Starting up a Van hire business

[Messer]

Hi All,

Looking for a bit of help & advice really from anyone who has set up a van hire business..

I am currently a business development manager for an IT security company but have always wanted to have my own business, I started an online model shop a couple of years ago importing chinese model cars & helicopters, but for many reasons I decided to close it down.

So, I have always thought about the feasability of opening up a van hire firm. Starting small, as in a very small fleet and grow organically as and when the business demands.

I have some cash available to help with startup costs, although I dont expect these to be very high anyway.

Do people in this business lease the vans and then hire them out? Are there any limitations on doing this from the lease contract point of view? Which insurers offer a business insurance policy for hiring? Is it ok to act as a sole trader in this business? what about VAT registration, TAX etc etc?

As I said, its very much an infant idea at the moment but I am sure more questions will arise as I think it through more and more!

Thanks in advance,
Tony

[4F6]

Don't do it.

I've been doing car and van rental for 15 years (albeit as an employee manager rather than owner) and it is a fantastically difficult business to make a profit in. I've done new start operations for small, franchised business and major plcs and see it as incredibly difficult for a new start independant operator.

If you really want to do it though, you'll need to start with at least half a dozen vans - preferably LWB Transit sized as you can earn more from these and they are bnot greatly more expensivce to acquire. Straightforward lease contracts will be way too expensive - the big rental companies get significant discounts and rebates which you won't be able to match. Instead, look at buying 3 - 4 year old vans at auction and work towards updating them with newer fleet if/when you can afford it.

Insurance is ruinously expensive - expect to pay somewhere around 30% of turnover just to insure them. Not many companies do self drive hire insurance but try AON and AXA as they both do. Maintenance costs - both accident repairs and general wear can also be fairly high on vans - and you will get a lot of vans damaged - if you rent to the public which as a new start you will be doing - then they will damage them.

VAT registration - do it - you will need to be VAT registered and probably best to set up as Ltd company too.

Biggest problem is for a new start, independant is that it is difficult to attract and retain business. Most companies with a requirement for van rental will have preferential rates already which you won't be able to match. So you need to drive retail hirers to you door which means you'll need to spend something on marketing the business, plus all the costs associated with operating premises etc etc etc. Most rental companies have the advantage of being able to buy vans cheap and make a profit on disposal which helps subsidise the rest of the operation. Unfortunately a new start won't have that.

Hope thats of some use, don't want to sound too negative but in most circumstances it is a very difficult business to operate in. That said, if you were in a small market town with no real competition then it might be viable. Still difficult though.

Edited by 4F6 on Friday 23 October 10:07

[jas xjr]

i use a localish firm for lwb transits. they deliver and collect the vehicles which are 1 or 2 years old. they charge £40 per day for unlimited mileage and insurance. how on earth they make it pay i do not know

[anonymous-user]

I do a lot of work for a national hire firm. They buy their vehicles in bulk fleet orders, hire them then sell them. Start up cost for each branch was around £20K!!(that was for site, phone systems etc NOT the vehicles!). Right time & tight place IMO-not many people were doing it back then. These days you are spoilt for choice, IMO there are easier ways to make £££ than get involved in that sector.

[jamiebae]

As a rough guide a big company using their own insurance pays about £16 a day for a small van, £20 for a regular Transit and £40 for an XLWB Sprinter. you won't be able to get close to this so you need to build up a retail business really as they'll be paying twice these rates.

[1]

If the above posts haven't already put you off enough, you will also struggle to get funding. Most of the big players in that market have stopped lending to daily rental companies as the risk are deemed to high. I think a lot of them caught a cold when 1car1 went under.

So in summary; DONT DO IT!!!

I have often thought motorbike hire would be a nice little niche. If you are in the right area it could be worth looking at. Moped's for the city or superbikes for the country.

[Messer]

thanks for all the input some really useful thoughts here.. My initial thought though was to buy a cheap van myself for say 3 to 4k, insurance and just hire it cheaply direct to the consumer so not through companies.. Also, funny bike hire was mentioned as i was also thinking of that too! I have an elise and a ducati and i was thinking i wonder if anyone would want to hire there out!

[trophies]

Just my 2p's worth:

I have know experience in this sector, but last week I needed to hire a van as our van was already being used. I phoned the local van hire firn and he said £50 for a transit, £60 for a lwb sprinter and £70 for a luton. I asked to book one for the next day, his reply 'sorry fully booked' I tried for the next day, also fully booked. I booked one for the day after.

