Starting a taxi business in South Africa is a profitable venture. There are many tourists and people commuting from one place to another. You can start a taxi business with one car and expand your business as the demand for taxi services increases. A report by Transaction Capital in 2019 showed that about 69% of households in South Africa use minibus taxis. This shows that the demand for taxi services is high.
In this article, I will show you how to start a profitable taxi business in South Africa, requirements and profitability.
Research the Market
Before getting started with the taxi business in South Africa, it is good you first get to understand the market. Get to know how many people need taxi services, competition, routes to ply, profitability and how taxi associations operate. Also, get to know the challenges in the taxi business. You can talk to someone who has been in the business.
Requirements for Starting a Taxi Business in South Africa
You need to meet the following requirements before you can start a taxi business in South Africa.
1. A Minibus Taxi
To start a taxi business, you need a minibus. The most preferred vehicles for the taxi business are Toyota Hiace and Nissan. It is because they are highly reliable and have adequate passenger capacity. When selecting a car for a taxi business, look for a reliable and fuel-efficient car.
2. Registration and Licenses
Before you can start the taxi business, you need to acquire the necessary paperwork. You need to get licenses to operate the taxi business. You need to register your taxi business with agencies like the Intellectual Property Registration Office (CIPRO), the Department of Labour and the Department of Transport.
The driver of the taxi also needs to have a driving license. You also need to get a route license. The route licenses for taxi businesses in South Africa are issued by the taxi associations. However, the routes are allocated and controlled by the local governments. Once you have acquired all these licenses, you can go ahead to start your taxi business in South Africa.
Read also: How to register a business in South Africa.
You need to insure your car and your passengers before you can start operating a taxi business in Kenya. You can opt for any of the three insurance covers: Third Party Only, Third Party, Fire and Theft, or the Comprehensive policy.
It is advisable to go for the comprehensive policy so that your car, third parties and passengers are insured. In case of an accident, you will car, third parties and passengers will be compensated. There are many insurance firms in South Africa. Shop around for the most adequate insurance cover.
4. Develop a Mobile Application
It is not mandatory you have a mobile application, but it will boost your taxi business. Many people prefer ordering and paying for taxi services using a mobile application.
Taxi apps have become a common trend in the transport sector, especially with the rise of many taxi companies. Therefore, if you want to make it in the business, look for a mobile app development company to help you develop a taxi app.
Read more: Best taxi apps in South Africa.
Cost of Starting a Taxi Business in South Africa
The startup capital for the taxi business in South Africa depends on the choice of your car and the number of fleets. The commonly used car for taxi businesses in South Africa is Toyota or Nissan. The cost of a reliable taxi car ranges between R100,000 and R350,000.
You also need to factor in the taxi business registration fees and insurance costs. It costs R175 to register a taxi business through CIPC.
Is Taxi Business Profitable in South Africa?
South Africa is a developed country and the presence of many tourists makes the taxi business a profitable venture. On average, a taxi business in South Africa makes monthly profits ranging between R8,000 and R25,000.
The profitability depends on distance. Taxis covering long distances tend to make higher profits than those ferrying customers over short distances.
Starting a taxi business in South Africa is a profitable venture. Many households rely on minibus taxis and therefore, the market is huge. Taxis plying long distances tend to make higher profits than those ones plying short distances. As such, you can decide to ply short or long distances.