Starting a car rental agency

starting a car rental agency
When starting a car rental agency you can decide to start a franchise or start your car rental agency from scratch. There can be advantages and disadvantages to both. The franchise can offer you a valuable business strategy and brand awareness which can increase your chances of success however there are also limitations on what changes you can make. If you decide to go the alternative route and start a car rental agency from scratch you can decide to target a niche/ specialty market such as luxury cars, or event vehicles. However before starting a car rental agency conduct market research to help you uncover whether there is enough demand for this business in your area.

Job duties

When starting a car rental agency your job duties involve managing your fleet, maintaining them in good condition and making sure they are returned to you safely. You will need to make sure they are rented out to each customer in a safe, clean and good operating condition in order to keep a good reputation. You will not only have to make sure you keep up with the latest in maintenance issues for your fleet, but also learn the best ways to keep the exteriors and interiors clean. When starting a car rental agency you will also need to develop a system to screen your renters and keep good records on your rental cases. If needed you can decide to hire and train a qualified small staff to help you rent out the cars and maintain records. You will also need to research the applicable laws and insurance needs. You should also be prepared with a good marketing plan to promote your business.

Where will you work?

When starting a car rental agency you need to set up your office in an area that is conducive for this kind of business. If you are starting a car rental agency near a tourist destination or airports, you may already have fierce competition. If you are starting a car rental agency from scratch and only have a few cars, you don’t need to be in a big tourist destination or near an airport. To avoid competition with the big corporate rental companies, you could offer service in niche areas such as an island only accessible by boat or ferry. A small town with no car rental service that has reasons for people to rent cars is another option. Even middle to low income areas might be an option for providing cars on an affordable car rental or leasing service. However do your research to verify whether people in the area are in need or would use a rental car service. You can also consider partnering with several hotels, travel agencies etc.

Basic Costs

When starting a car rental agency the costs involved are pretty high. You can either take your fleet of vehicles on contract from a company or buy them on your own. When starting a car rental agency you can start with a small fleet and work up to a larger fleet. If you are good at repair and restoration you can buy used cars and fix them up. You will need a safe garage/ parking area to keep your vehicles. Perhaps you can install security cameras in case they are stolen or vandalized. A small Office space will also be needed. At minimum, you will need one or two computers hooked up to the Internet with a fleet rental and maintenance software. As your business grows you may need additional staff. You should have an accountant to set up and audit your books. You should also hire a fleet management company to periodically audit your fleet management records. You also need to hire a lawyer to advise you legally and retain a good insurance company to advise you on your insurance needs.

Starting a Car Rental Agency Business tips

  • Find a Mentor- Find someone who has experience in this field and ask for their advice. Just be sure they don’t see you as competition. You can also find business experts at little to no cost at a small business development center near you. You can also consult with experts at a SCOREs Chapter near you.
  • Keep your vehicles in good working condition- Always maintain all of your vehicles in top notch condition. Customers will love you for this. Nobody wants a car to break down on them in the middle of a highway.
  • Developing a unique niche is the key- Don’t try to be another Hertz or Avis (unless you are starting a franchise). If you are starting a car rental agency from scratch keep your mind and ears open for niche ideas for car rentals.
  • Come up with some imaginative marketing strategies- To market your brand effectively does not necessarily mean you have to have a big budget. Get involved with your community by doing such things as participating in community events and parades. You should also come up with some cross-promotional activities with the other businesses in town.
  • Provide Top-notch Customer Service- Give your customers as much flexibility as you can with respect to renting hours, pickup and drop points etc.
  • Be aware of Competition- Keep in mind that it can be difficult competing with chain franchises since they have brand awareness and much money being spent on advertising.
  • Insurance – The most frustrating part of the typical rental agreement is the cost of insurance. Research out some ways with insurance agents to come up with more reasonable insurance options for your customers. Also, come up with some other ways you can address the other frustrations people have with the big players (car rental franchises).

Advertising a Car Rental Agency

When deciding on advertisement methods you should think of your target market (the clients most likely to use your service). Look for advertisement methods that will most likely be viewed by your target market.
Below are several advertising methods. I recommend experimenting with various advertising methods and keep track of which methods are more effective for your business. Stick with the methods that are bringing you high returns and get rid of the ones that don’t.

  • Car Rental Business Cards- Create business cards and hand them whenever an opportunity appears. Network as much as possible.
  • Flyers- Determine if you can put up flyers in local grocery stores, travel agencies, restaurants, and recreational areas. It is best to ask the owner of these businesses for permission first. Also hand out flyers to passer byers on the street.
  • Yahoo Local Searches- If you include your business in the Yahoo Local Searches, when people search for your service in your local area your business will appear in the list. To add your business to Yahoo local search, enter the term “add business to yahoo local search” in Yahoo.com and click on the first link.
  • Google Local Searches- Google has a local search as well. To add your business to Google local search, enter the term “add business to google search” in Google.com and click on the first link.
  • Newspaper classified ads- Newspaper ads in your local newspaper can help bring attention to your business.
  • Yellowpages- Consider advertising in the yellowpages. There is also an online version, yellowpages.com.
  • Website- You can decide to develop a website to provide clients with access to general information about your business.

Not sure about starting a car rental agency? See a list of small business ideas

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3 comments

  1. Mubarak Yusuf says:

    Good day. Can someone share with me what are the imaginative strategies for a new start up of a car rental company? Glad to hear to gm@fadaq.net.

  2. Mr Ho says:

    To run a car rental company, the first thing-the most important point is to think about the customers how they need and where they need.If any one wants to hear more about car rental from starting to managing …everything about car rental

  3. Anonymous says:

    what are the governmental requirements to open a business in car rentals

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Resources


Small Business Development Center- consult with experts

SCOREs - find a SCORES chapter near you to speak with a business consultant.

Small Business Administration- provides information for starting a small business.