How To Start A Taxi Business

 

Starting a taxi business means you are performing a essential service. Taxis and private hire vehicles (PHVs) provide a vital public service connecting people to places when alternative public transport services are not available or viable. 

 

1. Overview
2. Taxi Licences
3. Pros and Cons
4. How much can I earn?
5. How much does it cost to start a taxi business?
6. Do Your Research
7. Choice of Business Structure
8. Making a business plan
9. Branding and how to market yout taxi business
10. Red tape
11. Conclusion

 

“Taxiiiiii…..” We´ve all frantically waved our arms about flagging down a taxi and been eternally grateful when it pulled over in front of you. But have you ever considered being a taxi driver?

 

With more people choosing to ditch their cars due to high insurance and fuel prices, taxis have come into their own over the last few years. As of March 2022 there were 260,700 licensed taxis in England with over 330,000 drivers holding a licence.

According to the Department of Transport, the majority of drivers were male (97%) with an average age of 48 years old, with 17% of drivers being aged under 40. 

 

• Potential Annual Revenue: £30-40,000
• Startup Cost: £10,000-£30,500
• Time To Revenue: 2-3+ months 
• Annual Market Growth Rate: %
• Best for: Love driving, patient, self-motivated and customer friendly entrepreneurs

 

Provide an essential door to door service

 

Before you can begin ferrying around those grateful customers you first need to apply to your local council’s licensing unit. 

• Taxis, also known as hackney carriages, are available for immediate hire and can be hailed on the street. They can also accept pre-bookings.
• Private Hire Vehicles (PHVs), sometimes known as minicabs, must be pre-booked and cannot use taxi ranks. It is illegal for PHVs to picked up customers on the street.

Hackney cab and private vehicle hire (PHV) licences are different so make sure you apply for the correct one. 

Your council may carry out an enhanced criminal records check from the Disclosure and Barring Service (DBS).

You may also require a medical examination, a driving test and a knowledge test, character checks and you must have held a UK or Northern Ireland driving licence – or a full EU driving licence for at least 12 months

These requirements vary around the country and working in London brings more regulations from the Taxi and Private Hire division of the Transport for London (TfL). Passing the infamous London `Knowledge´ Test is an exceptional achievement but can take up to 3 years of preparation.

 

From registering your company, establishing your brand to marketing your services, we’ll cover everything you need to know to help you turn your creative talent into a successful taxi business. 

 

 

And before you put that key in the ignition, here are some pros and cons to keep in mind:

8 Great Reasons to Start a Taxi Business

• Steady Demand: People need transportation services regularly, whether it’s for daily commutes, airport transfers, or special occasions. This creates a consistent and reliable customer base.
• Flexible Working Hours: As a taxi business owner, you can set flexible working hours, allowing you to adapt to the demands of your personal life or other commitments.
• Scalability: You can start on your own and gradually expand as your business grows and you generate more revenue.
• Local Monopoly: In some areas, the taxi market might be underdeveloped, providing an opportunity to establish a dominant presence.
• Technology Integration: Modern technology allows you to streamline operations with apps for booking, dispatch, and GPS tracking, making it easier to manage and scale your business.
• Diverse Customer Base: Your services can cater to a wide range of customers, including tourists, commuters, people with special needs, and those looking for a safe and convenient ride home after a night out.
• Environmental Impact: You can choose to operate a fleet of eco-friendly taxis, contributing to sustainability efforts and appealing to environmentally-conscious customers.
• Diversification: You can diversify your income by offering additional services such as courier services, food delivery, or shuttle services.

