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How to Start a Car Rental Business

10 min read

Starting a car rental business, although competitive, can prove to be extremely lucrative. However, there are many key steps that must be taken. These steps ensure that you’re starting a business that becomes successful and operates within the parameters of the law. As in any industry, when you start a car rental business, you’ll need to decide on a business model, find a location, and build your fleet. You’ll also need to obtain the necessary permits, and comply with insurance and regulatory requirements.

Okay, so that might be a lot to take in. But don’t get discouraged! By following a simple step-by-step process you can discover how to start a car rental business properly. If you can handle the risks involved while preparing your car rental business for day-to-day operation, you’ll discover that renting out vehicles can be very rewarding. Not only that, but you’ll accomplish everything that you set out to do!

Let’s get started.

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Research Your Market

Whether you’re wondering how to start a small car rental business, or how to start a luxury car rental business, the first step is always the same. When you set out to start a car rental business, you’ll want to do your due diligence. This means extensive research into your ideal market/location.

You’ll want to identify where all of the other car rental locations are in your area, and determine where to locate your business. You’ll also need to consider what people will want from a car rental business and build from there. A good practice when starting a car rental business is to try talking to people and businesses to see what they would want from your car rental business.

Determine Your Car Rental Structure

Once you’ve done your research and have determined what people would like from your car rental business, it’s time to determine the structure of your business. You can either choose to rent cars daily or by contract. The main types of car rental services operate by daily hire or contract hire.

In a contract-hire business, customers lease vehicles for a predetermined amount of time. In a daily hire business, you will rent out cars for short periods of time, typically to travelers. Ultimately, you’ll want to figure out who you will want to rent to.

Simplify Your Set-Up Process

Major car rental chains operate around the world. Be sure to get involved by going to their websites and requesting information about franchise opportunities. They will contact you, and help you set up the franchise. A franchise usually requires less paperwork and money to start up than a new business. However, if you choose to start your own car rental business and you have entrepreneurial experience, you will benefit from not having to pay a rental chain for the rights to use their image, which minimizes expenditures.

You can also choose to purchase an existing rental car business, which means you won’t have to waste time building your fleet. However, this often requires a lot of research.

So, you have three options:

  • franchise
  • start a new business
  • or buy an existing one

Whatever the case, be sure to do your research and determine which will be more lucrative for you and guarantee success.

Build Your Fleet

If you’ve decided to start a new car rental business from the ground up, then these next steps are for you. First and foremost, you’ll want to build your fleet and choose a location for your operation. Hopefully by researching the market in the first step you’ve already determined where your business will be located.

Most of the time, you will be better off finding a location separate from existing car rental businesses. However, visible, accessible, and safe locations will always entice more customers. A location near airports, hotels, and train stations often provide a variety of interested customers.

Once you’ve settled on a location, you’ll need to build your fleet. You’ll need to determine whether you plan on purchasing your cars or leasing them when considering how to start a car rental business that is successful. Investing in a fleet outright can be costly, but it does minimize costs in the long run.

Leasing a fleet on the other hand involves renting cars usually from a dealership, but you will have to pay the contract costs. Whatever the case, you’ll need to determine how you plan on obtaining your vehicles in a way that allows for more revenue than expenditures.

Craft Your Business Plan

Write out a business plan that stipulates how your business will operate. Your business plan will serve as a blueprint to your success. So, spend as much time as you need to outline the aspects of your business in as much detail as possible. Explain how much funding you will need and determine how you will obtain it.

You’ll also want to explain how you will attract clients, obtain your fleet, and how you will manage and operate your business. This step often goes hand-in-hand with creating your brand, its name, its logo, and its aesthetic.

So, take as much time as you possibly can on this step, because it will determine whether or not your business will be successful in the future when obtaining funding.

Legalize Your Business

You must legalize your business. Preparing for risk, mitigating loss, and being able to provide for your employees are all key when it comes to how to start a car rental business. First, you’ll need to purchase a comprehensive insurance policy for your fleet. This will provide both collision and liability protection for your cars, and protect you and your business from risk. Make sure your policy is also available for your customers so that they can avoid any liability.

Also read: A Beginner’s Guide to Business Insurance for Ecommerce

Next, you’ll want to apply for a business license from your local government. You’ll need to visit the closest finance office in your area and submit an application. You will pay a small application fee, and normally wait two weeks to receive your license in the mail.

After this, you’ll need to register your business’ name and get a tax identification number from the IRS. You’ll need this if you plan on naming your business and hiring employees, as well as during the funding stage. You can choose to make your business an LLC, Sole proprietorship, Partnership, or Corporation. All of these have their own unique advantages and disadvantages, and can even be changed later on.

Hire Your Employees

You’re going to need employees to help with day-to-day operations, perform maintenance on the fleet, and assist customers. Be sure to properly vet and research your applicants prior to any interview stages.

In order to streamline this process, do your research, administer a comprehensive test to your applicants, and only hold one interview. This will save time, money, and headache if you can properly vet and research your applicants and administer tests that signify how well they will work together, with you, and under the structure of your business.

Market Your Business

Marketing is key, how else will customers know whether or not your business even exists?

Luckily, there are hundreds if not thousands of marketing outlets, channels, and platforms that you can use to get your business out there. You can choose to craft content in-house, or hire a third-party marketing team to take care of it for you. Whatever the case, you’ll want to hit your target audience with relevant, engaging content that voices your unique company culture, values, and principles.

If hiring a third-party marketing company seems too expensive, or you have little to no experience setting up a website or marketing, there is another option: Ecwid.

Are You Ready to Start a Car Rental Business?

Ecwid offers a unique platform from which you can manage your entire business from a single dashboard, build a website, market your business, and track analytics for FREE.

So, what are you waiting for? Get Started for Free!


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About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.

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