The article is about the steps on how to start a taxi business in Nigeria. Apart from the basics that are needed for survival such as food, shelter and clothing, man also has the need to move from one point to another in an affordable and efficient way. In fact, it would be difficult to fend for yourself if you do not have the means to move from one place to another.
A taxi business is aimed at moving people from one point to another in a more comfortable way than taking bus rides. Most people that patronize taxis do so because they do not want to go through the hassle of “jumping” from one bus to the other.
Operating a taxi can be a very lucrative business in most parts of Nigeria, especially in the big and highly populated cities.
Like almost every business venture, starting and running a taxi business in Nigeria is not without its own challenges despite the fact that it is quite rewarding.
Some of the challenges of starting a taxi business in Nigeria are;
- Dishonest Drivers
If you decide not to drive the taxi yourself, you will need to hire a driver who will work with your vehicle and pay you on an agreed time frame which could be daily, weekly or monthly, depending on your preference.
In as much as there are honest hardworking people out there, I am pretty sure that if you discuss with anyone involved in this business, they will probably have one sad tale or the other to tell with regards to bad experiences with some dishonest drivers.
Some drivers have been known to default in their payment plan or even in some cases run away with the vehicle, thereby incurring huge losses for the owner.
- Bad State of Roads
It is no news that the general state of roads in Nigeria are in a bad shape and this has a direct impact on the smooth operation of the vehicles.
Damages caused by bad roads will result in you spending quite a huge sum of time and money on vehicle repairs and maintenance.
- High Start Up Cost
The general cost for starting a taxi business in Nigeria is pretty high. You practically have to buy at least one car, maintain it, fuel it, license it, and so many other financial requirements. These problems become further complicated given the fact that it is quite difficult for small and medium entrepreneurs to raise funds from commercial banks.
The challenges listed above should not discourage you from venturing into this business because they are all very surmountable. The purpose of listing them here is just to prepare your mind appropriately for the business.
Despite these challenges, as long as you are willing to work hard and invest your time and energy into it you can still succeed in this business because of the following;
- The need for Taxis are currently on the increase, therefore you will not be short of customers.
- It is a business that enjoys a lot of repeat patronage and referrals. You will enjoy this more if you endeavour to deliver your services with good customer care.
- It is a business where you can start small and nurture it to grow with time.
Now that you now know the pros and cons of the business we can now look at how to start a taxi business in Nigeria.
It is important to decide on the location where you intend to set up your taxi business. This is key because your location goes a long way to determine the amount of capital that will be needed to start off.
It will also determine the revenue you will accrue over time. For example, if you start off in high end areas, you will tend to make more money because you can charge your customers higher. However, this means that you have to purchase a higher quality vehicle to meet their standards.
After deciding on the location that you wish to operate your taxi business, it is necessary for you to find out the existing rules and regulations that guide the operation of such business in that locality in order for you not to run foul of them.
As earlier stated, this is a capital intensive business. Assuming that you wish to start up with just a car, probably fairly used, you should budget at least ₦700,000. This includes vehicle purchase, registration and obtaining the required licenses.
- Vehicle Selection
The bulk of your capital will normally go into buying the vehicle. If you are not buying a brand new car, ensure that it has not been previously over flogged, else it will likely give you maintenance problems. Also, opt for a brand that is fuel efficient and easy to maintain. You can also link up with a trusted mechanic who will care of maintaining your vehicle or vehicles as your fleet increases.
- Remittance Method
Apart from driving your taxi yourself, there are two major ways of getting your money back. These are;
- Hire Purchase: In this method, you buy the car and hand it to a driver who will refund you an agreed amount periodically. The driver bears full responsibility for the registration, maintenance and running of the vehicle. In this type of agreement, you can place a target which if the driver meets, the vehicle becomes his own.
- Rental: In this method, you are in charge of the running costs and maintenance of the vehicle. All the driver does is to pay you an agreed amount, either daily, weekly or monthly.
In both methods, it is important that you carry out thorough background checks on the driver of your vehicle to ensure that they are trust worthy people. Handing over your vehicle to irresponsible people can completely ruin the business experience for you.
Ensure that potential drivers come with at least a surety and are compelled to sign a binding legal agreement. This can help you to recoup your investment in any unfortunate circumstance.
If all the above are carefully taken into consideration, then you are on the right path on how to start a taxi business in Nigeria.
One important thing to note is that a taxi business goes beyond just picking up and dropping passengers at their destination. Encourage your drivers to always keep your vehicle clean and also develop a very courteous approach to customers.
This is because the business thrives a lot on repeat patronage and referrals. People will tend to continue to patronize a particular taxi service if they know that it can be trusted to deliver.
Lastly, I must add that it is important to take action as soon as possible. Once you have made up your mind to go into this business, take conscious steps to get on with it.Buy and Sell Bitcoin in Nigeria - Register for free on Luno
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