Great Business Opportunity: Running a Taxi Business

I was talking to the driver of one of the bigger taxi companies in Manila and here is what I gathered:

1. Always have the latest model Taxi. (With so many taxi units plying and not so many passengers, passengers tend to ride on new model taxis over the dilapidated or old taxis.)

2. Taxis must have radio and a 24/7 Central Dispatch. (The driver said he gets good income from his regular phoned-in customers. Also, rather than scramble against other passengers, a passenger would rather phone the taxi company and wait at the agreed place)

3. Taxis have to be always clean & the driver's name and taxi company and telephone numbers displayed prominently in stickers on the dashboard and taxi doors. (This gives a certain amount of safety)

4. No tampered meters. (The owner takes it seriously when there are reports that his drivers tamper with the taxi meter to make it register a higher fare. Sure enough, whatever taxi unit I use from their company, the fare variance is between P2 to 3 only, versus up to P20 to 30 for other taxi companies)

5. The owner charges one of the highest boundaries in the industry. (While most of their drivers complain of the high boundary, I have come across some drivers from this company who said there is no problem with the high boundary for as long as you are industrious, not lazy)

6. I think the owner also earns by maintaining his own LPG tanks as he can charge higher than market rates for LPG, if he wants to. (There is a penalty if the taxi driver loads more than a certain computed quantity of LPG from outside gas stations.)

7. The dark side is that the taxi driver also has to pay for washing of the taxi unit, rental of seat backrest and other sundry items.

8. If the driver is short-boundary, his license is confiscated until he has come up with the balance of his boundary. (The tendency is for the driver is borrow money at usurious rates)

9. The owner maintains adequate supply of engine and body parts and a number of mechanics to ensure minimal downtime. (A taxi that has an engine that needs an overhaul in the morning will be running by lunchtime as a spare engine is fitted)

10. A taxi that suffered a collision and loss of a front fender may be running in an hour or two with the fitment of a new fender.

11. Because the owner along with his relatives have maybe 2,000 units between them, they are able to get Toyota Vios and Kia Renos at preferential prices. In the case of the Kia Ria, the owner was able to negotiate free maintenance for maybe 6 months (all costs absorbed by Kia as Kia is trying to promote their brand over the Toyotas).

12. All units have a programmed junking period to ensure a programmed replacement of units.

13. Junked units are refurbished with a one layer of paint and in running condition to ensure highest scrap sale to other taxi companies or private users.

14. The owner runs a tight ship and knows his business even to the minutest detail. An example--- if a taxi needs a replacement tire or battery before the standard useful life, the remaining life of the tire or battery is charged to the driver. (This ensures that the assigned drivers take care of their unit.)

15. For more control, his drivers are not allowed to take passengers for out-of-Manila trips.

16 To help market his taxis, the owner has negotiated with SM North EDSA (the biggest mall in the country) for a designate Taxi Stand exclusively for his taxis.

17. Before he commits hundreds to a new model of car, he tries about 50 units (which is already like a good-size taxi company) for trials as to fuel consumption, suspension torture, engine reliability etc before he will switch over. As of today, the best for taxi use is the Toyota Vios although the latest model (code-named Batman by drivers) is not as tough as the previous model.

18. Another expense for the driver is that some shell out some money to the security guards to ensure other drivers do not steal parts like sidemirrors from their taxis.

19. With a boundary of about P1,800/24-hour shift for the latest Toyota Vios, the driver may still shell out another P300 or more for car wash, money to guards to guard, money to mechanics to prioritize his repair, rentals for floormats & air fresheners etc. But a smart driver may still bring home P1,000/shift.

20. The owner is not bothered by the high turnover of drivers (as evidenced by the number of abandoned taxis he has on the road) but he also has drivers who have been with him for 3 or more years.