The taxi trade is currently thriving in the UK, with a shift away from the passenger monopoly of businessmen and the elderly to students, couples, and schoolchildren becoming frequent fares. Around 32% of the population uses a taxi a minimum of once a month; in the 1980s this was only 16%. Today, approximately 500,000 people are in employment as drivers for minicab and hackney carriage firms.
It is generally considered that the best way to make a profit from taxi driving is to become a hackney carriage driver and set up your own business in a black cab. This approach however is only suitable for those working busy cities, as black cabs make their money by picking up passengers that have hailed them from the street. In a quiet town or countryside it is unlikely that much trade will occur this way. Some black cab owners start their own co-operatives similar to a small business so that they can boost profit and organisation.
Minicabs or private hire vehicles are pre-booked either by phone, or by the passenger appearing at the taxi office in person to order a taxi. These are the best option for towns and countryside, with small to medium firms controlled by a central booking centre. Minicab drivers therefore are more likely to be in part employment with a firm than self-employed, although many do exist.
The costs involved in starting your own taxi driving firm will depend heavily on whether it is black cab or minicab and on the area in which you work.
Black Cab - New black cabs cost £25,000 for manual transmission and £27,000 for an automatic. Older style cabs must be adapted to meet the recent regulations for disabled access. Meters are obligatory in hackney carriages and cost about £300 to buy, but they can also be rented by the month or by the year.
There are also driving test fees to pay. In London, a driver will be required to pass The Knowledge, which carries a one off fee of £100. The required medical exam adds an additional figure of £60 to £80.
Minicab - It is common to purchase good quality second-hand saloons for private hire vehicles. Getting taxi insurance on a car over ten years old is very difficult, and you may encounter similar problems with the local licensing authority.
Before it is possible to take bookings for a taxi fleet, it is necessary to purchase licences for the drivers, cars and operator in order to acquire a Certificate of Compliance. The drivers' licences will range from £25 up to £200, and the licence around £75 to £300. The licence for the operator ranges between £250 and £300.
Whilst meters for the cabs are not compulsory, it can be preferable in the long run for customer reassurance and to provide further distinction between your business and the illegal soliciting of the so called "gypsy cabs".
It is worth spending a good deal of time perusing insurance companies and quotes, and finding out exactly what cover you need. Firms must insure the cars, drivers and third parties: the passengers. There is separate private hire insurance available for minicabs, and businesses are also advised to insure all equipment and the office/operating centre.
The policies will differ between providers, but be aware that some will only insure taxis under the classification of "commercial vehicles". In total however, it is possible to get cover up to £5 million.
There are several providers that are dedicated taxi and minicab insurance specialists, they can offer benefits like:
- Fully Comprehensive or Third Party Fire and Theft
- Taxi, minicab and contract hire insurance
- Windscreen repair
- Legal expenses
- 4 to 8 years no claims bonus
The essential piece of equipment required by private hire firms is the radio system, complete with the associated licensing. Licences are issued by the Radio Licensing Authority, with prices ranging from £75 to £200 annually, dependent upon the number of cars and the frequency on which you transmit.
Basic radio equipment with a fixed mobile appliance and VHF (Very High Frequency) costs about £170, while many modern fleets are fitted with GPS navigation which can cost around £10 per car per month.
To link the minicab communication together, you can install a group call radio system with costs starting at £100 to purchase, and £25 per month to rent. At the operations centre it will be necessary to install an antenna to transmit the radio communication, and for cab firms covering larger areas you can pay rental on a line on one of the phone masts. This is usually an option for when the business has established itself rather than just beginning, as the initial lease fee is around £1,000 with an annual rent of £16,000.
The law states that firms must have an operating centre that must all the necessary licensing and that meets health and safety regulations. This does not have to be an office, but often starts out at the proprietorís home which inevitably reduces initial costs.
However, you should ensure any commercial premises are near your customer base so that you catch drop-in fares and so that you can achieve adequate radio frequency.