 

 

6 Common Challenges When Staring a Taxi Business

• Regulatory Compliance: Navigating the complex web of local and national regulations governing taxi services can be challenging. You’ll need to obtain the necessary checks, licences, and insurance, which can vary depending on your location.
• Competition: The taxi industry is often highly competitive, with established players and ride-sharing services like Uber, Ola, Bolt and Liftshare. It can be challenging to break into the market and compete effectively.
• Potential High Operating Costs: Operating a taxi involves significant expenses, including vehicle purchase or lease, fuel, maintenance, insurance, and if you take on more people, driver salaries. Managing these costs while maintaining profitability can be a challenge.
• Driver Recruitment and Retention: Finding and retaining skilled, reliable drivers can be difficult. High turnover rates and the need to ensure driver safety and professionalism will be ongoing concerns.
• Technological Investment: To remain competitive, you may need to invest in technology like a mobile app for bookings, GPS tracking systems, and payment processing solutions. These can be expensive upfront.
• Fluctuating Demand: Demand for taxi services can vary throughout the day, week, and year. Managing these fluctuations effectively can be challenge.

 

The all-important question – How much can I earn running my own taxi service?

 

How many hours, where and when you work will determine your income. This is effected by what type of services you offer and whether you drive a hackney carriage or a private hire vehicle (PHV) 

Hackney carriage fares are controlled by the local council and a taximeter is installed.

A private hire vehicle is not required to have a meter, but if one is installed it must be checked and sealed by the council. 

A hackney carriage or ‘black cab’ allows drivers to offer immediate hire in the street or from taxi ranks. Although most towns do allow ordinary saloon cars and MPV vehicles to have hackney plates and use taxi ranks.

The most characteristic and important difference with private hire vehicles is that their service must be pre-booked with an operator, they are not allowed to offer themselves for hire in the streets. The driver must give a fixed price or an estimate of the fare before travelling.

The average salary for a self employed driver is £33-40,700/year. This is dependent on the region and hours worked.

 

How much does it cost to start a Taxi business?

Costs can vary greatly, obviously your main expenditure is your vehicle. This could be new, second hand or leased, this must be cost effective, clean running and well maintained at all times. Think ahead, hybrid or electric vehicles will in the long run be greener therefore won’t need replacing as emission laws change. 

 

Additionally you´ll need your a taxi or PHV Licence, specialist taxi insurance, card machines, satnav and tracking devices, these are essential and are just a few of the things you’ll need to budget for when starting up your business. Your taxi equipment alone can cost between £2,000 and £20,000.

With ever tightening emissions laws, the greener the vehicle the better.

Also, have you thought about premises or will you be working from home? 

 

Do Your Research

To be successful in the local taxi or private vehicle hire business you´ll need to do your research  and decide what you´d like to concentrate on. No one wants to start a Taxi War and established firms may not take kindly to additional competition. 

Could you offer something different and exploit an untapped market? 

Most people who venture into the taxi business target standard customers driving them from location to location without considering or researching other niches that can give them an advantage and expand their customer base greatly. 

 

How about focusing on – 

• School runs, picking up children in a small area
• With declining bus routes how about a rural service – connecting villages to larger towns
• Nightclub pickups
• Disabled passengers or passengers with a serious mobility impairment – obviously your vehicle would have to be suitable with a ramp or lift, adapted seat belts or harnesses and allow the transport of guide dogs as well. 

In England, 14% of all licensed vehicles were wheelchair accessible in 2022. 55% of all taxis were wheelchair accessible while 2% of PHVs were wheelchair accessible 

• Airport runs 
• Delivery services and same-day local courier services
• Are you a female driver? Offer female only bookings for evenings and weekends. 
• Eco-friendly hybrid or all-electric taxis are also in demand. This is a huge opportunity for an eco-friendly taxi business to differentiate itself from the diesel guzzling older vehicles. 
• Provide a service for various religious cultures. 

 

How I’d set this business up.

So, here’s how I’d make sure you have the drive to succeed. 

Choice of business structure

Anyone who sets up a new company should have a business plan. Ask yourself “What is my ultimate goal and how am I going to achieve it? “ Think organised, efficient and productive. 

 

A strong plan is fundamentally important when you are setting up any business. As a solopreneur, you can start this business as either a sole trader or a limited company.

I’d also strongly consider a hybrid startup structure where you can reap the benefits of both structures with minimal cost and risk.

