INNOVATIVE BUSINESS IDEA A TAXI BUSINESS

A taxi business is a very interesting business, you get to meet a lot of interesting
people and of course, the not-so-interesting ones, you get to go places and most importantly,
you get to make money. Taxi business can sometimes be tough and tiring but the income and
profit would wipe away the frown from your face in a few minutes.

To succeed in your Taxi business, the most important thing you ought to know is that
you need to employ positive attitude because taxi business is a service-based business. A
business that is a part of the hospitality industry and to succeed, you have to be hospitable,
you have to make people feel comfortable, at ease and satisfied. I found out that many taxi
drivers are not aware of how important the service they are rendering is.

As a visitor in a place for the first time, it doesnt matter if you came by road, sea or
air, there is a high probability that the first person you will meet in the new city is a taxi
driver whom you must have employed to take you to your destination and the attitude and
carriage of the taxi driver automatically creates a general first impression of the attitude and
culture of the residents of that area on your mind.

So, taxi drivers are like image makers and because of this, if you are starting your taxi
company, you have to make extra efforts to do it right.

Steps involve to Startup the business:

1. Get in the right mindset

The first step to succeed and beat your competitors is to make customer service a
priority. You should ensure that every ride in your cab is a pleasant and memorable
experience. This can be achieved if your car is always kept in good condition.

A stuffy car that isnt roomy and comfortable or breaks down from time to time,
making clients late or miss appointments is a very bad idea. Your taxi business is just as good
as the car you are using to run the business. To start your taxi company, here are some of the
things you have to put in place.

2. Purchase a good vehicle-:

Invest in the best car you can afford for this business. It would help if your car is
attractive and clean both on the inside and outside, has enough space and leg room to make
the passengers comfortable and has a large enough trunk for luggage.
3. Get Insurance Covering

This depends on the area you plan to operate your business. You should find out what
the rules concerning insurance for commercial taxis are in your locality. For your safety, it is
advisable that you get comprehensive insurance for all of your vehicles. This is the most
likely the biggest expense you would incur on the business apart from the cost of purchasing
the cars.

4. Buy and install taxi meters

You would also need a taxi meter to be able to bill and charge your clients. A taxi
meter makes the whole billing process fair and transparent. You can purchase taxi meters
easily on the internet. Just make sure you are buying one that has a certificate of compliance
and is legal for use in your country.

5. Top lights & Checkers-:

Checkers help to differentiate private vehicles from commercial taxis. You should get
one so that people can easily recognize your vehicle as a taxi. Top lights also perform the
same function of helping people identify your vehicle as a taxi.

6. Licenses and Fees-:

The licenses you would need to obtain and the fees required to be paid also depend on
where you reside, so you should take time to find out what is required to make your business
legal in your state.

7. Employ drivers-:

If you would be running your taxi business on a large scale, you would also need to
employ drivers. However, you must make sure you take your drivers through a test to
ascertain that they are skilled and qualified to drive commercially. Your drivers should also
have valid driving license.

8. Get an Office Space-:

An office space would also help a lot because you would need a cashier and a
customer service officer who can take calls from customers when everyone else is out on the
field. The customer service officer would also be in charge of directing the next available
driver to customers locations.
9. Toll Free Line-:

You should talk to your telephone service provider about getting a toll free line for
your business. A toll free line would help you beat your competitors. Customers would be
encouraged to call for your services knowing that they wont have to pay phone bills. You can
also set up an online portal or app, where clients can connect with you and book your
services.

This is basically what you need to get your taxi company running. You should also consider
looking into other sources of income like car hire and luxury car services. This would help to
increase your business profitability.

4 Challenges of Starting a Taxi / Cab Company

1. Cost of gas

The high cost of petrol, diesel or whatever it is vehicles run on these days, is high.
And this is the first complaint you are likely to hear from a taxi driver. However, the situation
is not totally hopeless as there are now products known as fuel savers that help to reduce
fuel consumption in vehicles. You should be careful when choosing a fuel saver as some of
them can damage your engine.

2. Fees & Taxes

Another major problem facing taxi drivers is the fees and taxes that they sometimes
have to pay. Some of these fees include parking tickets, toll fees, licensing fees and several
other fees and taxes required by the government. A good way to solve this challenge is to
incorporate these expenses in the prices you would be charging your customers.

