How to Start an Exotic Car Rental Business in 2022
Renting a car is quite a common thing today as sometimes it is even more profitable than buying a vehicle and spending money on its maintenance. Even more, for a very special occasion, you may need a real deluxe car or an exotic one. So you can be sure that the exotic car rental business is not a low-demand business. Yet it doesn’t seem clear enough how to start it and what to start from when you want your exotic car rental business to be prosperous.
Let’s talk in more detail about it. And the first thing we should mention is the choice between a franchise and business development on your own.
Using Franchise or Starting Exotic Car Rental Business from Scratch: Enclosing Pros and Cons
There are lots of ways for starting your luxury car rental company. The most obvious is a franchise and the development of a company from scratch.
If we are talking about a franchise, this, of course, is a very convenient option for beginner businessmen. The fact is that the franchise involves several advantages at once:
- Brand recognition as you will work under the name of an already well-known luxury car rental company.
- Having your own strategy and methods of doing business, which will be provided to you as a franchisee.
- Often, franchise owners also offer their own fleet of vehicles so that your exotic car rental business develops as quickly and dynamically as possible.
But there is also a fly in an ointment. And this is a high level of dependence of your exotic car rental business on franchise owners.
If we talk about the option of developing a car rental company from scratch, then here you are completely free to choose the methods and strategies for doing business. You can also choose a narrow niche in the field of exotic car rental. But there will also be a lot of costs because any business from scratch is a risk, both financial and reputational.
So it fully depends on you and your habits what option will be a win-win one for you.
Where to Get Exotic/Luxury Cars for Your Rental Business?
The next important question that needs to be addressed when drawing up a business plan for an exotic car rental business is the question of where to get a car of the type and class you need? Buying new vehicles at the initial stage is actually a waste of money. Such an expense will not pay off soon, and you will have to pay the debts regularly. Therefore, if you want to run an exotic car rental business without risky investments, it is better to choose a specific car pool for your fleet, and then start looking. You can choose a car for sale among used cars. But for exotic cars, this is rather an exception because the choice of such models on the market is often small, but the cost of even a used exotic car or a luxury vehicle will be sky-high.
The best option to start is renting or subleasing such cars. Of course, this also incurs costs but in the end, it will pay off much faster than buying a car for your exotic car rental business.
How Much Does It Cost to Start Your Exotic Car Rental Business?
After you’ve chosen an exotic car rental business for your further development, it’s time for drawing out an accurate business plan and taking into account the following features. In order to give you an accurate idea of the scale of the costs and actions to come, we asked the current owner of the exotic car rental business, Ronnie, for his advice. And he highlighted the following important parts of business development in this niche.
Licensing Business and Registration
Any business, if it is set up for prosperity and subsequent scaling, must be legal. This means that you need to allocate time, costs, and competencies to register your business and obtain a license. Depending on the laws of your state and the nature of your business, the amount of licensing costs can vary significantly. It is better to clarify in advance with the competent authorities how to register an exotic car rental business, and what license is valid for it in your area.
Hiring Business Lawyer
The car rental business is very often associated with legal risks. And the support of an experienced lawyer will be most welcome because there are many controversial situations. It is better to clarify the average rates of lawyers in your location, and at the same time monitor the market, is a specialist with extensive experience looking for a job?
Hiring an Accounter
Starting a car rental business is necessarily associated with financial transactions and reporting. How much money did it take you to open, how much did you earn in the first month, how expensive is the maintenance of exotic cars? All this should be known to your accountant. You can hire a specialist in your staff or choose to contract with an outsourced pro. Both options guarantee you crystal clear tax returns and accurate profit records.
Depending on the location of the office, the cost of an exotic car rental business may also vary. Keep this in mind, because you will need to find a passage place for the office, place a car park in a protected area, and organize workshops serving the enterprise.
Marketing services are one of the main start-up costs in the exotic car rental business. You need to make a name for yourself, launch your own website, and advertise on social media. You will need the help of marketers or agencies. Therefore, try to allocate as much finance as possible to this item on the list.
In order for customers to rent your exotic or luxury car, you will need an office. In addition, the presence of an office gives the company impressiveness. So consider how much you need to invest in office rent and organization of jobs for staff.
