How To Start Taxi Business In South Africa
What is Taxi Business?
Taxi refers to for-hire automobile travel supplied by private companies. Taxi service is an important Transportation Option that meets a variety of needs, including Basic Mobility in emergencies, general transportation for non-drivers, and mobility for Tourists and visitors.
How To Start Taxi Business In South Africa
1. Understand the Industry
Businesses in this industry provide passenger transportation by automobiles not operated over regular routes or on regular schedules. Reports have shown that the revenue and income of the taxi industry is driven by business and leisure travel.
The profitability of individual companies rest entirely on innovation and good marketing. In the taxi business, small companies can effectively compete with the large ones because there are few economies of scale in operation.
Also note that major services in the taxi industry includes the transporting of passengers in taxis; renting of limousines, luxury cars, vans, and other automobiles with drivers; and hearse rentals with drivers. The vast majority of industry revenues come from local passenger transportation services.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
We all can agree that taxis are major or rather daily amenities needed by all individuals ranging from the high and mighty down to school kids. Almost all average earning families in South Africa have car(s) but do the cars see to all their mobility needs at the same time?
It is a fact that all adults and most teenagers have boarded taxis in their lifetime not putting into consideration the many times, intervals or frequency. We believe that the taxi business serves both the able-bodied and the physically challenged, and the taxi industry has no specified age bracket or social status.
3. Decide Which Niche to Concentrate On
You have to understand that this business is very lucrative with good niche ideas for focused individuals. A lot of individuals who venture into this business target the normal plying of customers from location to location without considering other niches that can put foods on their tables. The taxi business in this age has gone far beyond the normal taxi calls and services we all are accustomed to. Niches in this industry include;
- Kid’s taxi services
- Health taxi
- Water taxi service
- Car rental
- Limousine service
- Minibus taxi etc.
4. Know Your Major Competitors in the Industry
The taxi industry just like many industries in the world is filled with competition and the struggle for survival. Listed below are few known names in the taxi business
5. Decide Whether to Buy a Franchise or Start from Scratch
In this business and especially in South Africa, a lot of taxi business owners started from the scratch but it is not a guarantee for success. Starting a business from the scratch or buying a franchise has its own advantages and disadvantages.
You need to understand that the taxi business is a goal oriented business where bigger companies are swimming deeper and the little ones are struggling to grow bigger. Innovation, commitment and brand popularity are important incentives that can guarantee success in this industry and buying into a franchise can provide that easily.
6. Know the Possible Threats and Challenges You Will Face
Every business has its own threats and challenges that require careful planning to scale through. To be successful in any business endeavour, you need calculated research, struggles and innovation. The taxi business is a business for individuals who are strong willed, patient and calculative.
7. Choose the Most Suitable Legal Entity
A lot of factors should be considered when choosing the best form legal entity for your taxi business. The type of legal entity you choose will affect the way you file paperwork, face personal liability, pay taxes and, if necessary, file for bankruptcy protection. Most taxi business owners in South Africa form their business as a sole trader, but for the sake of this article, the Closed Cooperation is the best legal entity for your taxi business.
8. Choose a Catchy Business Name
- Pick-me-up cabs
- Autojets
- 24/7 cabs
- Pick and drop motors
- RidingEmirates
- Quickcabs
- SuperFire
- Blue express
- Metro cabs
- Safe drivers
9. Discuss with an Agent to Know the Best Insurance Policies for You
When running a taxi business, you must have some basic insurance to cover your customers in case one of your drivers causes an injury or property damage. Operating in this high risk industry, insurance provides a safety net in case an accident or some other unfortunate incident happens.
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Intellectual property protection in the taxi industry is about protecting the time, money and effort you put into your business. It helps you to protect what’s yours, mould your handwork and ingenuity into profitable returns, place yourself up for growth or business expansion, keep competitors away, ensure you’re not fringing in anyone’s right, prevent employees from aiding your competitors, attract investors and also promote your business to investors.
11. Get the Necessary Professional Certification
In South Africa, the most important certificate for a taxi operator to have is a route license. The taxi association will upload the driver and vehicle details on a database, which will then show if the route is profitable or not. If there are too many taxi’s on the same route, then the likelihood of the driver making a profit will be reduced.
12. Get the Necessary Legal Documents You Need to Operate
In South Africa, your business must be registered with the appropriate South African agencies, including the Companies and Intellectual Property Registration Office (CIPRO), the Department of Labour and the Department of Transport. Once registration is completed and licensed taxi drivers are hired, the business is free to operate.
You should start by registering the preferred business name by visiting CIPRO’s website and filing the Application For Name form. The form can also be submitted in person at the CIPRO office in Pretoria. The approved name will be automatically reserved for two months. You then have to submit a completed Certificate to Commence Business form to CIPRO so that the business can begin to get capital or trade shares.
13. Raise the Needed Startup Capital
In South Africa, the commonly used vehicles are Toyota or Nissan taxis. These are called the premium vehicles in the taxi industry because of their reliability. These taxies retail from about R100 000 to about R340 000, but for the overall cost that would include paying your license and taxi association fees, the total cost can amount up to R350 000 to start a taxi business.
14. Choose a Suitable Location for your Business
In this business, one of the key decisions you have to make is to choose a suitable location for your business. You should be able to look at the benefits which each area have to offer as well as any government help which might be available.
