ATTRACTING CUSTOMERS
The current image of a taxi driver in the Philippines is not a pleasant one. Drivers are looked at as unprofessional and discourteous. One reason that this is true is the nature of the business. Most taxi companies operate in the best and the worst areas of town and drivers have to deal with a wide variety of people. The drivers that are hired are not professional and are given virtually no training before they are sent out to deal with the public. One way to address this is by encouraging the drivers to attend training programs. Knowledge of the city and command of the English language would go a long way towards improving the basic professionalism of the driver. Uniforms which are both comfortable and easy to maintain would also strive to complete the look that the public deserves and should expect. Of course, cleanliness of the cars is a must. A monthly inspection of vehicles would eliminate a large number of problems associated with operating a fleet.
Credit
Most if not all taxi companies in the country currently do not offer to take major credit cards. This is a huge mistake and there are a wide range of people who would use taxis more if this simple problem could be eradicated.
Advertising
Advertising is minimal in the taxi service business, but could be maximized with the use of a little creativity. Currently a yellow page ad listing is the only necessary requirement to generate business. Many customers will immediately try the new taxi company in town to see if it has a faster response time than the other services in the area. Other people will try the new service if favorable word-of-mouth advertising is received.
Additional Sources of Revenue
Even though taxi companies are by and large successful, they could be made even more so by adding additional revenue streams. Taxis can be painted with advertisements and turned into independent marketing venues of their own. Drivers could pass out flyers and could direct customers to certain establishments that had a reciprocal relationship with the company. Value added services could include food deliveries and other types of deliveries that other companies make on a routine basis. The horizon is truly unlimited when it comes to the taxi business. A little creativity would go a long way in furthering that horizon.
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START-UP COSTS
The start-up cost for running a taxi company is high for several reasons. These reasons are explained in detail below:
Investment: This accounts for the bulk of the start-up cost. Brand new units cost from PhP 500,000.00 to PhP 600,000.00 each. Second hand units, on the other hand, cost by about PhP 200,000.00 to PhP 300,000.00 each.
Insurance: Taxis are usually insured at a rate high enough to account for their high exposure to accidents. The type of insurance coverage is not even first class insurance, as the market for this type of insurance is so small. It is a challenge coming up with the premium down payment, which is usually set at around 10-15 percent of the total annual policy.
Franchising: The cost of franchising is roughly PhP 30,000.00 per year and is not a problem if all of the taxis are painted and equipped for inspection.
Administrative Costs: Would be minimal. The customer never sees the office and therefore the primary consideration for space is simply a location with plenty of parking. The cost for space like the type that is being described here would be roughly PhP 8,000.00 per month.
Radios: If you decide to equip your taxis with radios, then this will put additional pressure on your finances. However, starting companies would still be better off without it, especially if the drivers have their own mobile phones.
Miscellaneous Costs: There might be additional expenses that an operator will have to consider as the process of running the business gets underway. For instance, to help speed up the processing of your registration papers, you may need to hire somebody to follow-up on your application.
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REVENUE AND CASH FLOW PROJECTIONS
Maintenance Cost
The maintenance cost from taxi operations depends largely on the way the drivers took care of their units. Seldom are there drivers who took care of their taxis and this will always result to high maintenance cost. Including an in-house repair and maintenance team in the business might be economical in the long-run, but it will definitely increase your start-up investment
Revenue Formula
A simple revenue formula is as follows: PhP 1,300.00 (boundary) x number of vehicles x 6 days per week = total revenue per week
If you have 5 units of taxis, we arrive at a revenue of Php 39,000.00 per week, or PHp 156,000 per month, or PHp 1,872,000.00 per year. Even though the start-up number of taxis would be closer to 3 vehicles, there is still a weekly gross revenue of PhP 23,400.00 or PhP 93,600.00 per month. It should be noted that it is assumed here that each vehicle will only ply the road 6 times a week and spend one day each week for maintenance check-up. Moreover, revenue as presented here should not be confused with profit. Profit is the difference between revenue and cost.
Financial Data
The financial data above is presented as basic information and is only an estimate. Actual data may vary depending on the area of operation.
