Business Strategy for Taxi Start-Ups & Small Fleets

Ignite Interest

To properly strategize for start-ups or a small fleet, examining the fundamental needs of the business is in order. A staple in business schools and various strategists of all stripes has been Sun Tzu’s Art Of War.

And it had a gem worth living by: “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

So in a nutshell, we need to know more to make better decisions, and we do that by identifying the present challenges facing start-ups and small fleets. That’s how a business strategy for taxi start-ups gets built.

If you’re starting out from scratch, here’s some food for thought:

Starting a Transportation Company: Taxi, Medical Transportation NEMT, and More

Knowing Yourself

While there are a multitude of things to pay attention to in business, we’ll take a look at some challenges that a taxi start-up should consider when pursuing growth.

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The first and foremost consideration that makes all the others possible is profitability. There have been several ways to traditionally monetize aspects of a taxi business such as selling ad space to show on top of a vehicle or behind it and that’s still valid when feasible. There are also new business models that rely more on outside funding to sustain operations instead of organically being profitable like with ride-share companies.

The important thing when it comes to profitability is deciding how and when to be profitable. The ‘how’ means deciding the aspect of the business that makes money, and for taxi businesses, it can be finding out which areas are more profitable to have more cars in. The ‘when’ is typically related to your Return On Investment (ROI) which Investopedia states: “tells you how much money you’ve made (or lost) an investment or project after accounting for its cost.”

But more than that, a good rule of thumb to review your profitability is in the 2nd year and 5th year of operations as JP Morgan Chase notes in their research that a third of businesses quit in the second year and nearly half of all new businesses exit in their 5th year. 

When making business decisions with profitability in mind, see how these decisions can pay for themselves. For example, SmartMove’s lower cost, extensive features, and efficient & accurate reporting ticks all of the boxes including Sun Tzu’s advice about knowing yourself as a path to victory.


The next important aspect in the taxi business is staffing — partly because, conceptually, you need to be able to trust those that work with you and for you, and partly because any enterprise that does not know its people might neglect those who deliver performance, and might keep dead wood.

The way to take care of your staff is to factor in pay, benefits, and working conditions for your drivers and management staff. Oftentimes, it’s more prudent to outsource customer service calls as they constitute a different kind of service that also requires a different set of pay, benefits, and accounting for working conditions which all require valuable time and resources that would be better spent on the core aspects of your start-up.

On that note, SmartMove provides a solution as call center operations are included and integrated in the service and can work with your own in-house call center should you wish to have your own in the future.

As noted in a book by the Transportation Research Board, compensation is the main detail that gets drivers, but it wasn’t just purely the numbers as compensation included earnings, benefits, and payment practices.

As for earnings, it might be a good idea to reference publicly available pay data as well as find out from competitors to get an edge in finding talent.

With respect to benefits, they come in two flavors: state mandated and employer provided. The former needs to be complied with so it’s important to get all above board, while juggling the conflicting needs of the staff, the state, the business, and the clients.

Now, the two dominant types in payment practices are the ‘percentage per ride deduction’ and the flat per-day/per-week lease fee, and it’s been shown that drivers have preferred the former. So to attract drivers, a percentage basis is preferable but such a system requires some software integration in the cars and the fleet operations. So another strategy for taxi start-ups here would be to use dispatch software that can record and account for rides accurately.

Customer Acquisition

The lifeblood of the business is in the customers, and while it sounds like common sense, it will take data-driven decision making to truly understand the cost of acquiring a new customer and retaining an existing one.

There are many a business strategy for taxi start-ups to find when it comes to this, and customer acquisition costs can be broadly divided into two categories: marketing expenses (ads, discounts, vouchers, social media, SEO) and operational expenses (incentives for drivers to take more rides).

While it’s important to research what works in this aspect, it’s also important to use the data generated from the business itself. Market research can be pretty expensive, and data like that can be found almost free in unexpected places like customer complaints, data generated from the dispatch software, driver inputs, and more. Integrated software solutions with many features can tie in together the different data to expand the bigger picture.


Customer’s Standards & Expectations

Last but not least, another consideration to know about as a start-up is what customers want. It’s become clear that app-based transportation is now the norm, and a lot of software-based features are expected of any modern sophisticated cab.

Features like tracking their rides, multiple payment options, and more are available with SmartMove’s SmartHail passenger app that can be white labeled to cultivate your brand.

Making the SmartMove

In each and every strategy for taxi start-ups, a lot of the success hinges on making informed business decisions. And the way forward to that is adopting a comprehensive all-in-one software solution that integrates the features and functions together to work seamlessly, efficiently, and affordably.

Make the SmartMove and book a demo today to find out more about how these challenges can be solved.


  • 70 million bookings serviced

  • 20,000 drivers have used SmartMove

  • 17 years supporting the taxi industry

Lower-cost, scalable booking, dispatch and call-centre solutions