How to write a business plan for a taxi and minicab firm?
Creating a business plan for a taxi and minicab firm is an essential process for any entrepreneur. It serves as a roadmap that outlines the necessary steps to be taken to start or grow the business, the resources required, and the anticipated financial outcomes. It should be crafted with method and confidence.
This guide is designed to provide you with the tools and knowledge necessary for creating a taxi and minicab firm business plan, covering why it is so important both when starting up and running an established business, what should be included in your plan, how it should be structured, what tools should be used to save time and avoid errors, and other helpful tips.
We have a lot to cover, so let's get to it!
Why write a business plan for a taxi and minicab firm?
Being clear on the scope and goals of the document will make it easier to understand its structure and content. So before diving into the actual content of the plan, let's have a quick look at the main reasons why you would want to write a taxi and minicab firm business plan in the first place.
To have a clear roadmap to grow the business
It's rarely business as usual for small businesses. The economy follows cycles where years of growth are followed by recessions, and the business environment is always changing with new technologies, new regulations, new competitors, and new consumer behaviours appearing all the time...
In this context, running a business without a clear roadmap is like driving blindfolded: it's dangerous at best. That's why writing a business plan for a taxi and minicab firm is essential to create successful and sustainable businesses.
To write an effective business plan, you will need to take stock of where you are (if you are already in business) and where you want the business to go in the next three to five years.
Once you know where you want your taxi and minicab firm to be, you'll have to identify:
- what resources (human, equipment, and capital) are needed to get there,
- at what pace the business needs to progress to get there in time,
- and what risks you'll face along the way.
Going through this process regularly is beneficial, both for startups and existing companies, as it helps make informed decisions about how best to allocate resources to ensure the long-term success of the business.
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To maintain visibility on future cash flows
Businesses can go for years without making a profit, but they go bust as soon as they run out of cash. That's why "cash is king", and maintaining visibility on your taxi and minicab firm's future cash flows is critical.
How do I do that? That's simple: you need an up-to-date financial forecast.
The good news is that your taxi and minicab firm business plan already contains a financial forecast (more on that later in this guide), so all you have to do is to keep it up-to-date.
To do this, you need to regularly compare the actual financial performance of your business to what was planned in your financial forecast, and adjust the forecast based on the current trajectory of your business.
Monitoring your taxi and minicab firm's financial health will enable you to identify potential financial problems (such as an unexpected cash shortfall) early and to put in place corrective measures. It will also allow you to detect and capitalize on potential growth opportunities (higher demand from a given segment of customers for example).
To secure financing
Crafting a comprehensive business plan for your taxi and minicab firm, whether you're starting up or already established, is paramount when you're seeking financing from banks or investors.
Given how fragile small businesses are, financiers will want to ensure that you have a clear roadmap in place as well as command and control of your future cash flows before entertaining the idea of funding you.
For banks, the information in your business plan will be used to assess your borrowing capacity - which is defined as the maximum amount of debt your business can afford alongside your ability to repay the loan. This evaluation helps them decide whether to extend credit to your business and under what terms (interest rate, duration, repayment options, collateral, etc.).
Similarly, investors will thoroughly review your plan to determine if their investment can yield an attractive return. They'll be looking for evidence that your taxi and minicab firm has the potential for healthy growth, profitability, and consistent cash flow generation over time.
Now that you understand the importance of creating a business plan for your taxi and minicab firm, let's delve into the necessary information needed to craft an effective plan.
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What information is needed to create a business plan for a taxi and minicab firm?
Writing a taxi and minicab firm business plan requires research so that you can project sales, investments and cost accurately in your financial forecast.
In this section, we cover three key pieces of information you should gather before drafting your business plan!
Carrying out market research for a taxi and minicab firm
Before you begin writing your business plan for a taxi and minicab firm, conducting market research is a critical step in ensuring precise and realistic financial projections.
Market research grants you valuable insights into your target customer base, competitors, pricing strategies, and other crucial factors that can impact the success of your business.
