4 steps to become a car rental company

If the vehicle rental market market still has a bright future ahead of it, it's important to ask yourself whether this is really the right project for you, before rushing headlong into it. Skills and tasks of a car rental operator, regulations Here are a few things to consider before you take the plunge.  

 

For whom? What skills are needed? 

 

The skills needed to become a car rental company are really the same as for any entrepreneur - apart from the industry-specific skills, of course, which are : 

• The management

  Invoicing, accounting, and administrative management are a large part of the activity, to ensure that the business is built on a solid foundation. 

• Marketing and sales

  Definition of the concept, implementation of a commercial strategy, price settingcreation of a brand image and communication will be essential for your car rental company to be known and recognized by the customers.

• The customer relationship

  As a service offer, car rental includes a human dimension which will contribute to the reputation of the company. The mastery of customer relations is therefore an asset for this type of activity. 

Although there is no specific training for the car rental business, a BTS in tourism, training in business school, experience in reception, advice or as a customer manager will allow you to be well equipped to launch your business. 

 

 

What is the daily life of a car rental company like? 

 

As for any business creationIf you have not really had any experience in the field, you may have an idealized image of the job. Let's see the different tasks assumed on a daily basis by the car rental companies. 

• Fleet management

  A car rental company is first and foremost a fleet manager. He sets out search for financingnegotiates loans with bankers, buys vehicles, negotiates with insurance companies, issues vehicle registrations and ensures regular maintenance and technical inspections, in collaboration with garages. 

• Marketing

  The rental company offers its vehicles for rent. He must therefore give visibility to his offer through communication, sometimes managing his own website as well as his social networkscreate content, respond to messages from prospects, define rental rates according to periods and turnover rates, and regularly analyze key performance indicators. key performance indicators to keep your cash flow on track.

• Rental and reservation management

  Make sure the vehicle is in good condition, travel deliver it to the customer if necessary, draw up the contract, carry out the inventory of fixtures, manage unforeseen events during the rental period (breakdown, breakdown service, vehicle replacement, storage), then ensure that everything has gone smoothly when the vehicle is returned, and encourage the customer to return or recommend the company by implementing a retention strategy. 

• Staggered hours

  Not to mention that you will have to work shifted hours as well as weekends and holidays in order to keep up with your customers' schedules. In short, a busy day.

 

Do you feel up to it?
Great, so let's see what happens next.

 

 

What are the regulations? 

 

As a car rental company, your business will be subject to four main obligations: 

Inform your prospects of the terms and conditions of sale.

It is in fact all the questions that the potential customers ask themselves before making their choice, namely what are the rates, what are the rental conditions, what are the optional services, what are their commitments, what are the insurance conditions... All this must be visible and accessible. The complete list of information to be provided is available on the site economie.gouv.fr

Issue a quote. 

If for many activities an invoice or a contract is enough, for car rental, you will have to provide an estimate with the necessary information.(source : economie.gouv.fr).

Make sure the vehicle is in good condition.

This means that any vehicle that is about to be handed over to a renter must be inspected in order to at the time of the inventory of fixturesThis means that any vehicle that is about to be handed over to a renter must have been inspected in order to inform the customer of any defects or anomalies that have been noted. You have an obligation of safety with the customer.

Subscribe to a civil liability insurance.

 You will be covered as follows against bodily injury and property damage caused to third parties or suffered by your customers(source: economie.gouv.fr).

 

Choose the legal status 

 

If you are starting out on your own, you may be tempted by self-entrepreneurship. We'll stop you right there: this status is not at all adapted to the activity of car rental. 

Here is a comparative table of statutes to better understand and make your choice in full knowledge of the facts:

*To put it bluntly, this means that your home or your personal vehicle can be seized to pay off business debts, for example.

 

Becoming a car rental company: franchisee or independent? 

 

Here everything depends on your project and your motivations, your skills and your budget. your financial capacitythe choice of independence or that of the franchise each with its own advantages and disadvantages. 

 

Are you entering a competitive market? Marketing is not really your thing? Opt for a franchise.

The advantages of being a franchisee: 

• You will benefit from the company's reputation and visibility. It will be much faster to get customers if you are called Avis or Hertz, than if you come with a brand new concept, but unknown to the public. 
• You can be helped in the constitution of your fleet by the parent company, and that is good for the budget. 
• Your communication budget (and your mental load on this subject) will be reduced because the company will be able to provide you with materials to reuse, not to mention that the brand will already be known by the general public.
• Getting insurance? Much easier when you are backed by a big name or an established company.
• In terms of training, the franchise is also a good plan because you can also benefit from documentation and programs set up by the parent company. 

