Running any business requires capital and careful planning of business expenses. Owning and operating a taxi or limo company adds a whole new layer of expenses to maintain a fleet. Without the proper planning, costs can become overwhelming. We put together the top costs taxi and limo companies should prioritize to keep your business operations running efficiently.
First, it’s important to note that most for hired vehicle brands do not own their own vehicles. While some do, the majority dispatch rides to vehicles that are owned or rented by their drivers. Therefore, the costs below do not include the actual costs for the vehicles themselves.
Fixed Costs and Fees
Monthly and annual fixed costs are the easiest to budget since the remain the same. These costs can include insurance, taxes license and permit fees.
License/Permits – You and your drivers must apply for a taxi driver’s license. Licensing and permit requirements and renewal policies vary by location which you can find by contacting your state department of motor vehicles or municipal licensing office. Some states require additional permits such as the Dispatch service provider license and, in some regions, such as Chicago, New York, and Boston, you have to purchase a taxi medallion to pick up passengers.
Taxes – Staying current on property, commercial, and businesses taxes are an important to avoid penalties. During tax season, it may seem like there’s a never-ending list of businesses expenses, but there are also deductions available to your business to put money back into your pocket.
Insurance – You must have professional liability insurance for your vehicles and drivers. Minimum vehicle insurance requirements will depend on location, vehicle type, and seating capacity.
Varied Fleet Costs
Varied and operational costs are just as important as fixed costs to keep you in business. Varied costs can include gas, oil, tires, and routine and preventative maintenance. There are also incidental expenses such as vehicle damage repair, cleaning, parking tickets, and tolls. The taxi and limo industries can come with seasonal fluctuations. Higher sales for the limo businesses occur during prom and wedding seasons. This means higher demand and higher wear and tear on your fleet, which needs to be budgeted accordingly.
Personnel and Operating Costs
Drivers are a crucial part of your business and costs range depending on the size of your fleet, location, and licenses requirements. Dispatchers, mechanics, sales and customer service teams, and office managers are also an important part of running the day to day operations of your business, however, these costs vary greatly depending on the current needs and stage of your business.
The most important operating costs for your business include rent, payroll, equipment, and software. Again, these costs can vary depending on the size and location of your business, but there are ways to increase productivity and efficiency to increase personnel and operating cost savings. Dashirde offers industry-leading mobile apps for customer booking, electronic dispatching software, and back-office management systems for billing, customer management, and accounting.
Your marketing budget is all of your costs for marketing, advertising, public relations, and promotions. Experts recommend spending no more than 8-10% of gross revenue on your marketing budget.
Traditional paid advertising like print, billboards, radio, television, can be pricey and ineffective. Many businesses have transitioned their marketing dollars to paid search campaigns and social media platforms such as Facebook, Snapchat, Instagram, YouTube to run more tailored, trackable campaigns.
Once you have a firm grasp of the expenses associated with the size and location of your business, you are better able to prioritize and budget fixed and recurring costs. Strategically managing costs creates more efficiency, organization, and saves more money for your business. Dashride can help you manage these costs and keep your balancing act to a minimum. Contact us today!