Inventory and Car Rental Fleet
In addition to the office, you, as the owner of an exotic car rental business, will also need equipment for car maintenance. And at the same time, the vehicles themselves also matter because it is them that you will provide to the services of customers. Just imagine, in the exotic car rental industry, a car alone can cost $25,000! And sometimes more! But it is the basis of your business, and we already talked a little about it at the beginning of this article. Let's say right away: cars should look presentable, be serviceable, and be checked by mechanics.
Exotic car rental service is a very risky type of business. And it pays special attention to the issues of integrity and safety of vehicles after operation by the client. To avoid losses, it is better to immediately take out full insurance for each car in your fleet. This will make it faster and more realistic to receive payments for your car.
The risks of owning a car rental service are quite high. And they are connected not only with the integrity of customers but also with the technical serviceability of vehicles. A full-time mechanic is obliged to maintain technical serviceability. So this article will definitely come in handy for you.
Car Rental Staff
But what about the rest of the state? Of course, you can try to immediately answer calls, coordinate clients, accept payments, but if your car rental service expands, you will definitely need staff to be hired for all this or at least to work with clients and receive documents. The appetites of applicants, in this case, can be quite different. So keep your finger on the pulse.
Where to Raise Funds for Your Exotic Car Rental Business?
So, you have already written down all the stages of the business plan, thought out how to make your service a leader among competitors. The only thing left is to find money to implement your ideas. And here you also have several options to consider as an exotic car rental service model.
Involving Your Own Money
If you have savings that can be invested in a business, this is, of course, a good sign. You can use them to start up. But it will not be easy to do without lending when you want to develop an impressive project.
You can enter your savings for a certain category of costs, but you should not fully rely on your own investments. According to our consultant Ronnie, his business from scratch cost him $10,000. And this, you see, is a lot.
Getting a Loan from Friends/Family
Not everyone likes to borrow money. Moreover, it is especially embarrassing to borrow from your loved ones because you will have to give the money back. If you are not afraid of losing your business reputation and are sure that you will be able to repay the entire loan amount in a short time, this option will suit you. Otherwise, you will ruin your relationship with your loved ones.
Involving Business Investors
A successful startup can count on the support of investors. And such a specific niche as the exotic car rental business is definitely among such successful startups. Develop your business plan, present it on one of the special startup platforms, and you will be able to engage investors who will help you start a business from scratch. Their share in your business does not mean that you will not be the owner and manager, so this is the most profitable option for an aspiring entrepreneur.
How to Develop Exotic Car Rental Platform
Almost all businesses today are online. And this means that even in the absence of an office, as it is, you will be able to conduct your activities in the field of exotic car rental business if you have the appropriate online platform. According to its functionality, the Internet platform can be:
- web, that is, designed for users who access the site through a web browser to book a car.
- mobile, that is, available as a mobile application for smartphones and tablets.
- combined. The hybrid platform combines the functionality of both options and offers solutions for users of both web and mobile interfaces.
If we talk about the functionality of such a platform, then it is best if it includes:
- an informative menu of available exotic cars;
- constantly updated content about promotions and car rental conditions;
- built-in payment platform for paying for car rental services online;
- a comfortable form of customer feedback in the form of a chatbot, instant messenger, dedicated telephone line.
The basic functions of such a platform will allow you to attract customers using online communication channels, work with a wider target audience and quickly process applications.
Several Tips on How to Save Money on the Rental Car Platform Development
At the same time, the development of a rental car platform can take up a significant part of your business budget. And that doesn't do any good either. To reduce the cost of developing software for your exotic car rental business, we recommend a couple of tricks for a startup:
- Don't hire full-time developers. Your project will be easily outsourced to companies and specialists.
- Local outsourcing agencies set high rates. Do you want to get a quality product for business at half the price? Contact offshore specialists.
- Don't skimp on maintaining your platform. If you use this service from a developer, it will be easy for you to expand the functionality of the platform or improve it in the future. And it will be much cheaper than hiring developers for these tasks again.
The exotic car rental business is not the most inexpensive niche in the auto business. But with the right approach, the logic of the business plan, and skillful work with investors, the risks and costs of opening a rental company can be minimal. On average, even with the involvement of two cars, the cost of starting a business can reach $50,000. And then it all depends on your willingness to scale your business, the number and cost of cars that you will rent, the work of developers for your online platform, the amount of staff, and other parameters. After all, you can decrease costs by several working ideas we’ve shared with you.
Oleksandr KryvotsiukHEAD OF MARKETING AT REXSOFT