Cab business plan – How to start a taxi business

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The Taxi industry in India is one of the fastest-growing sectors. The main reason for this is the development of online taxi booking platforms that helps customers book taxis according to their convenience using their smartphones. The demand for taxis has also increased with increased online cab-hailing and cab sharing services. The low cab fare is also a driving factor for the increased demand for taxi cabs in India.

In this article, we will look into the Cab Market in India, how Covid-19 has impacted the taxi industry and how to create a business plan for a can business!

Cab Market In India

The Indian Taxi market was valued at around USD 6.4 billion in the year 2016 and was forecasted to grow at a CAGR of 13.7% from the year 2017 to 2022. In recent years the lifestyle and the disposable income available to consumers have drastically improved.

With the intervention of the internet in the taxi market, the way that people book taxis and experience the taxi ride has also greatly changed, increasing the demand for taxis in India..

Impact Of Covid-19 On The Taxi Industry In India

The Covid-19 situation has greatly impacted the taxi industry all over the world. The demand for taxis had greatly decreased with the increase in people working from home.

The lockdown and social distancing measures have further put a strain on the taxi market.

However, with the relaxation of lockdown measures and the application of vaccinations, the taxi industry is returning to its position in the market.

Creating A Business Plan For A Cab Business

A proper business plan is required to start and run any business smoothly. In this section, we will look into how to write a business plan for a cab business.

Executive Summary

The executive summary is the first part of the business plan. It provides a summary of the whole document so that those who are reading the document can get a glimpse into what the document is about before going into detail about it. So the executive summary must be catchy enough to gain the attention of potential investors, loan givers etc. It must enlist all the important details about the business in short. The following is an example of the executive summary for a cab business plan:

“Drive Fast is a Delhi based taxi company. The business aims to provide fast taxi service to the customers while ensuring their safety at the same time. We value the time of our customers and know how every minute counts. Our cab service aims to provide the latest technology services such as in-car credit and debit card access. Customer comfort and safety are our top priority while making sure that they reach their destination in time.”

Legal Aspects

Any business must be registered as a legal entity for it to function. The business must be registered as any one of the following such as:

  • Sole proprietorship
  • Partnership firm
  • Limited Liability Company (LLC)
  • Private Limited

The type of registration will demand the number of owners and the type of ownership for the business.

Obtain Necessary Permits And Licenses

In addition to the registration of the business as a legal entity, the business must also have the following legal documents for it to function in its business activities:

Driver’s License

People who own and drive the cars must hold a valid driver’s license to show ownership and their ability to drive the car. For a cab business, the driver must hold a commercial driver’s license, granted by the Regional Transportation Office (RTO).

Registration With The Regional Transportation Office

Under Section 39 of the Motor Vehicles Act, 1998, all vehicles must be registered with the Regional Transportation Office (RTO) within seven days from the date of purchase of the vehicle. The vehicle owners will receive a certificate of registration for the vehicle from the transport authorities. Driving an unregistered vehicle is punishable by law and the criminal offence may be fined up to Rs. 2000.

Car Fitness Certificate

Before the car is used for commercial purposes, it must be evaluated and should have received an official certificate of fitness to be eligible to be driven around.

Car Insurance

The car must have third-party liability insurance. In the case of an accident caused by the driver or owner of the car, the third party who are the riders of the cab will be protected by this insurance. The insurance is also beneficial to the car owner since it will serve as a source of income for the car owner.

GST Registration

The taxi business is taxable under the GST act. The taxi business must therefore be registered for GST.

Customer Analysis

Analysing the target audience or customers is very important to provide services that are most likely to attract them. Market research has to be done to figure out the customer persona. The customer persona is a fictional character created to represent the ideal customer for the business. The customer persona is created by analysing the demographics, psychographics, income level, buying power, purchasing behaviour, etc of the target audience. The following could describe a target customer of a taxi business:

“The target customers of Drive Fast are people who belong to the low and middle-income group. These customers do not own a vehicle of their own and hence have to rely on public transportation services. They also have high demand jobs that usually require them to be at places. The customers though cannot rely on buses all the time and hence users can services to reach where they want to.”

Product and Service Offerings

Products and services are the key elements that help in the growth of a business. In a taxi business, it is harder to differentiate one’s business from another, but there are still certain things that the business can offer its customers to give the taxi business a competitive edge over other taxi businesses. The following are some examples of services that a taxi business can provide its customers:

  • Our business allows scheduling of vehicles days in advance
  • Our cab business allows customers to book multiple vehicles at a time for a lower price for a larger group of people
  • Special discounts are offered to repeat customers who book taxis frequently in less time
  • Our business also has special service for office goers, schools kids etc who have to travel every day to the same place at a fixed time

Location and Storage Space

Even though the taxis are going to be on the run throughout the day, they need a place to be parked at the end of the day. The location of the taxi place must be somewhere safe for the vehicles to be locked in and at the same time be large enough to accommodate the number of cars in the taxi business. The location can also have a small office where customers can directly visit and book their taxis as well.

