How To Start A Rideshare Company And Get Your Profit
With so many people looking to save money on travel costs, as well as lots of people thinking more about reducing their carbon footprint, ridesharing (or carpooling as it is commonly called), is becoming an ever more popular choice.
So with this in mind, now may be the perfect time to start up a rideshare company, or even hit the road yourself as a rideshare driver. In this article, we will explore what it means to start a rideshare company and the steps you need to take. Let’s get into it.
What is carpool and how does it work?
Originally, carpooling or ridesharing was when a person who is already traveling to a destination gives a ride to somebody who also wants to get to that destination with both parties contributing to the cost of fuel.
They may also give a ride to more than one person, resulting in smaller costs for each party. Unlike a taxi service, the driver does not usually make a profit but does benefit from reduced travel costs.
However, ridesharing has come on leaps and bounds since this first notion and nowadays companies like Uber and Lyft have dominated the market with their rideshare services where they have self-employed drivers as part of their fleet. The drivers use the company’s app to negotiate and locate their customers and then all payment is completed via the app after a successful drop-off.
By inputting their destination, customers are matched to drivers in their area who would be willing to take on the job.
Steps on how to start a rideshare business
You may be wondering what the required steps are when it comes to starting a rideshare business. Let’s take a look at them here.
Choose the type of rideshare company you want to create
For this, you need to know what audience you are appealing to. With such a saturated market it’s better to find a section that you want to appeal to rather than try to focus on the masses.
Discover your niche and develop a successful marketing strategy
What makes you different from the other rideshare companies out there that will set you apart from the crowd. Uber has also created a food delivery service, whereas GreenCar focuses on the environmental aspect of the industry.
Create a business model
Creating a business can be a stressful experience as there are many things that you must attend to, especially in an industry as competitive as this. In order to best guide your company to success, you need to develop a realistic and actionable business plan.
This helps to keep you accountable for all your responsibilities and gives you a metric to measure your company’s successes and failures against.
Develop a rideshare app
Develop an app that fits with your business model and what you want to achieve. Make sure it’s user friendly, offer customer support, and also include FAQs and the chance for people to contribute feedback/interaction for the best results.
Advantages and disadvantages of carpooling
- Carpooling is a great way for all parties involved to save money, by sharing the cost of the fuel
- Ridesharing is great for the environment, cutting down greenhouse gas emissions by decreasing the number of cars traveling to a destination.
- Fewer cars on the road mean less traffic and fewer traffic jams!! Not to mention more available parking spaces!
- Having someone to talk to can make those long journeys go by so much faster. You might even make a few friends in the process.
- The cashless transfer of money reduces crime and safety concerns for drivers and passengers
- You may get some unreasonable passengers who don’t want to pay their fair share or will ask to get dropped off at destinations other than the arranged drop off points.
- You can find yourself stuck in a car for a long period with someone you don’t get along with. Companions may be rude or untidy which will make the experience less than favorable.
- You may also get a bad driver who you don’t feel safe with, doesn’t comply with road rules, or tries to charge more than is fair.
- Picking up each passenger from different locations will increase the travel time.
Keep in mind that a good app will help to iron out these problems by screening each individual, allowing ratings and feedback, and arranging payment through the app to ensure drivers get paid.
How much does it cost to start a rideshare company?
The main costs of setting up a rideshare company will be the app development and the legal costs involved.
The cost of app development can be anything between $10,000 and upwards. The more features the app needs, the more expensive it will be.
How much will ridesharing insurance cost?
Each driver must take out their own rideshare insurance to cover themselves during their working period. Unfortunately, rideshare drivers will not be covered by their regular auto insurance and may be exposed to extreme financial losses if they do not acquire a dedicated/hybrid rideshare insurance policy.
As for the company insurance, a rideshare company must acquire and pay for all the same insurances as a regular taxi company in most states, however, this is always worth double-checking before you embark on your journey.