How to Start a Passenger Transportation Company 2020 [Updated Guide]

Thinking about entering the passenger transportation business? Your decision to step into commercial transport business is perfect for this year. 2020 is quite feasible and lucrative for the public transport industry.

What You’ll Get From This Passenger Transport Blog?

The agenda of this Passenger Transport Blog is to help you understand the passenger transportation business from the inside out. I aim to answer every question that has come, will come, or won’t even occur to you at present.

This blog isn’t just a guide to cost of starting transportation service or features needed to build a passenger transport business. It’s a complete guide to create a foolproof passenger transportation business plan.

Why are Entrepreneurs Interested in Starting Passenger Transportation Companies?

There are numerous profitable transportation business ideas that countless individuals have approached. Still, more important is the execution of such an idea with the right group of people at the perfect time.

For every $1 invested in the Transportation industry, it is expected to get an RoI of about $4. So you are on the right track.

This fact is proof enough to show that passenger transportation business plan is the prized bull for transport industry giants. As this business model offers a very impressive RoI (Return on Investment) if you can manage it well.

Another reason why commercial transportation companies are entering the passenger transport business vertical is the rising fuel cost every year. In 2019, US customers spent on an average $2.60 per gallon.

People are opting for public transportation services for their daily commute for the same reason. As an entrepreneur, it’s advisable to leverage this trend and start a passenger transportation business.

The best part is you can start your transportation business with one single van and later expand as you grow. We’ll talk more on this later in the blog.

FAQs About Passenger Transportation Business

The first step to start a successful transport business (private or public) is to make and execute a foolproof plan of action. You need to gather all the information you can about the market you are going to enter. There are many ways of doing that, but the easiest and effective way is Google.

Here are few FAQs about passenger transportation business asked on Google:

How to start a passenger transport business?
How do I start a tourism transport business?
Is the transport business profitable?
How can I start a small tourism business?
How to get a license for a commercial transport business?
What do you need to start a private transport business?
What are the legal requirements to run a public transport company?
Is it possible to start a transportation business with just one van?

All these questions and many more will be answered in this blog on starting a passenger transport service company.

Steps to Start a Passenger Transportation Company in 2020:

1. Research About The Transport Industry

The first step of your plan should be to collect all the vital information about your business market, competitors, and customer behavior. Learn about the city and state you are planning to set up your business.

Does it really need another passenger transport service?
What are the problems people are facing with the existing transport companies?
How can you solve these problems?
Why should people leave existing service to join yours?

When and if you find the right answers to these questions, then you’ve found the right city to start your passenger transportation business. Now you need to decide what type of transport business you want to get into:

Taxi Service
Charter, Bus Company
Airport Shuttle
Chauffeur Service For High-End Clientele
Water Taxis

Next, thoroughly research your competitors (existing public and private transportation services). Visit their business website to learn about the services they offer, read their customer reviews, find out what they lack and work to improve your services where they are lacking.

By providing a solution to your customers’ existing problems will give you an edge over your competition while starting a passenger transportation company. Also, you can lower the fares in the beginning to get more passengers.

2. Create a Business Plan

Before creating a passenger transport business plan, make sure you have a complete understanding of the passenger transportation industry. The transport service market includes more than just buses, taxi cabs, and airport shuttles. You can also start a passenger service with ferryboats, cruises, limousines, and much more.

Whether you provide transportation services for land, water, or air; each business model has different regulations, strategy, and costs. For example; a taxi service requires lower startup cost than a charter bus company because the vehicles will cost less. So you better assess your budget and your business goals and make a business plan according to that.

Find the answer to the below-mentioned questions with your transport business plan:

How much do you expect to earn?
What are the costs involved?
Will you lease or buy your vehicles?
How many vehicles will you operate?
What services do you plan to offer?
What makes you stand out from the competition?

What goals do you have for the first year?
What licenses and permits are required?
Who is your ideal customer?
What challenges do you expect to face?
How many employees do you need?
How do you plan to promote your business?

A passenger transportation business plan is made of an executive summary describing the services, target market and goals.

You need to also outline the key aspects of your business in the report. Aspects like the name, location, mission statement of the business, expenses, business predictions, competitor analysis, etc. Further, this business plan document will inform your investors and guide you consistently on an action plan.

3. Arrange for Finance

There are primarily 5 ways to raise the fund for your passenger transportation business.

Bootstrapping

It’s the 1st and most common idea of all, use your own financial resources, like your savings in the bank account or credit cards. However, make sure that you don’t get lost in the flow and forget to track the investments. Don’t go overboard with your savings as it is necessary for your family’s needs too.

Friends & Family

If your growing business needs additional funding besides your own savings or credit cards – you can ask family and friends to invest in the company in return for a stake in the company (if that is possible for you to offer) or just ask for a plain and simple loan.