Marketing Strategy

The marketing strategy is one of the most expensive and expensive strategies in running a business. Hence care must be taken to decide the right marketing strategy for the business. Proper market research must be done to collect data that can help form the right marketing strategy for the business. The following is an example of a marketing strategy for a taxi business:

“The key target audience of the Drive Fast taxi company are people who want to reach a place quickly at a lower price. These people belong to the low and middle-income levels. Another group of the target audience are people who need taxi service regularly like an officer goer. So to attract such a target audience, television ads and social media posts will be the primary medium that is used for marketing. Marketing campaigns will also be done to make deals with offices and schools to provide our service to its employees.”

Competitor Analysis

The taxi service market is highly competitive with more and more new taxi companies being started. Taxi companies that own integrated apps that allow customers to look for taxis, book them, track the ride, etc have a better competitive edge than private taxi companies that do not offer any such services to their customers. Hence it is very important to perform competitor analysis to stay on top of the game. The following are some ways to provide better service than the competitors:

  • The business may provide an online platform such as a smartphone app for the customer to book, and track a taxi
  • The business may provide an estimate of the price for the taxi ride in the app
  • The business may have a decentralised structure that allows them to provide quick service to the customers
  • The business may provide in-car credit and debit card access to customers so that it is less of a hassle for them
  • The business may allow the customers to pay through digital banking and UPI services


  • It helps to find the strength and weaknesses of the business
  • It helps to find the target audience of the competitors
  • It helps to position yourself correctly in the market
  • It helps to find out their strategies to help find out if they can help your business


  • It is an expensive and time-consuming activity
  • It can lead to incorrect results if the data is not collected properly
  • The data collected might be incorrectly analysed or biased

Investments and Profits

The taxi can business requires a large amount of investment. Most of the investment will be in the car inventory and taxi drivers. The amount of investment required will depend on the number of cars in the taxi business, the types of cars used for the business, the space required to store the cars, etc. Other working costs for running a taxi business include fuel costs, employee saree, car repair and maintenance costs. So care must be taken to consider all expected expenses before fixing the investment required for running the taxi business.

The taxi business is fast-growing and the global market is expected to grow to USD 28.6 billion with a CAGR of 22.3% each year. So the return on investment and profits are going to be high for your taxi business.


A successful business required well trained minded employees to run it. The following are some of the different job roles required to run a taxi business:

  • CEO
  • Supervisors
  • Dispatchers
  • Office Managers
  • Call Center Employees
  • Data Entry Clerk
  • Accountant
  • Marketing Manager
  • Car Drivers
  • Car Mechanics and Service Providers

Create your business website

In today’s world, everything is digitalised. It is very important to create a business website for customers to know more about your business and gain trust in it. The business website must be user friendly that allow the customers who visit it to navigate through the pages easily and find what they are looking for. The website must be attractive to the target audience and must contain all the necessary details such as the name of the business, what the business is about, what are the products and services provided by the business, and how the customers can reach the business or give feedback, etc.

Financial Plan

The financial plan is one of the key parts of a business. It estimates how much funding the business requires and how the business owner plans to acquire the source for it. The following is an example of a financial plan for a cab business:

“Drive Fast taxi service requires an initial start-up cost of around Rs. 25 lakhs. Out of this amount, Rs. 10 lakh will be funded by the owner of the business, Mr Raj Kumar, and Rs. 5 lakh will be funded by his friend and partner, Mr Chandrasekhar and the remaining Rs. 10 lakh will be funded through a bank loan.”

Creating a business plan for an ola cab business

If you do not have the means to start an independent cab business you can still run a taxi by tying up with cab businesses like ola. Here is how!

Pair Your Car With Ola

  • If you own a car of your own, you can get it registered under ola as a cab and start your cab driving service
  • If you do not have a car of your own then you need to pay around Rs. 20,000 to Rs. 25,000 to get a car leased under your name by Ola

Rules To Pair Your Car With Ola

There are certain rules that you must fulfil if you want to pair your car with Ola. Here are some of the rules:

  • The car you want to register with Ola must be new
  • The car must not be older than five years
  • The car must be in a good condition
  • The car must have an air conditioner
  • The car owner and driver must have a commercial driver’s license

Procedure To Pair Up With Ola

The following is the procedure to register the car under Ola:

  • You must first contact Ola directly at their office or through their phone number
  • You must then submit your application for partnering with Ola along with the required documents such as owner and driver’s ID card, PAN card, commercial driver’s license, address proof, paper of the car, etc
  • Employees from Ola will check all the documentation and verify it
  • The car condition will also be checked by Ola
  • Police verification has to be done and verified with Ola
  • You need to open a current account in the bank
  • If all the procedures are done properly and Ola approves your partnership, you can start your cab business within 6 to 7 days


The cab business in India is on the rise with the increased demand for taxis and higher disposable income.

Not interested in cab businesses?Don’t shed a sweat because there are a variety of car business ideas that you can choose from.

More people are now opting to ride in taxis but the market is also highly competitive with taxi giants such as Ola, Uber, etc. With the right business plan and marketing strategy, you too can start your own taxi business and make that into a successful venture!

This post is also available in: English


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