How to Start a Rideshare Company
It’s the 21st century, and taxis are old news. These days, ridesharing apps are where it’s at. And thanks to some of the bad press plaguing ridesharing giants like Uber and Lyft, there’s a lot of interest in alternative services. That means it’s the perfect time for you to start your own ridesharing company and get a piece of the action. But how?
You might be surprised to learn that the legalities of starting a ridesharing company aren’t that complex. The hardest part may be finding your niche and getting the word out. But before you can start picking people up, you’ll need to establish your business entity and get the appropriate permits and insurance. You’ll also need to develop a ridesharing app to help customers schedule rides. The rest is a matter of hard work and luck.
Find Your Market Niche
With big, well-known competitors in the rideshare market, you’ll need to find your niche. What can you provide that your competitors can’t? Is there a market for services that big companies like Lyft and Uber can’t provide? Consider what ridesharing customers want and where the big names might be falling short.
For example, one problem lots of people have with companies like Uber and Lyft is the fact that they don’t feel safe taking these rides. They’re not comfortable with the level of vetting these companies do when hiring drivers. Others want the option to order a rideshare big enough for the whole family, but worry that drivers won’t have car seats for young children or enough room for more than a few people.
Drivers have issues with ridesharing companies, too — they feel underpaid, they want more stability, or they simply worry about what will happen to their livelihood as driverless cars take over. There’s plenty of room for ridesharing options that provide better driver protections, more security for passengers and passenger options that aren’t available from conventional ridesharing companies, like car seats, scheduled regular pickups, rides for minors or even accommodations for the handicapped.
Establish Your Business
The first step toward making your business idea a reality is registering your business. If you’ve already done some driving for Uber or Lyft, you’ve been working as a sole proprietor, but to start a ridesharing company, you’re going to want to choose a more structured business model. Forming an LLC may be the best option for you because it combines the pass-through taxation of a sole proprietorship with protection from personal liability.
Get Your Permits and Insurance
Drivers in your rideshare company will be using their own cars, so you probably won’t need to register as a taxi company because you won’t have a fleet. However, you’ll probably need to get Transportation Network Company (TNC) approval. This process varies depending on your state. In the state of California, for example, you’ll need to meet a number of requirements, including having an app passengers can use to arrange rides, paying fees to the California Public Utilities Commission and performing background checks on drivers. Check with your state’s Public Utilities Commission or Department of Revenues to find out what’s required.
You may also need to get some insurance before you start giving rides. You might not need commercial insurance, since you’re not a taxi company, but your drivers might need some rideshare-friendly insurance to cover passengers and damages sustained in the course of doing their jobs. You can either provide this for them or require them to buy it themselves from an auto insurance company.
Develop an App
To operate as a legit ridesharing company, you’ll need to develop an app that passengers can use to schedule and pay for rides — that means no street hailing! Not a software developer? That’s not a problem. You can hire a freelance developer to build your app or use a company like RideCell to help you create the passenger app experience you’re looking for and hash out the other details of your services, too, so you can give your target market exactly what it needs.
Get the Word Out
Once you’ve established your business entity, developed your app and gotten your legalities taken care of, it’s time to get the word out. You’ll need to start signing on drivers as well as attracting customers. You’ll need a budgeted, targeted marking plan that will reach both potential customers and potential drivers. If you don’t have any marketing expertise, it’s not a bad idea to bring in a partner or employee who can help with marketing and customer relationships.
If you’ve always dreamed of working for yourself, it’s a great time to get into the rideshare business. You can succeed by offering services your competitors can’t, don’t or won’t offer, to create driver and passenger experiences that surpass those available even at the big names in ridesharing.
Image: Ride share application in mobile phone from Tero Vesalainen/Shutterstock