In the course of this research, you may stumble upon trends that could impact your taxi and minicab firm.
You might discover that customers may prefer to book a taxi or mini cab online, rather than by phone. Additionally, market research could potentially reveal that customers might appreciate a loyalty program or rewards for frequent use of your taxi or mini cab services.
Such market trends play a pivotal role in revenue forecasting, as they provide essential data regarding potential customers' spending habits and preferences.
By integrating these findings into your financial projections, you can provide investors with more accurate information, enabling them to make well-informed decisions about investing in your taxi and minicab firm.
Developing the marketing plan for a taxi and minicab firm
Before delving into your taxi and minicab firm business plan, it's imperative to budget for sales and marketing expenses.
To achieve this, a comprehensive sales and marketing plan is essential. This plan should provide an accurate projection of the necessary actions to acquire and retain customers.
Additionally, it will outline the required workforce to carry out these initiatives and the corresponding budget for promotions, advertising, and other marketing endeavours.
By budgeting accordingly, you can ensure that the right resources are allocated to these vital activities, aligning them with the sales and growth objectives outlined in your business plan.
The staffing and equipment needs of a taxi and minicab firm
As you embark on starting or expanding your taxi and minicab firm, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is essential for ensuring your business's success.
Both the recruitment and investment plans must align with the timing and level of growth projected in your forecast, and they require appropriate funding.
The staffing costs for a taxi and mini cab company could include salaries for drivers, administrative staff, and management. The company may also need to pay for additional training and development for their staff. Equipment costs for a taxi and mini cab company could include the purchase of vehicles, radios, and other technology needed to run the business. The company may also need to pay for fuel, insurance, and maintenance for their vehicles.
To create a realistic financial forecast, you also need to consider other operating expenses associated with the day-to-day running of your business, such as insurance and bookkeeping.
With all the necessary information at hand, you are ready to begin crafting your business plan and developing your financial forecast.
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What goes into your taxi and minicab firm's financial forecast?
The objective of the financial forecast of your taxi and minicab firm's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.
The four key outputs of a financial forecast for a taxi and minicab firm are:
- The profit and loss (P&L) statement,
- The projected balance sheet,
- The cash flow forecast,
- And the sources and uses table.
Let's look at each of these in a bit more detail.
The projected P&L statement
Your taxi and minicab firm forecasted P&L statement enables the reader of your business plan to get an idea of how much revenue and profits your business is expected to make in the near future.
Ideally, your reader will want to see:
- Growth above the inflation level
- Expanding profit margins
- Positive net profit throughout the plan
Expectations for an established taxi and minicab firm will of course be different than for a startup. Existing businesses which have reached their cruising altitude might have slower growth and higher margins than ventures just being started.
The projected balance sheet of your taxi and minicab firm
Your taxi and minicab firm's forecasted balance sheet enables the reader of your plan to assess your financial structure, working capital, and investment policy.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.
Your taxi and minicab firm's balance sheet will usually be analyzed in conjunction with the other financial statements included in your forecast.
Two key points of focus will be:
- Your taxi and minicab firm's liquidity: does your business have sufficient cash and short-term assets to pay what it owes over the next 12 months?
- And its solvency: does your business have the capacity to repay its debt over the medium-term?
The cash flow forecast
As we've seen earlier in this guide, monitoring future cash flows is the key to success and the only way of ensuring that your taxi and minicab firm has enough cash to operate.
As you can expect showing future cash flows is the main role of the cash flow forecast in your taxi and minicab firm business plan.
It is best practice to organise the cash flow statement by nature in order to show the cash impact of the following areas:
- Cash flow generated from operations: the operating cash flow shows how much cash is generated or consumed by the business's commercial activities
- Cash flow from investing activities: the investing cash flow shows how much cash is being invested in capital expenditure (equipment, real estate, etc.) either to maintain the business's equipment or to expand its capabilities
- Cash flow from financing activities: the financing cash flow shows how much cash is raised or distributed to financiers
Looking at the cash flow forecast helps you to make sure that your business has enough cash to keep running, and can help you anticipate potential cash shortfalls.