The disadvantages of being a franchisee:

The franchise will mostly hit your cash flow. Between the personal contribution required (20 000€ on average), the entry fees including training and start-up kit (from 10k to 30k) and the royalty (up to 15% of the turnover), the financial effort can be quite prohibitive if you don't have strong backs and/or well-filled savings and/or a trusting banker 

 

You have a strong concept? You want to be in control of your decisions from A to Z?

You don't want to be limited in choice of vehicles ? Want the full entrepreneurial experience without compromise?

The creation of an independent rental agency is for you. 

 

Insure your business, insure your vehicles

 

In addition to liability insurance, which is mandatory for any car rental business, you will also need to purchase fleet insurance if you don't want to have to pay for damage to your vehicles caused by your clumsy customers.  

 

 

You will have two choices: third party insurance or comprehensive insurance. 

In summary:

• All risk insurance

No matter what the damage, insurance covers the cost of repairs. Whether it's natural damage, theft, your client or a hit-and-run driver, or injuries, everything will be covered. Of course, who says premium service says high price, but you can blow, you can pass on these amounts in the rental rate.

 

Apply for grants 

 

Among other administrative formalities, the assembly of files of request for assistance or of financing can give you a good boost, especially if you have no contribution.  

Some features that might interest you: 

• If you are unemployed - The NACRE, zero interest loan, theACREThe NACRE, a zero interest loan, theARE, a start-up exemption, theARCE, a capital sum made up of your unemployment benefits

Local and regional aid such as that of Réseau Entreprendre, your CCI and entrepreneurs' clubs; or even honorary loans from your local authority or general council.

The amount of money needed to create a car rental agency depends mainly on the size of the planned fleet and the type of vehicles. It is one of the biggest expenses, to which are added the insurances to be subscribed, the place of reception customer and/or the parking lot.

So, unless you are starting a car rental business with substantial savings and plenty of love money*, you will need to convince financial partners to follow you, and this will involve setting upa solid business plan.

 

🎯 OBJECTIVE: to paint a realistic and advantageous picture of your project to make financial partners want to get out the checkbook.

*Money lent or given by relatives to finance a project 

 

Conducting a market study

The market study will therefore provide you with a lot of information that you can, for more readability, enter in a SWOT.

The SWOT? It's a four-box chart that lists your strengths and weaknesses, market opportunities and threats. 

 

Example of SWOT 

Identifying the strengths and weaknesses of your project should be easy enough with a good session of introspection and hindsight. But when it comes to market opportunities and threats, there are several contents and materials that can help you find the relevant elements for your business. 

 

Mostly, the interest of the SWOT is to help you define your positioningwhich will be presented in the business plan: 

 

• What's the concept? We can think of niches such as the rental of delivery vehicles, the rental of cars without a license or even opt for long-term leasing for individuals who don't want to buy a vehicle.
  
  
• How many vehicles will make up your fleet? Which vehicles will you offer? What category? What type of engine? What type of gearbox? What brand?
  
  
• Who are you targeting? Who is your target audience? It can be families exclusively or the professionals or luxury car enthusiasts, or all of the above.
  
  
• With which services? Vehicle delivery, vehicle inventory and autonomous vehicle unlocking, car-sharing, one-way rental...
  
  
• With which options ? Unlimited mileage, GPS, car seat, additional driver, water sports equipment, personalized guide...
  
  
• What ancillary products? Voyageur Pro loyalty program, long-term rental program...
  
  
• What type of insurance, what deductible amount? 

 

Basically, it will be a matter of presenting your concept and your product in a precise way, what you sell. 

 

Set your prices 

 

As the business plan is mainly used to convince financiers and investors to follow you, you will have to detail in length, in width and in square, the incomes that you expect to obtain by your car rental activity. 

After the market study, you know what are the "market prices" and what prices your target is ready to accept. You can then define your pricing policy and your yield management strategy, according to the type of vehicle, the seasonality, the options, the conditions.

Your special programs and possible promotional offers. One question to ask yourself is what promotions you can offer if your turnover is too low. You should also be able to anticipate your turnover rate You need to be able to anticipate the period of time, in order to calculate your forecasted income. 

 

 

Establish your marketing strategy 

 

You've got a product and a price, now you need to makeit known to your prospects. You'll need to map out your strategy for building awareness and acquiring customers, as well as for nurturing, converting and retaining them! What sales and prospecting efforts are required? What will your digital marketing strategy ?

