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Ridesharing the Right Way: 5 Neglected Steps to Profitable Ridesharing
Uber and Lyft - and dozens of smaller and increasingly successful regional companies - have proven that ridesharing is big business. Rather than wasting money on a personal vehicle that will spend most of its life in a parking space, or wasting your time waiting for crowded, dirty public transit options, most folks are eagerly turning to convenient, speedy ridesharing, making it an excellent business idea for entrepreneurs everywhere.
However, starting a rideshare business isn't as easy as offering strangers rides and expecting payment. Entrepreneurs must approach ridesharing as a traditional business idea, drafting plans and marketing strategies that will enable stability and profitability. Further, ridesharing tends to require a few extra steps that some entrepreneurs fail to consider - like the following five steps to building a better rideshare business.
1. Create a Competitive Advantage
The rideshare market isn't brand-new, which means entrepreneurs have more than a handful of competitors. Therefore, it isn't enough to expect users to clamor for service since many will already feel comfortable using the big box ridesharing companies. Instead, entrepreneurs should create a competitive advantage by making their ridesharing experience unique.
Claiming a niche is perhaps the easiest way to garner attention in a competitive market. Ridesharing is rife with opportunities for agile startups to gain footholds because there are abundant niches to be claimed. For example, entrepreneurs might develop a rideshare devoted to transporting minors, one catering to physically disabled folks, one offering only luxury vehicles, or one committed to green practices. Though niches might require more planning, they are likely to pay off because they differentiate new ventures from established companies.
2. Consider Using Convenient Software
In a bid to save as much money as possible, many startup entrepreneurs strive to do everything in-house, from marketing to tech support. However, reassigning employees to arduous, complex tasks like software development not only wastes time and money, it can produce an inferior product.
Fortunately, ridesharing has existed long enough for third-party business solutions to appear. In particular, entrepreneurs should take advantage of options like RideCell, a complete ridesharing platform that organizes requests, vehicle tracking, routing, performance analysis, and more. Using pre-made software, at least initially, will help ridesharing businesses get moving sooner, attract an audience, and generate profits.
3. Complete the Legal Hoop-Jumping
Vehicles can be dangerous machines, and as such, every state boasts hundreds of laws dictating why, where, and how they may be used. Ridesharing businesses, which require vehicles, must understand and adhere to those laws if they hope to operate above-the-board. Typically, this means entrepreneurs must jump through some legal hoops before their ridesharing business can truly begin.
More and more states are requiring ridesharing entrepreneurs to file for Transportation Network Company approval (TNCs). These are most often acquired through a state's public utilities commission or transportation department. TNC approval ensures ridesharing vehicles are equipped with necessary safety equipment and drivers are licensed and trained.
4. Cover Drivers, Passengers, and Cars
While some entrepreneurs may prefer to leave auto insurance up to their drivers, some states mandate that ridesharing businesses must provide commercial insurance to keep passengers, drivers, cars, and the business safe. In such locations, states tend to set minimum coverage; for example, in California, new ridesharing businesses must have at least:
Ridesharing businesses in Periods 2 or 3 must purchase even more extensive insurance coverage, amounting to at least $1 million for death, personal injury, and property damage. Even in states that don't require insurance, entrepreneurs should consider insuring their drivers to protect their businesses and themselves from potentially ruinous lawsuits.
5. Continue Growing With the Market
Exciting changes are occurring in the transportation sector, and ridesharing entrepreneurs should pay close attention to emerging technologies to find additional opportunities to excel. For example, electric cars and other eco-friendly options should become more affordable and widely available in coming years, and claiming an entirely environmental fleet will likely be advantageous. Additionally, autonomous vehicles are likely to revolutionize the ridesharing market, lowering prices while raising safety and efficiency. As long as rideshare entrepreneurs are willing to adapt to market trends to grow, they should find ample success.
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