This could enable you to start trading with the simplicity of a sole trader but also have secured the limited company for marketing hacks and saving tax later if you decide to incorporate your business.

Have you thought of a company name yet? Use our FREE Company Name Checker Tool and find your entrepreneurial name. You’ll be searching through a database of over 5 million registered company names and more than 11 million UK domain names.

 

Business plan

Start by formulating a business plan. This will help to focus on delivering a clear message to your potential customers.

There are different types of business plans. (But you can use my 1 page business plan here) It’s designed to cut the waffle but has enough detail to make it a meaningful tool so that you remain laser focussed on what needs to be done when you set up this business.

 

If you are unsure what to do at this point I recommend seeking professional advice, my team is available to talk you through this in a clear and concise way you will understand.

 

How to Market a Start Up Taxi Business.

This is a business that I would definitely want to fast-track from the beginning for growth. You want to get busy as quickly as possible and there is only one real way to achieve this.

Most buyers/potential clients for this service are going to find a taxi business using a Google search. Sure some will use an app, some might ask for a recommendation on social media but MOST will look on Google.

Google knows that when someone is looking for a taxi, they want to see results close to where they are located.

This usually means that Google will show a maps listing at the top of the search results like the image below.

 

 

If your business shows up here then you are right at the top of the search results, under the nose of people who want to find a taxi business.

For any type of business/search term where Google shows a Maps listing like this , I describe these businesses as having “high local marketability”.

High local marketability means if you know what you are doing and tick the right boxes with Google you can get a lot of business enquiries very easily.

 

So if potential customers can’t find you on Google, they won’t be calling you. And guess what? That means someone else has started their engine and is picking up that customer and you’re missing out!

 

So how do you dominate Google search results for this business?

You have to optimise for the Google maps listing.
How do you do that? 

 

Follow these 10 simple steps to marketing a taxi service:

1. Get a website. Make sure it complies with Google’s best practice guidelines.
2. Get your new website in Google so clients find YOU.
3. Provide LOCAL PROOF. Use a local phone number and a mobile to tell clients and Google you are definitely a local business.
4. Provide SOCIAL PROOF. Show reviews from real customers on your site. This is called “social proof” and turns browsers into buyers!
5. Use LANDING PAGES. A landing page is optimised for a specific search term making it rank higher than your competitors. Landing pages are for people who want to buy your service now. They show the client what they want to see
6. Provide great CTA’s (CTA =call to action). Make it super easy on your website for clients to get in touch with you by including features such as a messaging/chat app and CTA’s that show clients exactly how to contact you.
7. Share FEEDBACK. Go the extra mile to provide an outstanding service and you are sure to collect plenty of positive feedback from clients. Ensure you harness this by collecting reviews from every new customer.
8. AUTOMATE – You won’t have time to be manually updating your website. Make sure you automatically show the new reviews on your website, driving more clients to your business.
9. PROMOTE – Regular updates to your website and using Google tools will give your website an extra edge.
10. MAINTAIN – From time to time websites need technical maintenance to the software they run on to keep peak performance.

 
Most taxi businesses DO NOT invest enough time and money to execute this simple marketing  strategy providing you with the opportunity to step in and DOMINATE in the local search engine results.

 

 

Live Chat Function

This is great as it gives your potential customers a “one click method” to message you straight from your websites – you get the messages on your usual Messenger account, this is probably something that your competitors won’t have and we’ve had clients getting great success using this tactic. Make it easy for your potential clients to get in touch with you. 

 

 

Still confused? We can create a personal website for you to get you off to the best start. 

 

Always ask for references and reviews on your website and apps. This is so important for new customers looking for a reliable company. 

Google reviews, testimonials and recommendations are essential. Potential customers WILL check for reviews when they are searching for a service, product or trade. 

This is difficult when you first start out and asking can be uncomfortable but a happy client will want to help you up the ladder every time.

