How to start a Taxi Company

Published: 07th August 2006
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How to start up a taxi company

Setting up and running your own taxi or private hire firm is by no means simple as there are regional differences and management styles are very different in different parts of the UK.

2005-2006, the private hire and taxi industry was worth approx £2.6 billion. Over 500,000 drivers in the UK. Taxi use has steadily increased over the last 20 years - 32 per cent of the public use a taxi every month, compared to just 16 per cent in the mid-1980s.

What's the difference between taxis and private hire vehicles?

Although both serve the same purpose (to transport paying customers to their destination, help with their luggage etc.), taxis and private hire vehicles have significant differences.

Hackneys
Hackney Carriage taxis (black cabs) are able to pick up people off the street (flag down) without a prior booking. Mostly found in urban areas, black cabs are highly regulated, with fares controlled by local councils and numbers restricted by many local authorities.

Drivers of black cabs are essentially self-employed and have to go through rigorous checks and tests before they are awarded their license. Some Hackney Carriage operators form co-operatives and drive saloons and MPV's, However most Hackney drivers prefer the traditional London style MetroCab or TX1 and TX2 Vehicles made by LTI.

Private Hire
Private hire vehicles, or minicabs, have to have a prior booking when picking up passengers.

Minicab owners will be prosecuted if they are found touting their business or behaving like a Hackney or Taxi.

Most private hire drivers are self-employed owner drivers and pay a minicab company a circuit fee for taking the bookings and scheduling the work. The minicab operator charges for the call centre and in most instances they will probably rent the radios end even provide data terminals or PDA dispatch systems if they have computerised booking and dispatch software.

If you want to be self-employed and make profit on your own without having to pay minicab circuit fees, become a licensed black cab driver and go it alone. Some black cab owners form co-operatives where they team up with other drivers to increase profits and run operations much like a small business. Computer Cabs in London, was built around a small fleet of black cabs. They now boast a fleet of over 3,500 taxis, taking 10-20,000 bookings a day. They also have one of the most advanced computer booking and dispatch and data systems in the City, they can process credit cards and track their vehicles by GPS.

It is possible to mix fleets, Hackney Carriages can cover private hire bookings if the street hires are quiet. It is however illegal for the Private hire vehicles to stop if a member of the public attempts to solicit them.

Rules and regulations

There are over 400 council licensing authorities in the UK and as there is no central body the regulations for each council will vary according to their particular management style. There are however basic regulations that are common to all authorities..

Private hire car regulations

Minicabs have suffered a bad reputation in the past due to the previously unregulated nature of their work. Rogue drivers would pick up stray passengers and charge them extortionate prices or worse. It is estimated that at least one woman a week is raped in illegal minicabs in London alone, a shocking statistic which blights the good name of the industry.

Some manufacturers of taxi booking and dispatch systems have features such as Text back www.textback.me.uk which ensures that just prior to the private hire vehicle arriving the passenger is informed by SMS the vehicle registration, description and driver name. These essential passenger personal safety features are likely to make you more popular with the female clients.

In 1998 The Private Hire Vehicles (London) Act, handed the responsibility of regulation of minicabs and private hire to the Public Carriage Office, which until then only looked after black cab licensing.

Minicab and private hire firms must now hold a private hire operator license before they can accept bookings - your company will not be able to trade without one. In order to get a license, you will have to prove that you are 'a fit and proper person'. Any criminal convictions, bankruptcy or breach of health and safety rules will count against you.

You should also prove you hold any relevant radio licensing or insurance documents and you must diligently ensure that your drivers vehicles and documents are in order. Some software packages will provide a comprehensive record of all friver and vehicle documentation and automatically lock drivers out if the documents have expired. For further information look at the Diplomat Navigator product on the website at the bottom of this article.


Your home address can be your operating centre, a licensing officer may be sent to inspect the premises.

An application fee which runs for five years will be charged by the local authority.

Private hire cars are not required to have meters but may choose to install them. If they are installed they will have to prove they are compliant when the vehicle attends its regular road safety check 3 times a year, there is no restriction as to what a minicab or private hire operator can charge.

Except for exceptional circumstances the vehicles must be less than 5 years old. Drivers must have held a full EU driving license for 12 months, pass a medical and make a declaration in relation to any criminal convictions. In some areas, drivers have to pass a 'knowledge' test, similar to black cab licensees, in order to operate.




Hackney carriage (black cab) regulations
If you are planning to go it alone in a black cab, you need to meet certain requirements. To get your license, you need to be 21 or over, have a full EU driving license for at least 12 months and be able to drive a taxi competently. you will need to prove that you are a 'fit and proper person', and you will be checked by the criminal records bureau .(minor crimes may not automatically disqualify you.) and will require a full medical, A 'knowledge' test may also be required.

London's black cab laws are slightly more complex. You need to decide to apply for a 'green badge' (which allows you to operate in central London) or a 'yellow badge' (which allows you operate in the suburbs.)

The Public Carriage Office allows two years for applicants to pass their central London knowledge test, and six months to pass the suburbs knowledge test.

Training
There is currently no compulsory training programme, although in 2000 the Intermediate Certificate in License Education for Taxi and Private Hire was introduced to provide a nationally recognised qualification for drivers.

To get involved with a training programme, contact the Private Hire, Hackney Carriage and Chauffeur Training Organisation on 0191 296 0814.

Useful contacts

The National Private Hire Association represent over 400 private hire firms. To find out what they can do for you, call them on 0161 280 2800

If you are thinking of becoming a taxi driver, you should firstly contact your local council to find out their particular fees. The Licensed Taxi Drivers Association will also be able to help you out - you can contact them by calling 0207 286 1046.


