Can 'small' survive in the car hire business? | Starting Out | Small Business Connect

Most car hire brands like Europcar are global brands, but there is also a gap for small car hire businesses to cater for the lower-end of the market.

Car hire is big business, right?

Well, half-right.

Most car hire brands you think of will be global giants, but brave South African entrepreneurs are showing that there IS space for the small guy.

Say the words “car hire”, and the average business person will pick up the phone to Avis, Hertz or Europcar.

We see their branches at airports, and they have a national footprint to compete with each other. But at a local level, there are smaller car-hire businesses popping up, serving a more local and more price-conscious market.

The challenge here is to design a business model that keeps your costs low (one or two offices, and no expensive premises at airports, for example) so that your prices can attract a different market segment.

To get some insight into how they work, visit a few websites such as www.stuartscarhire.co.za.

There are also quite a few that are so small they don’t even have a website.

Have a look at their prices, their locations, and their conditions for rental; they are surprisingly similar to the “big boys”, but don’t usually have a national network.

Essentially, a car-hire business offers passenger cars (and sometimes bakkies) for customers to hire. Some car-hire businesses also choose to specialise in the rental of sports and classic cars for special events. As a car hirer, you could also offer extra services, such as a free pick-up service, and items such as children’s car seats.

Starting a car-hire business, you will need to have a good knowledge of vehicles, and preferably some mechanical experience. You will usually need to start off small, so you may need to do some of the basic maintenance and repairs yourself. This will also help you to assess the condition and value of the cars you buy for your business – as you may well start off with used cars, not new ones like the big firms.

Checking the background and creditworthiness of customers is a key issue for any car hirer, as well as binding them legally to pay for excess on any damages they cause.

You need to sign a proper contract with every client, so that there is written agreement about exactly what responsibility they are taking for the vehicle they hire, such as what costs they will have to pay if the car is damaged.

Like car maintenance, you will need to ensure proper insurance cover on each vehicle – as these are mobile and high risk assets . A driver’s licence will be vital, as you may initially spend much of your time either picking vehicles up or dropping them off.You need to be well organised, able to plan and implement an ongoing schedule of cars going out and coming back and do the necessary paperwork before the next customer needs it.

This means you may often work under pressure, so you need to be able to handle this calmly.

Be sure about your target market, and find ways to reach them regularly. This could include small business owners on a tight budget (find them in the budget hotels or self-catering establishments), backpackers (young tourists on a budget) or local people in your area who need a car while theirs is in for repairs (talk to workshop owners in your area to advertise your services to their customers).

  •  Visit www.cobwebsinfo.co.za for more by Paul Crankshaw.