Making the commitment to ditch your day job and move forward with your own car rental business is a challenge. Being prepared, however, can make it less so and increase your chances of success. Before purchasing your first fleet of cars, take the time to write a thorough business plan.
This article on writing a car rental business plan will cover:
- Why you need a car rental business plan
- Car rental business planning steps
- Legal considerations for your car rental business
- Small business resources for your car rental business
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Why you need a car rental business plan
Your business plan will help you focus your strategy. In it, you define your mission, determine what makes your enterprise unique, and select your target market. Your business plan gives you an idea of where you want to go in the future so you can set realistic goals toward getting there.
Launching a business from scratch also takes time and resources — primarily money. Your lenders and investors want to be assured that their investment in you is going to pay off. Having a solid car rental business plan is necessary before applying for a loan or approaching anyone about investing in your company.
Car rental business planning steps
Don’t be intimidated by the scope of starting a car rental business plan. Break it into small steps. A sample PDF business plan template can help you get started. The specific elements of your plan may be slightly different, but at a minimum, they should include:
- Executive summary
- Company description
- Marketing plan
- Operations analysis
- Management and organization
- Financial plan
This section is a high-level overview of your company and should provide a summary of everything else that is in the plan. People should garner everything they need to know about your business by reading your one-to-two-page executive summary. At the least, include your mission statement, your goals for the company, an overview of your target market and competitive analysis, your organization and proposed operations, and a section on your current funding and needs.
In this section, sell your business. Describe your mission, goals, why you exist, and how you plan to meet customers’ needs. When writing your descriptions, answer the big questions that include:
- Who are you? Who is in your target market?
- What specifically does your car rental business do?
- Where is your corporate office? Where will you be doing business?
- What is the timeline for achieving your short-term and long-term goals?
- Why does your car rental company exist?
- How will you provide value to customers?
Before drafting your first car rental business plan, do some basic market research. For example, you may be considering starting a company that rents exotic cars. Doing demographic analysis in your area will help you see if there is a market for exotic cars. If you are in an area with lower median incomes and a small number of visitors, this business probably won’t be successful.
Conduct a market analysis by compiling demographics in your area and researching competitors. You can also conduct focus groups and surveys to see if there is a demand for your business.
Once you have conducted market research, define your target market. Are you planning on renting cars primarily to college students on the weekends? Will you be located near the airport so you can rent to travelers? These considerations will shape your marketing strategy.
For example, suppose your car rental company specializes in short-term rentals to city residents who want to get away for the weekend. In that case, your marketing strategy may include ads at city bus stops, ads on taxicab tents, or even in-app ads on ride-sharing platforms.
Your marketing plan should include a combination of digital and offline media strategies to reach a broader audience. Here, you can consider different marketing strategies, promotions, loyalty programs, social media, and others. Having a solid marketing plan will show investors that you are ready to go out and drum up business, and it will help you meet your financial goals more quickly.
To learn more about how to market your car rental business, check out The Download, our free guide to online marketing for travel and tourism.
In your operations analysis, cover everything that will impact how you run your business. This includes physical resources and operational processes. Physical resources can be anything from your building to the rental cars in your fleet. If you’re renting a building in a crowded city center, consider where your rental cars will be parked when not in use.
Operational processes to consider include your anticipated hours of operations, procedures for cleaning the cars after drop-off, and insurance coverage for your vehicles. If you plan on outsourcing any job functions, like accounting or human resources, cover it in your operations analysis.
Management and organization
This section is all about personnel, specifically the management structure. You don’t have to hire all of your employees at this stage, but you need to know the kinds of employees you will need to operate your business. Describe your reporting structure and identify who will be managing daily business operations.
Your financial plan will explore your startup costs, projected revenue, cash flow projections, and an overview of what you need to launch the business. When creating your cash flow projections, be detailed about how you will meet them.
When conducting your competitive analysis, you should know how much other car rental businesses in your area are charging. Use these numbers and other demographic information in your area to project your revenues. It’s good to be optimistic, but plan cash flow for scenarios in which your business is slow in the beginning.
Legal considerations for your car rental business
Car rental businesses come with a variety of legal issues to consider. First, become familiar with insurance laws in your area. Know how much insurance rental companies must carry for each vehicle and your options for selling supplemental policies to customers. Next, consider zoning laws when looking for your location. You might find a good deal on a building that isn’t zoned to have a parking lot full of rental cars.
Finally, before establishing your business, decide whether you’re setting it up as an LLC, a sole proprietorship, a partnership, or a corporation. Each structure has its benefits and rules. If you’re not sure which is best, ask a legal expert to walk you through the pros and cons.
Small business resources for your car rental business
Operating your car rental business will be more fun than the initial startup process. Business planning, marketing, looking for financing, and organizing your corporate structure can be daunting and tedious. If you are overwhelmed by the process or simply want another person to evaluate your car rental business plan for holes, you have resources. These include:
- The Small Business Administration (look for your local chapter)
- The Auto Rental Resource Center
- Your local chamber of commerce
Set up an appointment with a professional at one of these organizations to discuss your questions and concerns about your business plan. They might also steer you toward funding resources that you hadn’t considered.
Developing a car rental business plan for your new company will set you up with realistic and implementable goals before you hand over your first set of keys. With a market analysis and a clear marketing plan, you can start drumming up customers on your first day. Your business plan will also prepare you for inevitable obstacles. With a thorough and cohesive plan, you will be prepared to make your business succeed.