3. Maintenance, repairs & insurance

To keep the car running and in good condition, you would have to maintain it
regularly and this costs money. In the same vein, cars break down unexpectedly sometimes
and this might just mean goodbye to that days income. Insurance is also another issue as
most countries would require you to have motor vehicle insurance before you can run a taxi
business.
4. Dishonest drivers

This is a challenge you are likely to face if you are going to employ drivers to run
your business for you. Some drivers are simply not straight-forward and would look for ways
to short change you with every chance they get.

There have even been cases of drivers running away with their employers vehicles.
To guard against such events, you must make sure each driver you employ has a guarantor
who would be held responsible for any damages. You can also install car tracking devices on
all your taxis.

SWOT Analysis:

Strengths:

o It has a high standard of service, verified drivers and cars.

o Operational cost is quite low. As it relies on customer-to-driver interaction, a

dispatcher is not needed.

o Very little competition. A major competitor is Lyft.

o As cashless payment system can be used, we can track and choose highly rated
drivers. It has many other features like getting a car easily and having record of the
spending.

o Dual rating system boosts trust and safety.

o The system is convenient for the drivers. They can work flexible hours and even
choose to be a part-time employee. Drivers can also reject unwanted clients.

o The prices are lower compared to traditional taxi operators.

Weaknesses:

The idea can be easily imitated. Nothing will prevent competition from presenting the
same product.
 Also, company and its customers have no bonding.

Costs of operating vehicles are very high. But, the drivers do not earn so much.

Very Unpredictable business model.

Opportunities:

Customers are often dissatisfied with traditional cab companies because of high prices
and long waiting time.

It can exploit new and big markets in countries like India where taxi services are
inconvenient and expensive.

Can tap growing markets in suburban areas where taxi services are not available.

Cheaper electric cars can be used. It will reduce the cost and increase the drivers
profit margin.

Additional services like transporting older patients to hospital, transporting children to

school and transporting pets to the vet can be offered.

Threats:

Drivers arent happy with the low-profit margins. This might lead to bad publicity.

Problems with local authorities can lead to fines. It will also earn a bad PR.

Increasing competition will ultimately decrease prices. This will discourage drivers
from joining the startup in new markets. This will result in loss of customers.

As new markets and drivers are joining, fraud and scandals are also increasing. It is
damaging for the brand.
 Overvaluation can lead to Overinvestment in locations where there is no room for
businesses of a similar type.

Various Strategies for the progress of the business

Marketing Strategy
PATS' marketing/sales strategy will be two pronged, one to address each of our
two segmented targeted groups:

1. Families/individuals: PATS will be using advertisements as a way to increase

visibility for the company. The advertisements will be placed in the Cleveland Plain
Dealer, the local newspaper with the highest readership level in the area. The ads will
appear in the weekly travel section. Premier will also be working with associations
such as the American Automotive Association (AAA) and other community groups to
try to build up a network of users. PATS believes that working with these groups will
provide them with a steady flow of customers. Additionally, since a lot of these
groups are close knit among members, referrals will be quite powerful when they are
coming from a member who already has established a trust bond with the other
organizational member.

2. Business Travelers: PATS will be contacting the travel department of many of the
different companies in Cleveland that have employees traveling and tell them about
PATS' service and offer them an introductory discount. This will be an important
segment to win over, as companies routinely have employees traveling throughout the
year. Businesses are also valuable because once the initial contact is made, the
relationship can be turned into a steady stream of business. Additionally, there will be
advertisements targeted for this market segment. The ads will appear in the Business
Journal of Cleveland as well as the business section of the Plain Dealer.

Mission
The mission of Premier Airport Transportation is to provide the customer the finest airport
transportation service available at a reasonable price. We exist to attract and maintain
customers. When we adhere to this maxim, everything else will fall into place. Our services
will exceed the expectations of our customers.

Marketing Objectives

1. Steadily gain in market share.

2. Increase repeat customers by 3% per quarter.

3. Decrease customer acquisition costs, measured by a decrease in marketing costs

divided by the number of new customers.

Financial Objectives

1. Increase the profit margin by 1% per quarter.

2. Decrease training costs of employees every two quarters while

simultaneously improving service quality.

3. Decrease the operation costs of the leased vehicles through improved preventive
maintenance and behavior modification.