 

 

 

 

Here are 8 great tips to help you market your taxi business effectively:

Promoting your business is crucial to attract new customers and grow your business. 

 

• Do your research

The taxi world is super competitive, so it’s important to research your competitors in your local area. Identify what you can offer that others don’t. This will help you differentiate your taxi business and attract more customers.

Keeping to your brief will help you attract new customers and spread the word.

Customers gender, age, income, where they live, work place and social habits will all play a part in your success. 

Examine your competition’s website and online presence to get as much information as possible about them. This will help you differentiate your business and attract more customers. Be reliable. 

• Create a great company and domain name for your website

Choose a name that is related to you and your business and is memorable for your potential customers. 

Remember to steer well clear of similar sounding names so confusion does not occur with other companies. Visit Is Your Company Name Available?   for more information and use our Company Name Search Tool below. 

 

 

We can quickly and easily help you get the ball rolling with this, registering your company and domain name and even providing you with fully featured business email boxes making your business look more professional, adding credibility when you are approaching new customers. So instead of emailing from an @yahoo or @hotmail address you can be emailing from @mycompanyname. Doesn´t that look better?

 

You will then have to register a domain name for your website. We all know websites are crucial nowadays so make sure you get yours registered as soon as you have chosen your trade name. Take a look at our Domain Name FAQs which will explain why a domain name is so important to getting your business up and running.
Use our Domain Checker and let´s get you onto the world wide web!!  

 

• SEO

Search engine optimization is the art of getting your taxi website to the top of the search results on Google and the other search engines so that you have the best chance of getting their business. 

If you’re new to running a website it’s easy to get caught out with a low cost SEO service that just doesn’t work.

We can help put together an affordable SEO package and we’ll always tell you what we are going to do and what results you might expect to achieve.

 

• Create a website

The site must also give lots more information about the services you offer, the area you cover and if relevant, any fixed rates you offer. They are also essential for contact purposes, online bookings and enquiries. 

Here you can introduce yourself and give your customers a little background info.

A little information about yourself can make the business more personal and boost customer confidence. 

And don’t forget to add all reviews and comments to your website – I can’t stress highly enough how important reviews are. 

We all rely on those Google reviews and recommendations when we need a service, product or trade, so make sure they are clearly visible on your site. 

Unsure where to start with a website? Just ask us. We can help you create a website that will attract new customers and boost your local marketability .

 

• Word of mouth

  is a powerful and effective marketing tool and should never be underestimated! Customer service is king.

A lot of your business will come from clients recommendations. Make sure these reviews are on your website and monitored frequently.

We have already mentioned this (a lot!) but it is vitally important.

Always ask for References and Reviews on your website and apps, this will boost your online presence rating. 

Start with your friends and family if they have used your taxi service. 

How about special offers? Ask your clients to introduce friends and family and they´ll receive one discounted journey!

How about asking if you can leave your cards or leaflets in hospitals, bars, theatres, cinemas etc. 

Make sure you have any additional services mentioned on them. 

Partner up with some hotels, restaurants, bars and other popular locations in your area to set up “exclusive” options, guaranteeing that they will have transportation quickly whenever they need it.

How about creating a marketing material for these local businesses! For example, you can create beer mats that can be placed on bar counters. Potential customers will surely have a look, and you might land up with bookings every night.

If you start to employ drivers, collect customer feedback. Customer engagement and customer retention really matters, get in touch with your customer and listen to their views. This will also really help you to create trust among the customers.

 

• Design an eye-catching logo

Your logo is an important aspect of your brand identity, so it’s essential to design a logo that represents you and your business and can be used everywhere, including your workwear, business cards and leaflets. 

Have you thought about adding QR codes to your marketing material? 

With a click of their mobile phone, customers can make a booking, fill out a request form, or write a review by using a QR code.

Add a QR code to your taxi, magnetic signs are perfect for this.  Potential consumers passing by can immediately scan for further information about your services. 

QR codes are perfect for business cards, giving website links, tips or how to find us instructions. They are also an easy way to get that all-important customer feedback and can be added to receipts that go directly to your review page.

