Cross border taxi/minibus business
Running a cross border transport business is quite challenging. There are various different national laws that need to be abided by and this complicates the business somewhat. The taxi/minibus business is always appealing to many who want to invest a bit cash and earn a daily income. Sounds very promising. When managed well, the business performs well, with the vehicle paying for itself and a little left over for profits. The biggest problem with this business is that if the vehicle is not owner driven, there are various challenges that come with hiring staff to run the business successfull.
The cross border transport business is similar to other transport businesses. How to start a transport business and the All in one guide to starting a transport business will help you get on your way to building your business. Plan ahead and get all your ducks in a row. With carefull planning and support, your transport business can be a success.
Consider the following:
If the vehicle is being purchased via credit a monthly loan repayment needs to be factored into operation costs. It may seem like making the vehicle payment will be simple, but making all the day to pay payments, many have often been shocked to realize that the taxi isn’t paying for itself. It is crucial to obtain the best finance for your vehicle, shop around and get the best rate possible. Loan sharks are definite no and should be avoided because they will push margins down and make it difficult to breakeven.
This step is probably the most important because the amount of money you spend here will affect your business; the type of vehicle you buy will affect your business as well. When it comes time to purchase vehicles for your business you may want to consider buying used models, which can be a big money saver. If you find a vehicle that has low miles and suits your needs, then have it checked over by a mechanic. Don’t buy a wreck because it is going to be in the garage more than on the road. If you are buying a larger fleet of vehicles you can often get a discount for buying from a dealer in bulk. Obviously, the vehicle is the key element to any transportation business, so do everything in your power to make sure that you get the right vehicle for the right price.
Recruit good reliable drivers
If the vehicle is not owner driven, careful recruitment of drivers is necessary. The drivers make or break the business. Even with a brand new car, he driver can still sink the business. A few months ago an operator couldn’t find a driver for his vehicle and opted to just get a regular guy to drive the vehicle to South Africa. The vehicle didn’t make it to Johannesburg as the driver couldn’t drive up the steep ascents in Limpopo.
The one snag that makes running a taxi business challenging is having different drivers driving the vehicle. It is common knowledge that taxi drivers are careless drivers. This careless driving impacts your cash flow in a negative way. Taxi’s that are owner driven perform better than those that are not driven by the owner. Repairs and maintenance costs will probably be very high.
Get the paperwork in order
Get as much information about permits. Depending on which borders you are crossing, get all the required permits and licenses required. Mozambican police are about as bad(in soliciting bribes) as Zimbabwean police so don’t give them a chance. Obtaining a permit can be a show stopper, so go to the right departments. Ensure drivers have the correct licenses to operate across both borders. IT is now a requirement to have two drivers for long distance journeys. Confirm how many drivers are required on the South African side. This will affect overheads as this will mean two salaries. Some people have operated under permits belonging to other companies but this deal often turns out sour. Don’t say I didn’t warn you.
Keep an eye on costs If you are prudent and good with money, this may not be so difficult for you, but if you are like most people, finances will be a major hurdle. My accounting friends always insist that to manage your money well, always plan in advance.
- Anticipate how much will be required for the trip. Calculate exact figures where possible, fuel, toll gates, border payments etc.
- After each trip tuck away a portion of the taking for maintenance, insurance and routine costs. Don’t wait to plan for the service a week before the vehicle is due. If you put a little away each week or month, it will be easier to meet these routine costs.
- Keep a little stash tucked away for emergencies. Be prepared for breakdowns when the vehicle is not making any money. Some costs need to be paid whether the vehicle is on the road or not.
The challenge of cross border transport is difficult to know exactly how much is made per trip. Long distance drivers often consider income from passengers picked up en-route to be personal takings; the owner will never know how many these were and how much was made. If driven by the owner, all takings are carefully recorded and accounted for. If there is a problem along the way costs related to the problem can be escalated with the rest of the money being pocketed. This can be solved by ensuring that receipts for every payment made are kept.
The police will milk you dry
If the taxi is operating across the Zimbabwean border consider police along the highway who are looking for every opportunity to take a bribe or to levy hefty fines. Don’t be fooled, even if all your ducks are in a row, the police always find a reason to fine you or solicit a bribe. In South Africa, the police are a lot better as long as everything is on order.
How to deal with the police:
- Ensure that the vehicle is in good working order or this is reason for more fines and bribery requests.
- Drive carefully or speeding tickets, parking tickets and so can chew a big chunk into taking.
- Make sure that paperwork is in order.
- Stay on designated routes and timetables.
- Have fire extinguishers, reflector jackets and triangles in the vehicle at all times.
- Develop a relationship with them.
- Dont always get caught on the wrong side of the law.
Dont try and get rich in one day. Take your time to set strong foundations. A shona saying says, “Kumhanya hakusi kusvika, Speeding doesn’t mean you will get there.”