Crowdfunding

If you haven’t heard about crowdfunding, you must not be serious about funding your business – or you’ve been living under a rock for the past seven years. The Jumpstart Our Business Startups Act (JOBS Act) is a law that was introduced by President Barack Obama to encourage funding for small businesses in the US by easing on several securities regulations.

The crowdfunding approach taps into the collective efforts of a large community encouraging a single individual. One person with a business idea or prototype asks a community of people to invest in the business idea; now if an online community of a million people offer just a single dollar per person, the fund raised is a million dollar. That’s the power of crowdfunding.

Angel Investors

The next best thing after crowdfunding is Angel Investors. Have you watched Shark Tank or Dragons’ Den? That’s the televised version of an angel investment approach.

The basic concept of Angel investing is completely opposite of crowdfunding. Instead of asking for small amounts from a large community, ask for a large amount from a very small community (or individual) of wealthy investors. In return, they ask for convertible debt or ownership equity in the company.

Bank Loan or Venture Capital

What if you need a larger capital than all of the above options can provide? Then you go the good old fashioned way to banks or other large financial institutes who will give you a loan for the amount you seek, however large or small.

Although, remember that these institutes (in most cases) may not be interested in getting stakes in your company, but getting the interest on the given loan. So, you need to provide an equal valuated collateral for the loan.

You’ve got the funds for your passenger transport company. Now what?

Once you’ve got the funding, analyse and bifurcate your costs to learn how much amount will be invested where.

One of the most important investment is to buy or lease the passenger transport vehicle like a van, bus, etc. If you already own the right kind of vehicle, then you might not need to spend much money into vehicle purchase and upgrade.

Next comes the cost of hiring employees and setting up an office. My advice, don’t invest money in hiring employees and buying an office if you’ve just begun. Start from your home or garage with a handful of trusted people and grow from there.

Tactics like these will reduce your overall cost of investment and increase the return.

4. Buy Inventory

Buy Inventory for Passenger Transportation Company

The single most costly investment for any transportation company is to buy a transport vehicle. If you have opted for taxi service, high-end chauffeur or airport shuttle, you need a simple car (new or used car), luxury cars (like a limousine) or transport bus, respectively.

You don’t need to buy a pool of transport vehicles in one go. Start with just one bus, van, or car and later expand as your revenues increase. However, many vehicle dealers offer a substantial discount on vehicles if you make bulk orders.

Other accessories that you’ll need are a Top light, taxi meter, paint, or decals with your company logo and design to transform your vehicle into a proper transport vehicle.

5. License and Registration

License and Registration for Transportation Business

You need a business license before starting a private transportation business. You need to get various permits for your passenger transport company. Also, you’ll be needing insurance for all the vehicles used by your transport company.

Besides these, you would also need to have vehicle permits for all commercial transport bus, van, car, etc. These permits will contain the make and model of the vehicle and manufacturer details with your proof of ownership of the vehicles.

The documents mentioned above are just the ones that are compulsory in every country. Besides them, every country has its own set of additional documents; I can’t specifically mention them all here. You can search for all the other documents needed for your specific country and state by going to the government website of the transport regulation body.

With so many rules, regulations, licenses, and permits, it may seem overwhelming to enter this field, but it doesn’t have to be. It all comes down to your business model, and you need to focus only on the legal requirements that your business needs to fulfill.

Various Passenger Transport Permits

If we talk about permits, there are four types of different permits needed based on the nature of your transport business.

For the transportation of goods, you need goods carriage permit.
Transport business with taxis or cabs need contract carriages permit.
For the buses, you would need a stage carriage permit.
For both goods & passengers, you would need a casual contract carriage permit.

Now among these permits, you don’t need to worry about the 1st one as you have planned to enter the passenger transport business. So, the next step is to decide if you wish to transport passengers in a small vehicle like a car or van; or go for large transports like buses. Then accordingly choose from 2nd or 3rd permit options.

Further, if you wish to go into something like an airport shuttle service, then choose the 4th one that allows passengers as well as goods transport.

Remember that these permits are temporary and last only for 4-5 years after which you have to renew them.

Insurance is mandatory

I know you’ve probably gone through ten other blogs saying the same thing, insure your vehicles to financially protect yourself from any mishappening, and even though those other blogs are my competitors, I for once agree with them.

Insurance is vital, but not just of your transport vehicle but also the goods and people you are carrying in it.

The all in one insurance (covering the vehicle and everything and person in it) is a little costly than the usual. Still, it can provide the peace of mind to your customers and the financial support you need in troubling situations.

6. Make Your Public Van Transport Popular

Once your business is all set up, the next step is to promote your business and get lots of passengers.

One of the best old school marketing approach is to promote your passenger transportation business using the vinyl stickers and paint jobs with your company logo and contact details on the body of the cab, van, and buses. This is a surefire marketing strategy that is guaranteed to catch the eyes of your potential passengers.

Another proven old school technique is to list your company in local business directories like Google My Business, Yelp, Local.com, Bing Local, Manta, LinkedIn Company Directory, and Yellow Pages. Add a brief description, along with a link to your website and your passenger transport company’s social media pages.

