Running a Taxi business can be lucrative and satisfying but needs circumspection! The taxi business is a capital-intensive venture but can bring returns on investments quickly depending on how well it is run. Today, we are going to give you a lesson on how to boost your taxi business and achieve growth amidst the stiff competition. You can use all of the ways and get more customers on board.

Discussion Points

The taxi business is often run in a specific area; for example, there are taxi services that are run across a whole country whereas some taxi services are run only in certain cities or specific regions. Taxi businesses, in general, have something in common with the other transport businesses as well as unique differences.

Some important points related to this must be considered if you are contemplating “how to start a taxi business?”

Estimating the Potential for Taxi Business


Determine if there is enough potential for a taxi business in the region where you wish to operate and despite any existing competition you can still make enough turnover. It is always good to start and establish the business in selected cities or provinces before expanding into more regions.

At first, find out more about existing competition; studying the local taxicab companies could be a good way to start. The study about the competition could provide you with important details about their existing market, strengths and unique points.

Explore if any unique offering can be introduced to make your taxi business special; for example, a discount on return trips or a loyalty scheme like a frequent traveler. All this must be planned to keep in view the demand in the place where the business is targeted.

Developing the Business Outlook

Insights into the current size of the market and also the future potential might provide you an idea about the size of the business you could start with and also the speed at which you may plan the expansions. This could give you an idea about the number of taxis to be purchased and also the number of drivers to be hired; this could even provide you an idea about the types of vehicles to be acquired. This could further give you an idea about profitable segments to start with and in the near future.

The following steps could help you to get ready to start the taxi business:

  • Establish the business plans

    Chalk out the details for the regions in which you would operate, the vehicles you could own directly or hire from others, the kind of drivers you would hire and the way you would manage the financial aspects of the business.

  • Establish tariffs and route plans

    Choose flexible tariffs that could vary between different parts of the day or night and also between different parts of the region. This could also help you set the regional limits within which you would run the taxis. Also, plan out the different modes of payments, between the passengers and drivers, between the company and the drivers.

  • Plan for vehicle acquisition and driver hiring

    You can either buy the vehicles or hire from other sources. You can have drivers working full-time with you or part-time. Since this requires the major part of the initial investment, make sure you work this out before the company is registered.

  • Establish the funding

    Once you have an idea about the initial capital requirements, determine the sources from which the funding must be arranged. If a bank loan is a way to go, this could require some of the business case documents. Make sure that the bank funds take care of all aspects of the operations, the infrastructure, insurance, marketing, legal and statutory aspects.

  • Acquire office space

    The next step would be to plan and acquire the office space that can be used as a point to coordinate and control the taxi services; make sure that this premise could contain storage space for vehicles. Either rent this or use any space that already belongs to you.

  • Register the business

    As a next step, apply to register the company with the required regional or national authorities. This could include the Registrar of Companies, Taxation Authorities, Environmental & Safety clearances, and Labor Authorities.

  • Get Insurance

    Start the business with at least the minimum required insurance schemes for various aspects such as the vehicles, the drivers, and the premise. In due course of time, review these schemes for the changing business better.

In the end, you could be left with a lot of important papers and details that would help you launch your taxi business. You would need a dispatch center that could help the communication and control aspects of the business operations. With this, you are all set to acquire the vehicles and the drivers.

Forming the Fleet of Cars


Your fleet of cars is one of the most crucial spokes in the wheel of the taxi business. The pleasing appearance, trouble-free running, and decent trips at reasonable rates play their significant part in advertising your business.

Depending on the number and types of the vehicles you may prefer, you can consider the following points to optimize the purchases:

  • Suitability as a taxi

    Make sure that all vehicles to be acquired have the features required by taxis such as top lights, luggage space, metering facility based on the distance run and the tariff applicable. Communication equipment is highly recommended to ensure that the taxi is tracked and the driver could stay in touch with your dispatch.

  • Delivery terms

    If you are buying a large number of vehicles from a dealer, you can insist on the applicable volume discounts. You can also keep in view other delivery terms to be favorable to you, such as the vehicle service terms, delivery dates, and the choice of interiors & exteriors of the vehicles.

  • Vehicle registrations

    Register all acquired vehicles for commercial transportation with the necessary permits and documents; you need to ensure that these are accompanied with the respective vehicles always as they can be verified across the regions during the course of operations.

  • Insurance

    Have the vehicles insured and have the terms ready for operations as early as possible. Keep in mind that the insurance is meant for taxi vehicles.