 

You can only define the right channels to communicate through if you know where your target audience is and how they get information. In any case, here are the minimum requirements in your digital marketing toolbox:

• A listing Google my Business in order to be well referenced locally in Google search results. This form will allow you to provide the most important information to a prospect; location on Google Maps, contact information, website, photos and customer reviews. It's free and easy to set up, what more could you ask for ;)
  
  
• A website to offer a complete presentation of your agency and your offer, or even allow you to book directly online. In this case, it will be essential to set up anatural referencing optimization strategy so that your site appears among the first results on search engines.
  
  
• A contract with one or more online travel comparison services to boost your online visibility and get more bookings: Booking.com, Expedia, Liligo, Kayak...
  
  
• In order to optimize your income and gain visibility, you can also offer your vehicles on specialized rental platforms such as Zotcar, Get Around or Ouicar. Don't forget to think about the amount of commission that this can represent.
  
  
• A presence on social networks (for example, avoid going on TikTok just because your nephew told you it was good) to reach your target. With over 40 million monthly users in 2021, Facebook is a must-have, especially for 25-49 year olds, ahead of Instagram (21 million of monthly users) and Tiktok (nearly 15 million of monthly users).
  
  
• It may also be necessary to advertise online through Google Ads, social networks or platforms such as Le Bon Coin; even influencer campaigns.

 

Knowing your marketing strategy will also allow potential financiers to evaluate your ability to reach your financial objectives. Marketing expenses (in technical or human resources) should be anticipated and included in your financial forecast.

 

Where to set up ?

The location of your car rental agency is also a factor in the viability of your project. Common sense dictates that your agency should be located near traffic hubs (airport, bus, sea and rail stations) so that it is easily accessible and visible (signage to access it).

Likewise, if your concept consists exclusively of delivering your vehicles, it is best not to set up in a central area but rather in a central location so as to be able to easily reach out. 

It is also obvious that you will need to find a location with space that can be converted into a parking lot and that allows for the creation of a parking garage. fleet maintenance garage. The location of your business can also have an impact on your expenses, as some areas allow for tax exemption. This is an interesting signal for financiers. 

 

Maintenance: should you hire a mechanic?

 

Another thing to consider when writing your business plan:

• Are you going to use an external service provider for the maintenance of your fleet?
• Will you put on the shirt and learn the mechanic's trade? 
• Would it be more cost-effective tobring a mechanic in-house?

In the event of an at-fault accident, this can allow you to take charge of certain repairs and to invoice the client directly without having to call on your insurance; and thus avoid malus which will increase your expenses. 

 

 

Define how vehicles are acquired 

 

• The purchase 

If your bank account is not particularly well-funded and your cash flow is low, buying vehicles will be complicated. You can of course apply for a loan, if your business plan has everything it takes to put stars in the eyes of the financier. 

The good thing about being an owner is that you have total control over your fleet, from maintenance to renewal, from availability to choice of service providers, from choice of equipment to vehicle customization. However, there are other options available to give your cash flow a break. 

 

• Long-term rental (LLD)

Two terms that you may have already heard for the same concept: the rental of vehicles over a period of 2 to 5 years. Leasing, It is above all a solution of peace of mind. All the administrative procedures (registration, maintenance, insurance...) are delegated to the company that rents you the vehicles. As a bonus: you are assured of always having well-maintained and frequently renewed vehicles. 

 

• The LOA, or Rent to Own or Leasing 

It's simple, the LOA is a mixture of purchase and leasing, allowing you to build up your fleet through leasing with the possibility of buying the vehicle at the end of the contract. It's a bit like buying your vehicle little by little (new and maintained it must be said), without having to borrow, and while reserving the right not to buy it at the end of the contract, without being penalized. 

 

• Leasing

Here, a bank or financing organization acquires the vehicle on your behalf and you repay it througha monthly rental. At the end of the contract of a determined duration (from 3 to 6 years), the leasing company can settle the amount to become owner of the vehicle, to continue the lease or to resell the vehicle and to realize a surplus value. However, leasing is more expensive than a traditional credit (source : tacotax.fr).

Having trouble deciding? There's nothing like data to make a decision. So compare the costs and play with the numbers in your business plan to see which solution is the most advantageous. You can use all four of these acquisition methods simultaneously. 

After having worked on all these aspects and especially, having quantified them through a projected budget, a projected income statement and a projected balance sheet, your business plan will be complete.

If we have to summarize the data to be taken into account: 

 

⚠️ Don't forget: the main rule of a good business plan is to demonstrate the profitability of your project! Otherwise you can say goodbye to bank loans and financial contributions. 

