How to Start A Taxi Business in Kenya

Budget: Sh500,000 or more

Taxis have become an integral part of our lives, especially when you need to rush somewhere urgently. In our major towns, there are people who need to move from one place to the other within the specified time. Someone may be rushing to the airport to catch a flight, to the hospital for treatment, going to a job interview or an urgent meeting or appointment among others. At such times, public transport can be slow or inconvenient. In addition, some areas are not well served by public transport hence reaching such places may require very long walks. Other times, one may need to go somewhere late in the night. In all these situations, a taxi cab becomes the only reliable option.

Taxis business is very viable in a busy town or city such as Nairobi, Mombasa, Kisumu, Nakuru and many other big towns. If you are in any of these towns, starting a taxi business can be a good idea. Since people are always moving day and night, weekday or weekend, you will be assured of a steady supply of clients.

What you need

You must have a car to operate a taxi business. The car can either be yours or hired by someone else. There are those who may hire out their car for you to use as a taxi for your business, but many people do not prefer this route. You will be better off buying your own car that you can easily control. The model and age of car to buy will be your choice, depending on your budget. Taxi business in Kenya requires a strong, durable and stable car. Our infrastructure is still not well developed. There are many areas even in Nairobi where roads are in very bad condition or nonexistent. You may need to drive in these areas, therefore, a light weak car will not last long.

Many taxi operators prefer Toyota models, with Fielder, NZE, Corolla, Succeed, Probox, G-Touring, Allion being the most popular models. This is because these cars are not very expensive, are durable, stable, easy to maintain and easily sold in case you need to upgrade. You will need anything between Sh400,000 — Sh1,000,000 to get a second car in good condition. Many mechanics also understand these cars and can repair them easily. Their spare parts are also readily available and at pocket-friendly prices. You will start with a second-hand car, therefore, it is important to remember that car maintenance will be your major cost item throughout the business. You should get a reliable and efficient mechanic who will repair your car on regular basis.

Other requirements

You will need to acquire a business permit from the county government, a Public Service Vehicle (PSV) driving license for the driver and the vehicle from Kenya Revenue Authority (KRA) and a comprehensive insurance from a reliable insurance company. These documents will enable you to operate your taxi business legally and save you from harassment by either police or local county authorities.

Armed with a car and all the legal documents, you will still need a place to park and operate your taxi from. There are many taxi points in major towns, shopping malls, major supermarkets, hospitals, residential areas, nightclubs etc. You will need to ‘fix’ yourself in these areas. All these areas have cartels who already operate taxis and joining them will not be easy unless you part with a ‘fee’ which can be as high as Sh100,000 in major streets in Nairobi CBD. Other areas could be lower, between Sh20,000 -Sh50,000. This ‘fee’ is mandatory and it will be difficult to penetrate and be allowed by other existing taxi operators to join them without paying, so be ready with the money in your budget.

Pros

• The business is easy to operate as it requires mainly driving and little-negotiating skills.
• Has no monthly bills such as rent, utilities etc.

Cons

• Constant harassment by authorities on flimsy grounds.
• The poor state of roads can escalate maintenance costs.
• Risk of picking robbers posing as passengers.

Critical Success Factors

As a taxi business owner, you will face competition as there will be other taxis where you operate from. To succeed, you will need to maintain a close relationship with your clients, drive carefully, obey traffic laws and respect your clients. This will help you stay in business, avoid costly court fines, reduce maintenance costs and attract more clients.

Give out your number to as many of your clients as possible and ask them to call you next time they need service. Offer to pick them from home. Give your number to bar attendants, security guards in places such as hospitals, shopping malls, night clubs and major hotels and supermarkets. These people are very useful since they are the first ones who get into contact with travelers or patrons who may need taxi services.

Above all, make sure you have a presentable car, well maintained, clean both on the outside and inside, smells nice and don’t forget to help your clients out of the car if they have luggage whenever possible. Since there are no regulations on taxi charges, negotiate a reasonable fee to keep your clients coming back.

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Originally published at PesaConsult.