Everything you need to know before you start your car-sharing project
So you have chosen the type of vehicle. And of all the transportation means available you have decided that you’ll use cars for your sharing business. Congratulations! You have done the most challenging part. Congratulations! 🥳 😆 The next step is to create a business plan. As this too is not the easiest of tasks, we’ve created a guide for you highlighting the most important things to consider before starting hands-on.
There are a lot of different approaches to start from, but let's start with the one that opens up a wider perspective of your future playground. And this is all about the market assessment. So why not start with the demographic assessment that will later help you to define your target audience.
Demographic assessment is the understanding of your customer profile and finding out how many people meet those criteria in the area you are planning to operate. For example, if your customer profile is young people without their own cars, but for whom having one would make their life easier, you are in the right place. However, it could be that the same age group is not interested in using the car-sharing service because, for example, distances are too small or young people are working in the city nearby and coming home just for the weekend and have no need for a car. There might be different scenarios and each of them should be analyzed separately.
Look at competitors
If there are competitors in the area you’re interested in, this could be both a good as well as a not-so-good sign. It is also a good sign in terms of demand - it means that the service is required in the area in question. However, it could be that market is too small for several companies to operate in, so you should carefully research how many players the market can take.
In addition, consider obtaining all the information you can have about your competitors - their fleet size, how many rides each vehicle makes per day and per month, and their pricing strategy. Any credible source of information works. For example, consider looking into local media. Sometimes company representatives are talkative about their success and future plans so it could be useful for you to analyze the market. You can also use their service and, for example, analyze vehicle odometers from time to time to calculate the distance that a vehicle travels within a week.
There are also talkative customers, who might be willing to share their likes and dislikes about your competitor’s service with you. This could also be a very important source of the information about the business.
Wide range of possible future customers - B2C, B2B, P2P
At the beginning of this article, you might get the feeling that car sharing is about the business-to-consumer (B2C). But your customer could also be another business. For example with the help of your service companies can rent out their vehicles to corporates as well as to logistics, delivery, or even construction companies if the appropriate vehicle type is available. These are not very common solutions and car-sharing is used more often to offer vehicles to people, but some companies also operate very successfully in B2B settings.
However, there are several types of B2C car sharing. There is an option where are the owner of cars and you rent them out with the help of your platform. Car owners could also be other businesses that rent out cars to regular consumers while they are not using them. Another option is peer-to-peer (P2P) renting - people rent out vehicles to other people while they are not using them.
In all these cases, your car-sharing platform is going to be a tool that will help to make cars available. For you, the platform is going to be the most important driver of your revenues.
Regular or electric?
There are fans and supporters of both - regular as well as electric cars. However, personal opinions do not play a crucial role here. What really matters is financial reasoning:
- What is the price of the car? What's the difference in price between regular and electric cars?
- If you have to take a loan, does the bank somehow support one or another type of car?
- Can you get support from the state or the city council? For example, are there special fees for parking electric vehicles that could reduce your costs while the car awaits the next driver?
- What about taxes? Do reduced taxes apply if you use environmentally friendly vehicles?
Price and costs
When you make your choice, in the framework of your business plan you should also plan one step further and look at values like insurance and maintenance costs. A vehicle is one of the most important assets if you decide to have one, but also it generates most of your costs.
At this point, you should already focus on deciding what the price for your service will be. In addition to all nuances mentioned above, you should also take into account the prices that your competitors offer, as well as other costs - salaries for your employees, premises’ rental, etc. And, last but not least, what is your profit going to be and how will you earn money?
One more cost item that you should consider is marketing costs. However, this is a bit easier as these costs are relatively easy to predict and control. Bear in mind though that if you don't invest enough in attracting customers, you won't generate enough revenue. And marketing doesn't end with advertising campaigns. It’s important to create your brand and find your unique selling point - how are you going to be different? You can read more about marketing and other things to keep in mind in this blog post “How to launch a vehicle sharing business in 6 steps?”
Technological challenges
The sharing business is complicated from a technological perspective as vehicles should be connected to the software that is connected to the platform used to operate the business. And the platform is also connected to the app used by customers. Everything should work smoothly together. At ATOM we are making life better for those who are willing to use ready-made solutions. However, there are companies that are thinking of creating technical solutions from scratch. This is possible, but you should really ask yourself is it worth it? In this blog post “A white label solution or building your own software - what to choose for your vehicle sharing business?” you can find out more.
That's it! After all these decisions have been made, it seems like you could be ready to go! Finally, let's sum up how much time it takes from business plan to launch:
- ideas and draft of your go-to-market strategy - 1-2 weeks;
- market analysis by taking into account competitors as well as customers - 2 weeks;
- tech decisions on cars and IoT solutions - 1-3 weeks;
- preparing the budget - 1 week (+ at least 15 weeks if funding is required;
- operational plan - 2 weeks;
- hiring - 3 weeks;
- software - 2-4 weeks (in case of using white label solution);
- testing & soft launch - 1 week.
So the most optimistic scenario is that you will be ready to launch your car-sharing business in three to four months. Contact ATOM for additional information. We are here to help our clients succeed.