 

• Use Social Media

Why would a taxi service use social media?

Social media platforms such as Facebook, Twitter/X, Instagram and TikTok can be powerful marketing tools for your taxi business. 

Shout out loud what makes your business unique! Whether it´s school runs, rural routes or that your vehicle is a super eco-friendly hybrid or all-electric taxi. 

Whatever if it is, make sure you are getting the word out there. 

Join local business Facebook groups or similar platforms to promote your business and connect with potential customers. You will have to be active to beat off the competition for the app giants like Uber and Bolt.

You can also create social media pages for your business and post regular updates, photos, and promotions to attract more customers. 

Running competitions on social media is a great way to create more business. Remember to make it simple and quick to enter.   

Consider a reward scheme. Guaranteed to create some regular customers. One free journey under a specified mileage after a certain number of bookings?

Remember not everyone uses social media, remember the elderly and stay visual with leaflets and posters too.

 

• Use apps

The biggest change to hired travel over the last few years is the introduction of taxi apps. 

Uber was introduced into London in 2012 and has now spread nationwide. Others such as Bolt, Ola and Gett are growing but are a long way behind Uber. Uber drivers completed a staggering 7.6 billion trips globally in 2022.

Whether you choose to work as an Uber driver or not is your decision but it will give you income more easily than starting a business by yourself. You will still require a private vehicle hire (PHV) licence and the checks will be the same. You will pay Uber 25% of your taking, which is important to understand when it comes to managing your finances and budget.

 

Additionally, there are many apps available that can help you manage your business more efficiently. They can be used for booking, saving customer details and receiving payment. 

 

By implementing these marketing strategies, you can attract more customers, improve your brand identity, and grow your taxi business.

 

Other formalities

 

There are other formalities that you will need to complete before you can start trading successfully.

Open a bank account

You need a separate business bank account for your business whether it’s a sole trader or limited company.

Keeping your personal and business finances separate is crucial for several reasons. It simplifies accounting and bookkeeping, making it easier to track business expenses, income, and tax obligations. It also helps demonstrate financial transparency, which can be important for legal and tax purposes.

How about a  contactless card payment machine? No carrying lots of change around with you all day. There are plenty on the market now and easy for you and your customers to use. 

 

You will need specialised taxi Insurance.

Taxis are no different from other vehicles on the road in that they all need to be properly insured. So whether you only take bookings or can be hailed from a busy street, taxi insurance is essential.

As well as driving in crowded urban areas, taxi drivers spend more time on the road during peak hours and unsociable hours. The fact that taxi drivers log more miles annually than many other sorts of drivers also shouldn’t be a surprise. All of this raises your risk of being in an accident, which can raise the price of your insurance.

There are lots of specialised companies offering their services so have a good look around and take their advice. 

 

Stay Safe

Belonging to a trade association or union is always an excellent way to show your professionalism. Make sure this is shown on ALL your marketing materials. The Licensed Taxi Drivers´ Association and Unite The Union  and others are raising standards of safety, pay and conditions and offering advice and guidance to their members. Even Uber drivers are now being represented by the GMB union, helping members with earnings, pensions, benefits, their health and wellbeing.

 

 

Conclusion

 

There is little doubt that running a taxi company is not your normal 9–5 job! However, it is quite feasible to have flexible working hours if you build up a good customer base or manage to acquire school runs or hospital trips for a local care home. 

However, if you want to make a decent wage you can expect to say “goodbye” to evenings, weekends, and bank holidays so be prepared to make plenty of sacrifices to your personal life. 

 

Do your local research, know your competition, be prepared to work hard, offer alternative services and run a smooth, clean, reliable, courteous business and you can make taxi driving a lucrative business. 

 

Whether you are an Uber or Bolt driver, sole trader or freelancing for a company, working in the taxi business is always varied and interesting.

Who knows who you´ll pick up next! 

Let´s get your new business on the road!