 

Summarize it all in your Canva Business Model 

Business Model what? If the term is slightly barbaric, the principle is rather simple. It is a one-page table that summarizes the business model chosen for your business project. 

Source: businessplanmodels.com

This table is always divided into 9 boxes whose order is also always the same:

• Key partners 

This is where you specify the partners that are essential to your business, i.e. those without whom your company cannot function properly. As a car rental company, this could include car dealerships that will help you build your fleet, or the airport in your area, if you want to offer customer service directly at the airport. 

• Key activities

What are the activities that will make your car rental agency work? Long term or short term rental for example? 

• Key resources

Basically, what do you need to operate, in terms of means: material (vehicles obviously, a room, a parking lot, tablets, a cleaning station...), immaterial (a fleet management softwarea website, an insurance...), human (sales, customer service, mechanics...), financial (useful to detail if you did not win the lottery, in order to have a clear vision of your needs). 

• Your value proposition

The value proposition is a short sentence that summarizes what your concept brings to your target customers or persona. To formulate it, think about what you can bring to your persona to solve its problem (added value), not what you do (features).

👉Someexamples of requirements to help you see more clearly:

• • • outsource your company's vehicle fleet 
    • rent beautiful vehicles for a wedding 
    • go on roadtrips in safe and efficient vehicles
    • etc, etc
      
      

• The customer relationship

How do you intend tosatisfy your customers, what will you put in place to be there when they need a vehicle at last minute or when they find themselves stranded in the middle of nowhere? 

It can be the provision of a personal concierge,an after-sales service by email, phone and WhatsApp, a loyalty program, self-service vehicle recovery...

• Distribution channels

Here you will list the different contact points chosen to acquire and interact with prospects. 

• Targeted customer segments 

It is often said that addressing everyone is addressing no one. What type of clientele are you targeting specifically? It could be tourists or pro travelers, but you can also "niche" and choose to address unlicensed drivers, VTC drivers, people who move, people who do delivery... The possibilities are endless, but depend on your market research!

• Your cost structure

Fixed costs, variable costs: it's essential to anticipate your agency's expenses so that you can calibrate your financing requests and define the sales you need to achieve to stay afloat.

• Your sources of income

How you are going to make money and therefore make your business live! What are the revenue streams generated by your business? Specify here how are set your ratesWhat is the average price according to the customer segment or the offer or if you will propose a subscription for example. 

 

If you have been motivated so far despite all the work involved in setting up your business, let's take a look at the bonus tools that can make your life easier as a car rental company. Because with all the tasks you have to take care of, you might as well not torture yourself with time-consuming and tedious processes. 

 

 A tool for managing rental schedules

Don't try to create your rental planning with Excel you'll waste precious time trying to hack the spreadsheet's functionality to create a practical schedule. Linked to your booking engine, your scheduling tool can feed itself with booking data. 

A billing solution and a contract generation software

directly linked to the booking engine as well, to quickly retrieve all the tenants' information. 

A vehicle inventory application

allowing to photograph and digitally annotate the damage to speed up the process and leave nothing to chance.

A fleet maintenance monitoring tool

to centralize service and inspection reports, track repairs and receive alerts so you don't miss any maintenance operations and anticipate them. 

A ticket management software

automatically providing the information to the of offending drivers to the administration. 

A performance monitoring dashboard

with the main indicators of your activity (turnover ratenumber of vehicles in maintenance, turnover...) for more visibility and reactivity in decision making. 

 

Fleetee Manager, the complete suite of fleet management tools 

Fleetee Manager is composed of three tools that will facilitate the management of your rental business. 

• Fleet management software

Fleetee allows you to create pre-filled quotations and rental contracts from a computer, smartphone or tablet, to manage your fleet maintenance schedule and to monitor your turnover from a simple and intuitive dashboard. 

 

 

 

 

• The state of the premises

They are made easy with the Fleetee Check application. Directly carried out in digital format, from a smartphone or a tablet, each damage is noted by a photo, and the report digitally signed by the customer, for an automatic comparison during the inventory of fixtures of the vehicle return. 

 

• To offer an autonomous service

Fleetee Connect is a car-sharing box allowing your customers to rent your vehicles 24 hours a day without the intervention of your agents. The customer selects the available vehicle of his choice from the application, reserve online and on the day of the rental, unlocks the car from the app. The car starts once the inventory of fixtures is completed by the customer. 

If you wish to discover the Fleetee Manager tools, the first 14-day trial is free and without obligation. Our sales team will answer all your questions at contact@fleetee.io .