The runaway success of ride sharing companies like Uber and Lyft have many entrepreneurs considering joining the ride sharing game. After all, creating a ride sharing startup seems to require little effort and investment, since drivers will provide the cars and the fuel on their own. It seems entirely possible to start a ride sharing business today with just a mobile app and a dream.
However, like any business, ride sharing requires planning and preparation to work properly, which means entrepreneurs need to equip themselves with the tools to find success. Though you certainly can start a ride sharing company without the following five tools, you won’t be starting correctly, so success will be much harder to find. For the best hope of finding a foothold in the ride sharing market, you should strive to acquire the following four business tools first.
1. The Right Software
The concept of ride sharing isn’t particularly new; several cities have had organized ride sharing programs for decades, helping commuters connect to save fuel and limit traffic. However, ride sharing wasn’t popular until Uber (and other startups) created an app for the service, removing the inconveniences of traditional ride sharing programs and allowing nearly any driver and any passenger to meet up anywhere.
Therefore, functional ride sharing software is absolutely imperative for a successful ride sharing business. The software must run on mobile devices to allow drivers and passengers to access the service on-the-go. Additionally, the software should be fast and simple, so neither driver nor passenger feels confused or frustrated by the interface. When the service is easy to attain, you will find success.
2. The Right Permits
When Uber started in 2009, cities around the world were uncertain how to react to it. Initially, ride sharing intended to connect people headed in the same direction, but it didn’t take long for drivers to take up ride sharing as a job ― if a side job ― competing with taxis. Today, more and more cities are imposing restrictions on ride sharing companies, forcing them to obtain permits and licenses to operate legally.
The necessary permits will vary from state to state. At the very least, your business should be incorporated and have licenses in the states where you operate. You might also need to contact your state’s public utilities commission or transportation department to register as a transportation networking company, or TNC.
Often, you will have to conform to rules of TNCs; for example, in California, TNCs cannot own their own vehicles, cannot accept street hails, and must perform criminal background checks on drivers.
3. The Right Insurance
Auto insurance is mandated in nearly all states, and your drivers should have their vehicles and person protected with proper policies. However, your commercial fleet also needs insurance, especially since you have little control over how your employees ― your drivers ― behave.
As with personal auto insurance, requirements for your commercial insurance will vary from state to state, but no matter where you do business, it is wise to have some protections against liability.
Additionally, those protections might change as your business grows; when $50,000 per person per incident may have sufficed in the early days, upwards of $1 million might not be enough when you have thousands of cars on the road. It is important that you partner with an insurer that can meet your changing needs.
4. The Right Angle
Ride sharing is a hot market, and it is only getting hotter. Uber and Lyft dominate the market, and dozens of smaller companies, like Juno, are struggling to find a foothold. Unequivocally, the best method of finding success in such a competitive market is finding a niche.
In ride sharing, that might mean catering to a specific group of people generally overlooked by other ride sharing services, like children, the elderly, or the disabled, or it could mean marketing your business with a unique brand message, such as eco-consciousness or tech-forward. Perhaps all your drivers are women, which help female users feel more at-ease, or your cars are especially luxurious, catering to the wealthiest of users.
Ride sharing is a profitable market ― but it is also an exceedingly competitive one. To succeed, you must have all the right tools from the beginning, to include a distinctive concept to attract ride sharing users to your app. With these tools in hand, you will have the best chance of gaining stability and success in the ride sharing world.