Next up comes the social media platforms. You must leverage the power of these giant platforms like Facebook, Instagram, Twitter, etc. to gain exposure in your local community. These social platforms allow you to create ads and show it to only the relevant people that you are targeting to serve.

For example, you can choose to display your ads only to the users who live within your city and are avid travellers.

Advertising your passenger transportation business locally is another brilliant idea. Sign up for travel-related events and trade shows and meet other companies in travel that are not your direct competition, distribute flyers, promote your transportation business, spread the word about your services with them and exchange marketing materials with them.

Those businesses will not affect you negatively, but on the contrary, you both can help each other by sharing common customer base.

Various Types of Transportation Businesses to Try Out

There are several profitable transportation business ideas that you can check out in the passenger transportation industry vertical. Go through these business ideas and choose the perfect one for you.

Office Transportation

This type of passenger transport service is beneficial for large companies and plants that have more than 100 employees that have to travel a significant distance to get to their work location. You can tie-up with such companies and provide in and out transport service for their employees.

Medical Transportation

Now there are three types of transport we are talking here. (i) Transporting hospital staff in and out of the medical facility just like the office transportation model. (ii) To transport patients in emergency or non-emergency cases (contract-based ambulance work). (iii) To transport medical equipments and transplant organs to and from medical institutes.

School/College Students Transportation

Transportation for the school or college students is one of the easiest and most lucrative passenger transportation business plans on this list. You get partnered with a school and provide in and out transport service for the students (faculties, and other school staff). You can work with multiple schools or raise your monopoly in a particular district with a larger workforce and transport fleet.

Civil Transportation

In many cities, there are private bus services running locally and inter-city besides the government ones. You can start a passenger transportation business in the same category. Your earnings will be from the daily ticket sales.

Shuttle Transportation

This type of passenger transport is more specific to an A-to-B drop model. For instance, an airport shuttle service which will pick you up from a common point of your area and drop you to the airport and vice versa.

Chauffeur Transportation

The chauffeur transportation service is exactly what it sounds. It is a private cab, van, or even bus service that caters to a single client at a time and provides ride service as per their needs and demands. Just like a private limo service would. The limousine service is a sub-section of this passenger transport business model.

Water Taxi Transportation

As we talked earlier in the blog, the passenger transport service is not just limited to the land. There are several ferries, private boats, and touring yachts that provide a transport service from one point to another in the water bodies (rivers, lakes, and sea).

Livestock Transportation

Livestock are not precisely a sentient being but still living passengers none the same. Several livestock transportation companies provide inter-city livestock transport services for animals like cows, bulls, horses, chickens, and other farm animals.

Is it Possible to Start a Passenger Transportation Business with One Van?

After reading about such amazing and overwhelming passenger transportation business ideas, you may be concern about the size of the overall operation. Well, not to worry as you can start your transportation business with one single van or vehicle.

How To Start Transportation Business With Just One Van?

The chances are that you already own a van or have enough fund to purchase a single (new or used) van for your passenger transportation business. If you are going to buy a van, then make sure to get the right kind of van. For general concern, make sure that your van is a model with good safety designs, comfortable seating, and enough boot space for luggage.

Once you’ve acquired the van for your business, you need to work on how to get the finance for your business, creating a business plan, and market your company services. We’ve already discussed these topics above, you can go through them again to brush up.

Why Do Small Transportation Companies Fail?

Don’ts	Do’s
Lack of Planning	Begin with solid research and create a foolproof plan accordingly
Poor Management	Launch and Expand Your Business Only when You Have Enough Funding
Low on Cash-Flow	Go for Hyper-Local Marketing
Having No Collection Strategy	Improve Business Model According to Reviews (ORM- Online Reputation Management)
Failure to Stay Compliant – resulting in fines or being shut down by DOT (Department of Transportation)	Learn about the regulations of running a passenger transport business and be aware of the new updates
Partner with the Wrong People	Find the right business partners, e.g. best app development company.

How will Digitalization Help You to Start Profitable Transportation Service?

All the top private bus transport businesses have their own transport app using which customers buy their tickets. People are getting more and more tech-savvy; hence, a transport app can yield 3/4th of your business revenue. Having a customized, fully functional app will boost your reach and increase your userbase.

To build such an app, you would need an expert team of transport app developers. Find an app development company that has proper experience in building passenger transportation service apps like online taxi service apps, airport shuttle service apps, etc.

Best Enterprise Fleet Management Software

Now Go & Start Your Own Transport Business

When people are getting more concerned about the environment and opting for public transport options, it is clear that starting a passenger transportation company is an excellent idea right now.

The user base of such public and private bus transport services is at an all-time high inviting new entrepreneurs every day. The earlier you get in; the more prominence you’ll have in this industry.

What are you waiting for? Get in touch with the experts of Excellent Webworld and start working on the app of your dream business.

How to Start A Passenger Transportation Business in 2020