How to start a car service business

“Car service” covers several businesses that look alike from the outside and run very differently. Pick the one you are starting with, because it decides your vehicles, your customers, how bookings arrive and how you get paid.

• Airport transfers: scheduled in advance, flight times to watch, flat rates common. A frequent starting point.
• Corporate and black car: repeat work for companies, negotiated rates, billed monthly on account.
• Local livery: residents calling for rides around town and to appointments, often the same people every week.
• Medical and dialysis transport: standing orders on fixed days, billed to a facility or account.
• School and contract runs: fixed routes and schedules, usually under a written contract.
• Limo and events: weddings, proms and nights out, booked by the hour with a minimum.

Account and contract work gives you predictable revenue, which matters while you are paying off vehicles. Many operators start with one or two accounts or a steady airport trade and add other work once the base is covering its costs.

Carrying passengers for money is regulated almost everywhere, and the rules are set locally: by your city, county or state. In New York City, for example, the Taxi and Limousine Commission licenses the base, every driver and every vehicle separately. Other places regulate much less. What is commonly required:

• A business entity, such as an LLC, and an EIN from the IRS.
• A for-hire, livery or base license from your city or state regulator.
• For-hire vehicle registration or plates for each car, where your state requires them.
• Commercial auto insurance that covers passengers for hire. Personal auto policies generally exclude paid trips, so a single claim can be uncovered.
• Driver checks: a clean driving record, a background check, and in some places a drug test or a driver permit.
• An airport ground-transportation permit if you will pick up at airports. Many airports require one for commercial pickups.

Call your local taxi and limousine regulator, or your state’s department of transportation, before you buy a vehicle. Insurance is usually the largest fixed cost of a small car service, so get real quotes early. They change the numbers in every other part of your plan.

Match the vehicles to the work. Corporate and airport clients expect a clean black sedan or SUV. Medical transport may need wheelchair access. Event work needs larger vehicles that only earn on weekends, which is why many operators affiliate with other companies for those jobs instead of owning the vehicle.

There are two common driver models. You own or lease the vehicles and drivers work shifts in them, or drivers bring their own vehicles and work under your base, which is common in livery. Whether a driver is an employee or an independent contractor is a legal question that varies by state, so get advice before you decide.

Whichever model you use, keep a record of each driver’s license, permits and insurance, and each vehicle’s registration and inspection, with their expiry dates. A lapsed document can take a car off the road on the day you need it.

Decide how you will price before anyone asks. The worst habit a new car service can form is quoting each trip by feel, so that two customers making the same trip pay different prices and find out.

Work out what a mile and an hour actually cost you, including the empty miles back from a drop-off. Then pick a pricing method that suits your work: zones, per-mile, flat routes or hourly. Our guide to pricing car service rides goes through each one in detail.

Early customers rarely come from advertising. They come from direct relationships with businesses that need rides regularly and are tired of their current provider being late.

• Hotels without their own shuttle, for airport runs and guest requests.
• Office managers and executive assistants at local companies.
• Medical offices, dialysis centers and physical therapy clinics.
• Schools, senior centers and assisted living facilities.
• Event planners, wedding venues and caterers.

Set up a Google Business Profile for your base so you appear in local searches and on Maps, and ask happy customers to review you there. In this business, reliability is what people pay for. One account that trusts you will usually introduce you to the next.

With one car, dispatch is your phone. With two or three, you need one place where every booking lives: who is riding, from where, when, in which car, at what price, and whether it is done. A shared calendar or a whiteboard works until the first double-booking or the first standing order someone forgets.

Our guide to running a dispatch desk covers how to take a booking, assign it, and catch problems before the customer does.

Most car services take three kinds of payment: cash, card, and account billing for businesses. For cards, use a payment processor that pays into your own bank account. For accounts, agree terms in writing before the first ride and send itemized invoices on a fixed schedule. Our guide to billing corporate accounts covers this step by step.