An idle vehicle is a dead capital! It must be moving on the roads for as long as possible. You would do better to collect the vehicle from the dealer in a ready condition for the taxi business; you can schedule the drivers’ recruitment in parallel so that this objective can be achieved.

A part of your taxi fleet could be formed by the vehicles acquired by the drivers themselves or provided by another renting agency. It is possible in certain cases that the vehicle along with the driver is hired or the renting agency may prefer to provide the drivers; in such cases work out details to check if the deal is profitable for you.

Developing the Business


Before launching the taxi business make sure that all requirements such as the documents, approvals, agreements, and vehicles are ready. Then, you can acquire and prepare the office space, the infrastructure and other support services necessary for the taxi operations.

It is highly recommended for you to set up a GPS based software that could be used to locate and link up the drivers with dispatch and provide a central visibility of the vehicles. This will commonly consist of three parts; a central dispatch system, the driver software, and the customer software.

Customers could download the software and use it via the internet or mobile networks to book taxis, contact drivers, make payments and rate the services. Automation of services via the software helps run the operation with minimal supervision and interference by the dispatch.

Drivers also need software (on the mobile networks) that can handle minimum requirements such as accepting taxi booking, registering starting/ending points, accepting payments, contacting customers and getting the location information related to the relevant customers and routes to be covered.

The central dispatch could monitor the movement of all taxis and coordinate with the drivers for any trip changes, cancellations or drop-offs. Make sure the software system has features to meet the needs for most of the operational aspects.


Advertising the Business

This entirely depends on the budget that you may earmark. There are some digital marketing methods that can be adopted with minimum budgets:

  • Social media marketing

    You can choose either free or sponsored advertising on social media such as Facebook, LinkedIn, Instagram, YouTube, and others depending on the impact and the coverage sought.

  • Digital media marketing

    Advertising (free or paid) on search engines, marketing campaigns conducted via the internet, emails and mobile devices can also reap rich rewards by you.

  • Select locations

    Advertising in select locations such as airports, bus & railway stations, and shopping complexes could also yield considerable visibility for your company.

  • Promotions

    You could start loyalty based rewards, encouragement to avail repeat trips, providing discount coupons or e-Coupons, lucky dips and certain other promotional schemes could encourage the existing customers to prefer your services over others.

  • Business ethics

    Most important advertising means that will show you in a better light is the consistent and pleasant customer experience while using your services; the various experiences such as spotting the taxi top lights/logo, easy booking, timely ride, competitive rates, and pleasant travel experience, and polite/decent driver behavior speak a lot more about your company than the other forms of advertisements.

Getting the Driving Team Ready


Hiring the drivers for your taxi fleet can be easy as well as tricky depending on the candidates’ background. As you plan to recruit drivers for the taxi company as regular or part-time employees, you could keep in mind the following points:

  • Background checks

    Always conduct a background check of every candidate, about the habits, previous work & personal records, and the conduct in general. This will help you with a list of reliable candidates for the interview.

  • Interview process

    Check for politeness, sincerity, and driving skills. They must have a driving license (check the validity period in each case) as an indication that they have been driving for some time. If required, take their driving test.

  • Company ethics

    The drivers must abide by some codes of conduct and company values so that they, in turn, enhance the brand value of the company as well as its reputation as a reliable transport provider.

  • Dress code

    You can establish the employees’ dress code which will again reflect the company values and oneness. One of the best ways to achieve this by arranging well-designed uniforms for the drivers.

  • Operating times

    Balance the time flexibility provided to the drivers with providing round the clock taxi services by making judicious schedule changes. Just like the varying tariffs for the customers, you can plan additional remuneration for your drivers who drive during tough hours (such as during peak traffic or late nights).

  • Rules

    Drivers must abide by the rules set by the company such as those related to over-speeding, drunken driving, rude behavior, customer fleecing, and violating traffic rules. Drivers are the front end of your company that can bring fame or infamy by their behavior; so it is better to enjoin them at the earliest about the company rules.


If the taxi business is run well, it will not just bring returns quickly but also helps your company to eventually grow larger. This requires starting and running the taxi business successfully. This, in turn, requires some crucial aspects to be taken care of such as the viability of taxi business, business planning & execution, financing, vehicle acquisition, advertising and forming an effective driving staff. If these steps are executed well the taxi business could be not just lucrative but also bring fame to the owner.


Author's Bio

Nitin Lahoti Mobisoft Infotech

Nitin Lahoti

Nitin Lahoti is the domain expert of Logistics and Transportation. He has 12+ years of experience in Design, Business Development and Startups. His expertise is in Product Ideation, UX/UI design, Startup consulting and mentoring. He prefers business readings and loves traveling.