We believe that a suitable location for your taxi business should have easy access to all major routes in your area and enough parking space to safely store all your vehicles. A location for a taxi business or a dispatch office for your taxi business should be easy to locate, convenient for the taxis to be refuelled and repaired. We strongly believe that centralized located sites are best if you will be serving your entire city.
15. Hire Employees for your Technical and Manpower Needs
We agree that this lucrative business can be started and run by an individual, probably the owner, but it doesn’t necessarily mean that the taxi business is a business for just one individual. But we believe that the manpower you will need to run your taxi business will depend on the size of your business.
16. Write a Marketing Plan Packed with ideas & Strategies
It’s very important to state that intense competition and growth in technology have moved the taxi industry to another level. You need to understand that creativity pushes you to search for ways to make a difference in business. When starting this business, you should consider creating business cards you can give out so people will have your number handy when the time comes for a taxi to be called.
We believe if you establish concrete relationships with repeat customers and with people who call taxis often (like bar owners or hotel managers) and maintain those relationships, you’ll likely find yourself with a steady stream of business.
17. Develop Iron-clad Competitive Strategies to Help You Win
You need to understand that competition is what brings about ideas and creativity. Void of competition, the taxi business would be boring and will lack new ideas and no one will work hard to satisfy the general public. We believe that possible ways to win your competitors in the taxi business involve finding a void or an opening in the business and filling it.
A business doesn’t necessarily have to be revolutionary in order to succeed. Rather than struggling to come up with a brand new idea, take a look at the industry and see where there’s a void to be filled.
18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity –
Starting a taxi business is not just enough as it needs more than just vehicles and drivers to establish yourself in this business. To win over customers, you need to make sure you shout about your brand and get your name in front of as many eyeballs as possible.
Indeed it won’t be an easy task as it takes planning and innovation to be able to push your taxi business to a point where people can easily identify it and patronize you.
Frequently Asked Questions (FAQs)
How much do taxi owners make in South Africa?
Over shorter-distance routes (like a 23km trip between Soweto and Johannesburg), operator profits are around R25,000 a month, while longer distance trips (like the 595km trip between Joburg and Durban) can lead to profits of around R37,000 per month, the group said.
How much is a taxi certificate in South Africa?
A check with the Department of Roads and Transport revealed that you can obtain your taxi operating license for just R300 and that it is valid for seven years.
Is the taxi business profitable in South Africa?
Over shorter-distance routes, like a 23km trip between Soweto and Johannesburg, operator profits are around R25,000 a month, while longer distance trips, like the 595km trip between Joburg and Durban, can lead to profits of around R37,000 per month, the group said.
How do taxi associations work?
Taxi associations collectively manage traffic flows along their own routes with rank marshals. In general, taxis tend to operate in two ways: They fill up and go from one rank to the next. They “crawl” on their route collecting passengers, and/or dropping off passengers.
How much does it cost to start a taxi business in South Africa?
These taxies retail from about R100 000 to about R340 000, but for the overall cost that would include paying your license and taxi association fees, the total cost can amount up to R350 000 to start a taxi business.
How much does a taxi owner make in South Africa?
Over shorter-distance routes (like a 23km trip between Soweto and Johannesburg), operator profits are around R25,000 a month, while longer distance trips (like the 595km trip between Joburg and Durban) can lead to profits of around R37,000 per month, the group said.
Which is the biggest taxi association in South Africa?
South African National Taxi Council (SANTACO)
Is the taxi business profitable in South Africa?
Over shorter-distance routes, like a 23km trip between Soweto and Johannesburg, operator profits are around R25,000 a month, while longer distance trips, like the 595km trip between Joburg and Durban, can lead to profits of around R37,000 per month, the group said.
How many taxi associations are there in South Africa?
“We’ve got 76 taxi associations both from Top Six and Santaco Greater Johannesburg Region [raising their fares].
How much is a taxi certificate in South Africa?
A check with the Department of Roads and Transport revealed that you can obtain your taxi operating license for just R300 and that it is valid for seven years.
How much does a taxi make per day in South Africa?
Assuming that the taxi is in operation every day of the year, bar Christmas, the average income stream for a taxi in SA, is around R1,236 per day, or R37,500 per month. The e-ticketing project is expected to be expanded to other taxi routes, with the aim of completing a national rollout within five years.
How much is the South African taxi industry worth?
There are some 250 000 minibus taxis operating in South Africa, according SA Taxi, the largest finance provider to the industry. Some 69% of local households use minibus taxis. The industry generates annual revenues of an estimated R5 billion.
Do taxi associations pay tax in South Africa?
“This means that the vast majority of taxi operators and owners are declaring no corporate tax income at all, and are not paying payroll tax for their drivers and employees,” the party said. “It is illegal to under-declare income and to evade paying taxes.
How do taxi drivers get paid in South Africa?
In addition, some driver pay is determined by the takings of the taxi – between 25%-30% of the takings per week – while others pay a flat monthly rental fee (R10,000 in January 2016), with drivers taking any additional profits on top of that amount, plus petrol costs.
How much is taxi Relief Fund?
In July 2020, Parliament allocated R1,135 billion Taxi Relief Fund as a once-off payment to taxi operators to provide relief for the COVID-19 impact on the sector, as a consequence of restrictions that had a devastating effect on the industry, similar to many other sectors.