Startup costs
As with much to do with the taxi industry, where you live and what sector you are working in (black cab or private hire) greatly affects the costs involved in setting up your own firm. You should contact your council to get exact figures, although there are some solid estimates that you can work from.

Hackney Carriage costs
From last year, the Disability act requires black cabs have to include wheelchair access and induction loops for the hard of hearing, although the timetable for compliance with the new regulations has been put back pending an announcement by the government.

Nevertheless, it could cost you several thousand pounds to modify second hand black cabs to keep up with the new rules. Brand new cabs currently cost £25,000 for a manual, £27,000 for an automatic.

Taximeters are obligatory for Hackney Carriages and cost around £150-£300, although it is possible to rent them out on a monthly or yearly basis. For further information contact Diplomat on the link at the bottom of the article.

As well as the cost of a license, drivers also have to pay for an additional driving test and area knowledge test - again, these costs vary according to the licensing body. The outlay doesn't stop there - a medical examination will cost you between £60 to £80.

Private hire costs
As with Hackney Carriages, the costs of getting your private hire fleet on the road will vary depending on which licensing authority you are dealing with. You will need to pay for operator, driver and vehicle licenses before you can get your Certificate of Compliance from the council, which allows you to start taking bookings.

A private hire operator's license costs anything between £250-£300, while a license for your vehicle will range from £75 to £300. A license for your drivers will cost between £25 to £200.

Insurance
You must be insured, Cars, drivers and third parties (i.e. passengers) must be insured, with special private hire insurance available to minicab firms. It is also worth getting your operating centre (if it is not your house) and any equipment (radios, GPS, PDA's and computer booking and dispatch systems etc.) insured too.


 



Premises
This can be any building you like as long as it conforms to Health and safety and has all the appropriate licenses for equipment.

If you are going to be operating a VHF two way radio system try to choose a site that is on high ground so as to maximize your transmission coverage area. Some companies will provide you with computer coverage predictions before you even talk to the potential landlords. For more details on this service please contact Diplomat.co.uk

Your operating centre should be easily accessible to customers who wish to walk in and make bookings, rather than call.

What equipment is needed?
Modern cab companies have state-of-the-art radio equipment, this often integrates with Global Positioning Systems (GPS) so the vehicles can be tracked on the booking and dispatch computers using the bespoke dispatch software to co-ordinate the jobs and vehicles. Another useful feature is to have full data so that the job details are transmitted in digital form to the cars and can appear on pocket PC's mounted in the cars or simply texted to the drivers phone. This enables a few operators in the office to control a large number of cars and it also prevents confusion when people may be of different nationalities and have widely changing accents. Once the vehicles have Pocket PCs fitted then the drivers can also choose to have in vehicle navigation systems such as Tom Tom and destinator.

Radio licensing
Almost all private hire firms have some sort of radio communication, ranging from simple hand held mobile devices to complex computerised systems that are able to track and interact with drivers. Before you consider your options, however, you must get a proper license from Ofcom

The licence costs between £5 and £10 per car per year depending on the size of the fleet.

You can contact the RLA by calling 020 7211 0211 or by clicking on www.radio.gov.uk

Radio equipment
Small operators may wish to dispense with the cost of any two way radio equipment and just use mobile phones.

It is however far more cost effective in the long run to use two way radio as unlike a mobile phone contract there is no monthly line charge associated with such systems

Make sure you get the right equipment for the area you cover. VHF is good for long range communication and is best over long straight lines. Be sure to purchase radios that are data compatible as many radios being offered at bargain prices are not. For further information on data compatibility phone Diplomat on 01256 381656

To take the next step up to cover a wider area, you would need to lease a line on one of your area's telephone masts. Space on these transmitters is owned by companies such as NTL and Crown Castle, who then lease out space to local operators.

New technology

With new technology you can track your cars using specialized software that knows the destination address and automatically places the car in the rank when they are clear. In addition to this GPS can be used to accurately pinpoint a car and jobs can be sent digitally to onboard computers or even text messages to mobile phones..

Previously high tech software and GPS systems have been out of the price range for most start-up minicab firms, but now there are firms that specialize in startup packages such as Diplomat which offer a single seat of their software complete with National street data for less than £1.00 a day. This package can then integrate with SMS dispatch or full vehicle data systems complete with GPS for under £300.00 per vehicle.

Once your fleet is fitted with a data system you can talk to them in the conventional way and send them text details about pick ups and so on. The drivers have five or six standard responses that they can send back to you, ranging from 'Picked up and on our way' to 'Help! I'm being attacked!' or please call me I need to talk to you.

Making a profit
Getting the right equipment and licenses doesn't provide a guarantee that your private hire firm will be successful - your whole enterprise can survive or fail due to public perception, so it's essential that you get this right.

It is important that 'word of mouth' is on your side. Carding (putting business cards through letterboxes) is also very important. Research shows that most customers make their judgment on a minicab or private hire firm after just one journey.

Even if you are operating just two cars from out of a cramped spare bedroom in your house, if your drivers make a good impression, you could see a loyal customer base build up, thus enabling you to take on more drivers and vehicles.

Factors such as turning up promptly, treating the customer with courtesy and having a competitive pricing policy is vital in building up repeat customers so invest in booking and dispatch software and always be polite and courteous on the telephone.


A good way to attract customers is to offer new features such as online internet bookings and text bookings, this appeals greatly to the younger generation as they can book entirely by SMS, modern booking and dispatch software will instantly translate the text to a job and bypass the telephonist all together.
Please contact www.diplomat.co.uk for further information.


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