I didn't shop around, we have used them before and I thought the price was reasonable.

The firm... I cant remember the name have about 15 vans , between 4 - 8 years old.

On that basis it could work, but obviously if every firm was as busy as they could be,everyone would be making lots of money....

Lew

[KevF]

Tony,


You need to speak to Steve (stevie b nch 2 on here) as he owns and runs a decent van hire business and is a very approachable and helpful bloke.

www.vanhire.tv

KevF

Edited by KevF on Saturday 24th October 11:10

[Gibson70]

KevF said:

Tony,


You need to speak to Steve (stevie b nch 2 on here) as he owns and runs a decent van hire business and is a very approachable and helpful bloke.

www.vanhire.tv

KevF

Edited by KevF on Saturday 24th October 11:10

Just looked at the website - very impressive! I am in the car and van hire business in Bucks and I have done VERY well, despite the current clmate and difficult trading conditions.

As long as you have the experience in the car hire industry and good contacts then go for it. If not, then you will be more likely to fail. If you have the right business plan, competitors in your area, right marketing, right price and the right vehicle. For the right business plan, you need to produce 4 sheets:-


1. Sales

2. P&L

3. Cash Flow

4. 4. Capital Expenditure



The sales should show how many car rental days or weeks by model/range of vehicle you expect in each month ensuring that you projections do not exceed the number of vehicles you have available. The time period should cover at least 24 months. The days/weeks rental units should then be multiplied by the relevant price to come up with totals


These Sales Revenues will then feed into the P&L which adds in Operating expenses but not Capital items ( Capital items are those that last for at least a year and the cost can be spread over a period of time in the form of depreciation – e.g. Computers, Buildings, Cars, Special equipment etc) so all of the direct costs(these are costs which you will incur irrespective of how much business you do such as salaries, rent etc) and the variable costs which are costs which vary in proportion to the amount of business you do. This sheet will also contain the lease costs of the Vehicles and should include any deposits or final payments at the end of the lease. You should either include or exclude VAT but not mix them up


The P&L then will contain Revenues and Expenses from which you can calculate the Net profit.


The next sheet is the cash flow which is quite separate from Profit as it is simply tracking the payments and receipts of cash so you can see just how much money you have in the Bank at any one time. This cash flow is necessary as you will be having to spend money before you get revenue in and their will be periodic payments such as VAT and NI which you will have to prepare for and it might be that you will have some customers who do not pay upfront but at some point after the rental period is finished.


The Capital Expenditure is a list of items together with their costs you will have to buy both at the beginning of this business and during the next few years if anything needs replacing or additions



Hope this helps

SG

[CaptainSlow]

Messer said:

thanks for all the input some really useful thoughts here.. My initial thought though was to buy a cheap van myself for say 3 to 4k, insurance and just hire it cheaply direct to the consumer so not through companies.. Also, funny bike hire was mentioned as i was also thinking of that too! I have an elise and a ducati and i was thinking i wonder if anyone would want to hire there out!

I think starting up a company hiring the Elise and Caterfields would be a better idea. More seasonal for sure but a far better day rate plus strong RVs. Good time coming up to buy a couple of cars ready for the spring.

editted for spooling

Edited by CaptainSlow on Monday 26th October 11:55

[pavanbpsingh]

Hi

I know I'm 8 years too late to the forum but if I am able to give any advice to anyone out there who is thinking of establishing their own van hire company it is... GO FOR IT!

However, it is best to start small. Don't rush into it and purchase a whole fleet. Get a few links, purchase a van or two and start from there

[KevinCamaroSS]

pavanbpsingh said:

Hi

I know I'm 8 years too late to the forum but if I am able to give any advice to anyone out there who is thinking of establishing their own van hire company it is... GO FOR IT!

However, it is best to start small. Don't rush into it and purchase a whole fleet. Get a few links, purchase a van or two and start from there

Given that nearly all the advice above was don't do it with reasons given, care to share why you think it a good idea?

[Messer]

wow, this is an old thread!

In the end, I decided against the van hire business and set up my own IT company instead. Things are going well, have some major clients and references, the team is growing and we have had year on year growth. So, very happy I made the leap!