How Hard Is It to Start a Taxi Business?

One of the most enduring business models is to provide taxi cabs. There are several good reasons for this.

Starting and managing a taxi business doesn’t take much money compared to other business models. You need to invest in a vehicle to start off with, but there are ways of reducing the cost through finance or by finding an affordable used taxi for sale.

Moreover, you don’t need much training to be a cabbie. In days gone by, you would have had to learn the local area by heart to qualify. Although this is still a vital skill, smartphones and satellite navigation make it far easier to find your way to particular destinations.

You can also scale a taxi business easily. If you live in a busy urban area, you may need to invest in more taxis to meet additional demand or find ways of marketing yourself in the local area.

However, you can also spread your wings into other nearby areas (or even nationwide) if you are smart with choosing the right locations and keeping your costs under control.

Despite this, it must be said that several challenges associated with starting a taxi business need to be addressed.

For example, you need to make sure you don’t spend too much on your cabs and that your drivers are all qualified, experienced, and properly vetted for security clearance. You need to be intelligent with your choice of location.

With that said, this is what you need to know about starting a taxi business:

You need to invest in the right car


The lifeblood of any taxi business is the taxi cab itself. Although specialist taxis will be required in certain cities (such as London and New York), in the main you have many choices regarding the vehicles you use.

When you are just starting out, it is vital to choose the right cab at the right price. When it comes to deciding on the type of vehicle, you need to consider the nature of your service.

Do you provide airport runs to families? Late-night pick-ups outside bars and clubs? Or do you cater mainly to the elderly and those who may have mobility issues?

All these factors must be considered closely because your choice of vehicle will differ wildly. For instance, a large minibus is probably best if you specialize in airport runs. In contrast, if you cater to the nightlife crowd, then a luxury car probably isn’t going to withstand the inevitable wear and tear that this type of service entails.

When you have decided on the class of vehicle you want to buy, it is time to look for them online. Consider using a specialist website like cabdirect, which has a wide selection of taxis available for this kind of business venture.

Join an existing platform like Uber

If you want to play it safe and ensure consistent income while just starting out, then joining an existing taxi network like Uber or Lyft could be a smart move.

While these services may not be sustainable if you want to build your own brand, they can provide you with a steady stream of customers. This will allow you to pay off initial bills, get experienced with taxi cabbing, and navigate your local area.

Moreover, you can troubleshoot any potential issues while your name isn’t above the door. This will prevent any reputational problems and allow you to grow more silently.

Once you have saved up enough money and built your experience level, you can branch out independently.

Build your reputation in a concentrated area


As with any business model, it is crucial that your brand develops a strong reputation. This will help your target market notice that your service exists, can be trusted, and will remember it in the future.

Building a strong reputation is hard, and there is no way around it. You will have to deliver exemplary service at a good price to stick in your customer’s minds, and ensure that you are prominent in the area you are active in.

This is why sticking to a concentrated area is best at first. Trying to stand out against a huge city or county competition is incredibly difficult, which is why you should aim to dominate a smaller patch.

Investing in marketing campaigns like SEO, PPC ads, and other digital content marketing is a great way to fast-track this process, as is advertising in local media like newspapers and flyers.

Start your business in an area that needs taxis

You need to make sure the area you are targeting actually needs taxis. You might struggle to justify your service if you are in an area with minimal nightlife and easy travel connections.

However, if you are within an hour of an airport, are based in a city with a bustling nightlife, are active in a countryside town with several surrounding villages, or are a retirement hotspot, you will have a target market ready to go when you set up your business.

Another factor to consider is fuel and time. If you have to drive out into the countryside, and your fees don’t reflect the additional cost in fuel and staff hours, you may quickly slash your profit margins.

Make sure the area you operate in is conducive to a healthy profit margin, and that the distance your cabbies travel is worthwhile.

This may require a considerable amount of research, as well as trial and error, as you perfect your local radius.

Learn how to navigate properly

One of the most fundamental talents a cab driver needs to have is strong navigational skills. If you don’t know where a particular location is, or struggle to remember where you are going, you can quickly upset your customers, dent your profit margins, and ruin your reputation.

Thankfully, having accurate navigational tools has never been easier in the age of smartphones and satellite navigation. However, you shouldn’t rely solely on technology because it can always go wrong.

You need to train yourself in navigating the local area effectively and know where the worst congestion is and where any possible shortcuts are.

Once you take these tips into consideration, you will stand a far higher chance of your taxi startup succeeding.