Target Marketing

The customers can be divided into two groups: families/individuals on pleasure trips, and
business travelers.

The first group is taking a trip for pleasure and will either be an individual or a family.
Their choices are to drive and park in long-term parking, take a taxi, or use a
limousine service. This group does not typically mind paying a bit more for a solution
that takes care of their transportation to and from the airport. Since they are on
vacation, they appreciate having a service that gets them to the airport in a seamless
way so they do not have to worry about anything. All they have to do is make the
reservation and show up at the arranged pickup point.
 The second group is the business traveler. In the past the company would typically
hire a limousine service to pick up their worker. With PATS as an alternative, there is
a transportation service that functions like a limousine (you can pre-schedule pick up
dates and be taken directly home or to the airport) but without the overly fancy car
and the high price. As companies are always looking at ways to cut costs, PATS offers
a very reasonable solution in terms of comfort and cost.

Positioning

PATS will position itself as a professional, reliable airport transportation service with
limousine like service at affordable rates. PATS will achieve the desired positioning by
leveraging its competitive edge.

PATS' competitive advantage will be based on an incentive system that rewards the driver
economically when they achieve good service, develop repeat customers and act in a team
fashion instead of competing against other company drivers. This incentive system will
reward drivers when:

1. The company receives positive feedback about the driver (a feedback system will be
set up).

2. The customer is turned into a repeat customer.

3. The driver develops new customers.

4. The driver acts in manners that are team based instead of individual gain.

Through this complicated but purposeful system, PATS is incentivizing behavior that it
believes will help the company succeed. Additionally, PATS will be having the driver lease
the cars through PATS for several reasons:

1. With PATS leasing the cars, they are able to get a volume discount for the leases.
PATS will actually be passing on the costs to the drivers.

2. Leasing through PATS encourages a long-term employee as there are fees to break a
lease and PATS includes provisions in the lease that do not allow drivers to use the
cars for more than two months beyond termination of employment.
 3. By having the drivers lease the cars, they have an economic incentive to maintain the
cars as they are financial responsible for damage beyond reasonable wear and tear.

Strategy Pyramids

The single objective for Premier is to position itself as the market leading airport ride service.
The marketing strategy will seek to first create customer awareness regarding Premier and its
services offered, develop its customer base, and work toward building strong customer
loyalty and new customer referrals.

The message that Premier seeks to communicate is that it offers limousine-like airport service
without a limousine price. This will appeal to both business travelers as well as families that
use the airport for their travels. This message will be communicated through a variety of
methods. The first method of communication will be advertisements. Two different sources
will be used for the advertisements, The Cleveland Plain Dealer and the Business Journal of
Cleveland. Within the Plain Dealer, ads will be placed in both the business section as well as
the travel section.

The second method of communication will be visibility generated through relationships

cultivated with organizations such as American Automotive Association. AAA in particular
has an active, loyal membership base and visibility in its membership newsletters and display
posters at the office will help position Premier.

The last method of communication will be networking with different companies travel
departments. Sam is well connected within the community and will leverage these contacts to
gain "entry" into the larger companies in hopes of generating a constant stream of business
from the travel departments.

Marketing Mix

Premier Airport Transportation's marketing mix is comprised of the following approaches to

pricing, distribution, advertising and promotion, and customer service.

Pricing: The pricing model will be based on a per-trip rate with a slight discount
offered for round trip service.
 Distribution: By virtue of the type of service offered, distribution will occur where
ever the customer requires it to be.

Promotion and Advertising: Premier will use various activities to achieve

positioning and visibility including advertisements and strategic relationships.

Customer Service: The business model has been premised on the assumption that
outstanding customer service is required in order to build a sustainable business based
on repeat customers and new customer referrals.

Marketing Research

Premier Airport Transportation used a survey to gain insight into prospective customers
preferences, needs and desires. The surveys were given out to travelers at the airport. The
surveys were composed of a total of 20 questions. The number of questions were kept low to
encourage people to complete the survey.

Sam used a statistics graduate student to develop the surveys. The careful construction of
surveys is imperative to achieve a statistically significant results that are meaningful. A total
of 200 surveys were handed out and 59 were returned completed, a fairly high return rate.

The results of the survey ultimately served two functions:

1. Confirm/validate previously held assumptions;

2. Provide insight into prospective customers preferences and thought processes.

The surveys provided copious amount of information for both functions. Due to the large
amount of information that was mined, Premier plans to conduct more primary research in 18
months.

