200 to £1,800 per year. It is important to remember that your location, vehicle, previous claims history and other rating factors will ultimately decide what your total cost will be.
How to get the best taxi insurance
The cheapest cover available isn’t always recommended and could be problematic. Make sure you understand what you’re covered for along with any limitations and exclusions. Ensure your private hire taxi cover includes public liability insurance and breakdown cover, although these can be purchased separately. Optional extras include things like business interruption cover and personal accident cover.
To get the best value, don’t accept the first quote you are given automatically. Compare cover from many different leading providers. To save money, consider increasing your voluntary excess to an amount you’re happy with. Some insurers offer discounts if you choose to pay annually rather than monthly.
To summarise, it’s important to survey your market beforehand, ensure you have the right license to operate, purchase the most suitable taxi insurance and be ready to work hard. We wish you every success in your new journey.