Some portion of this article came from this site: http://www.answers.com/topic/taxi-service-business-plan-3?cat=biz-fin
The current image of a taxi driver in the Philippines is not a pleasant one. Drivers are looked at as unprofessional and discourteous. One reason that this is true is the nature of the business. Most taxi companies operate in the best and the worst areas of town and drivers have to deal with a wide variety of people. The drivers that are hired are not professional and are given virtually no training before they are sent out to deal with the public. One way to address this is by encouraging the drivers to attend training programs. Knowledge of the city and command of the English language would go a long way towards improving the basic professionalism of the driver. Uniforms which are both comfortable and easy to maintain would also strive to complete the look that the public deserves and should expect. Of course, cleanliness of the cars is a must. A monthly inspection of vehicles would eliminate a large number of problems associated with operating a fleet.
Credit
Most if not all taxi companies in the country currently do not offer to take major credit cards. This is a huge mistake and there are a wide range of people who would use taxis more if this simple problem could be eradicated.
Advertising
Advertising is minimal in the taxi service business, but could be maximized with the use of a little creativity. Currently a yellow page ad listing is the only necessary requirement to generate business. Many customers will immediately try the new taxi company in town to see if it has a faster response time than the other services in the area. Other people will try the new service if favorable word-of-mouth advertising is received.
Additional Sources of Revenue
Even though taxi companies are by and large successful, they could be made even more so by adding additional revenue streams. Taxis can be painted with advertisements and turned into independent marketing venues of their own. Drivers could pass out flyers and could direct customers to certain establishments that had a reciprocal relationship with the company. Value added services could include food deliveries and other types of deliveries that other companies make on a routine basis. The horizon is truly unlimited when it comes to the taxi business. A little creativity would go a long way in furthering that horizon.
START-UP COSTSThe start-up cost for running a taxi company is high for several reasons. These reasons are explained in detail below:
Investment: This accounts for the bulk of the start-up cost. Brand new units cost from PhP 500,000.00 to PhP 600,000.00 each. Second hand units, on the other hand, cost by about PhP 200,000.00 to PhP 300,000.00 each.
Insurance: Taxis are usually insured at a rate high enough to account for their high exposure to accidents. The type of insurance coverage is not even first class insurance, as the market for this type of insurance is so small. It is a challenge coming up with the premium down payment, which is usually set at around 10-15 percent of the total annual policy.
Franchising: The cost of franchising is roughly PhP 30,000.00 per year and is not a problem if all of the taxis are painted and equipped for inspection.
Administrative Costs: Would be minimal. The customer never sees the office and therefore the primary consideration for space is simply a location with plenty of parking. The cost for space like the type that is being described here would be roughly PhP 8,000.00 per month.
Radios: If you decide to equip your taxis with radios, then this will put additional pressure on your finances. However, starting companies would still be better off without it, especially if the drivers have their own mobile phones.
Miscellaneous Costs: There might be additional expenses that an operator will have to consider as the process of running the business gets underway. For instance, to help speed up the processing of your registration papers, you may need to hire somebody to follow-up on your application.
REVENUE AND CASH FLOW PROJECTIONS
Maintenance Cost
The maintenance cost from taxi operations depends largely on the way the drivers took care of their units. Seldom are there drivers who took care of their taxis and this will always result to high maintenance cost. Including an in-house repair and maintenance team in the business might be economical in the long-run, but it will definitely increase your start-up investment
Revenue Formula
A simple revenue formula is as follows: PhP 1,300.00 (boundary) x number of vehicles x 6 days per week = total revenue per week
If you have 5 units of taxis, we arrive at a revenue of Php 39,000.00 per week, or PHp 156,000 per month, or PHp 1,872,000.00 per year. Even though the start-up number of taxis would be closer to 3 vehicles, there is still a weekly gross revenue of PhP 23,400.00 or PhP 93,600.00 per month. It should be noted that it is assumed here that each vehicle will only ply the road 6 times a week and spend one day each week for maintenance check-up. Moreover, revenue as presented here should not be confused with profit. Profit is the difference between revenue and cost.
Financial Data
The financial data above is presented as basic information and is only an estimate. Actual data may vary depending on the area of operation.
Some portion of this article came from this site: http://www.answers.com/topic/taxi-service-business-plan-3?cat=biz-fin
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