Financials, Budgets, and Forecasts

This section will offer a financial overview of Premier Airport Transportation as
it relates to the marketing activities. Premier will address break-even analysis,
sales forecasts, expense forecasts, and how they link to the marketing strategy.
Break-even Analysis

The break-even analysis indicates that $19,500 is needed in monthly revenue to

reach the break-even point.

Create or edit
this chart

Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even

Assumptions:

Average Percent Variable Cost

Estimated Monthly Fixed Cost

Sales Forecast

The first month will be spent setting up the business. By month two the business
office will be in order and PATS will have been working with associations to
create visibility for the company. PATS will have two drivers and will be paying
them a base monthly wage on the assumption that it wants to have the drivers
ready when fares come up.

Month three will see an increase in fares and things will be getting busy.
Business will continue to grow and by month five a third driver will be brought
on board. It will not be until month 11 that a fourth driver will be hired.

Sales Forecast

Sales Forecast

Sales

Families/individuals

Business travelers

Total Sales

Direct Cost of Sales

Families/individuals

Business travelers

Subtotal Direct Cost of Sales

Expense Forecast

The marketing expenses are to budgeted so that they are higher than normal
during the first quarter. This elevated amount is budgeted to achieve initial
presence and visibility during the first four months of this start-up operation.
The second and third quarter will show a general decrease in expenses,
returning to normal levels after the initial spike. The last quarter will see a spike
in expenses, a recognition that this is the time that has the most travel occurring.
The expense forecast will serve as a tool to keep the department on target and
provide indicators when a modification or correction must be made for the
implementation of the marketing plan.

Marketing Expense Budget

Create or edit this table

Marketing Expense Budget

Advertisements

Strategic alliances

Other

Total Sales and Marketing Expenses

Percent of Sales

Case Study- TAXI For Sure

Background: Online cab hire in India is an industry that is high on rise. It is

characterized by huge demand and high growth rates. The industry took off in
recent years with players like Meru Cabs, Olacabs, Easy Cabs, Quick Cabs and
many others. TaxiForSure made an entry with its distinguished quick and tech
savvy services and broke the clutter by ensuring that customers get an easily
accessible, safe and reliable taxi ride for sure. It started in June 2011 with its
operations in a small roof top bungalow. Since then, the operations have taken
over Bangalore, Chennai. But it was not an easy game. The industry is
fragmented, majorly dominated by unorganized players and considered highly
expensive. But TaxiForSure was sure of its success because it knew the key
points to be put in place.

The Challenge: Despite a decent scope for companies to sustain in this market,
the reality was that it was dominated by an unorganized market and any branded
cabs were considered very expensive. Customers still think twice before calling
other top cab companies. Secondly, customers were exhausted with the late
arrivals and non availability of cabs at the time most needed and thirdly, there
was very less digital presence of these companies so in case someone is unable
to reach the phone call, he can order a cab online. TaxiForSure grabbed all the
opportunities!
The Strategy: TaxiForSure believed that the use of technology is abundant and
by making use of existing online media platforms like Twitter and Facebook,
they could offer their users with more convenient options to book a cab online.
The campaign was a novel idea that aimed to bring technology and service at
the users doorstep. It created a brand that had everything transparent, did not
have exorbitant prices, instead offered special discounts and initiated the most
innovative, simple and quick social media campaign with Twitter
#TweetATaxi.

The Execution: The campaign aimed to reach out to a new target audience who
do not use Android/iOS apps but are glued onto Twitter. Users could book and
select a taxi on Twitter by just tweeting twice. On Taxiforsure handle
(@taxiforsure) users were required to tweet their requirement and suffix the
hashtag #TweetATaxi. For example: @taxiforsure need a taxi from JP Nagar to
Airport at 5:30pm #TweetATaxi. Voila, the taxi was there! With the help of the
app, one could also locate in how much time the taxi would arrive and where is
it exactly along with the driver details. An easy, quick, fun and a beautiful use of
the new age media!

The Result: The campaign generated a lot of interest and has allowed
TaxiForSure to get 5-10 bookings everyday from that channel. It currently has
over 500 followers on Twitter has serviced over two lakhs customers and has
also won several accolades for its distinguished services.