Your taxi and minicab firm business plan will normally include both yearly and monthly cash flow forecasts so that the readers can view the impact of seasonality on your business cash position and generation.
The initial financing plan
The initial financing plan, also known as a sources and uses table, is a valuable resource to have in your business plan when starting your taxi and minicab firm as it reveals the origins of the money needed to establish the business (sources) and how it will be allocated (uses).
Having this table helps show what costs are involved in setting up your taxi and minicab firm, how risks are shared between founders, investors and lenders, and what the starting cash position will be. This cash position needs to be sufficient to sustain operations until the business reaches a break-even point.
Now that you have a clear understanding of what goes into the financial forecast of your taxi and minicab firm business plan, let's shift our focus to the written part of the plan.
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The written part of a taxi and minicab firm business plan
The written part of a taxi and minicab firm business plan is composed of 7 main sections:
- The executive summary
- The presentation of the company
- The products and services
- The market analysis
- The strategy
- The operations
- The financial plan
Throughout these sections, you will seek to provide the reader with the details and context needed for them to form a view on whether or not your business plan is achievable and your forecast a realistic possibility.
Let's go through the content of each section in more detail!
1. The executive summary
The first section of your taxi and minicab firm's business plan is the executive summary which provides, as its name suggests, an enticing summary of your plan which should hook the reader and make them want to know more about your business.
When writing the executive summary, it is important to provide an overview of the business, the market, the key financials, and what you are asking from the reader.
Start with a brief introduction of the business, its name, concept, location, how long it has been in operation, and what makes it unique. Mention any services or products you plan to offer and who you sell to.
Then you should follow with an overview of the addressable market for your taxi and minicab firm, current trends, and potential growth opportunities.
You should then include a summary of your key financial figures such as projected revenues, profits, and cash flows.
Finally, you should detail any funding requirements in the ask section.
2. The presentation of the company
In your taxi and minicab firm business plan, the second section should focus on the structure and ownership, location, and management team of your company.
In the structure and ownership part, you'll provide an overview of the business's legal structure, details about the owners, and their respective investments and ownership shares. This clarity is crucial, especially if you're seeking financing, as it helps the reader understand which legal entity will receive the funds and who controls the business.
Moving on to the location part, you'll offer an overview of the company's premises and their surroundings. Explain why this particular location is of interest, highlighting factors like catchment area, accessibility, and nearby amenities.
When describing the location of your taxi and minicab firm to a third party financier, it is important to emphasize the potential of the area. You could highlight the diverse customer base, as well as any local attractions, events, or businesses that may generate increased demand for taxi and mini cab services. Additionally, you could emphasize the ease of access to the area, whether that be through public transportation, airports, or highways. You may also want to talk about the area's growth potential and potential for future development. All of these factors could make the location of your taxi and minicab firm an attractive investment opportunity for the financier.
Finally, you should introduce your management team. Describe each member's role, background, and experience.
Don't forget to emphasize any past successes achieved by the management team and how long they've been working together. Demonstrating their track record and teamwork will help potential lenders or investors gain confidence in their leadership and ability to execute the business plan.
3. The products and services section
The products and services section of your business plan should include a detailed description of the offerings that your company provides to its customers.
For example, your taxi and minicab firm might offer services such as 24-hour availability, pick-up and drop-off at any location, and a variety of car sizes to accommodate different types of groups. These services can provide customers with convenience, safety, and flexibility when travelling, as they are able to get to their destination in a timely and efficient manner. Additionally, customers may receive an estimated time of arrival and a receipt for their journey.
When drafting this section, you should be precise about the categories of products or services you sell, the types of customers you are targeting and how customers can buy them.
4. The market analysis
When you present your market analysis in your taxi and minicab firm business plan, it's crucial to include detailed information about customers' demographics and segmentation, target market, competition, barriers to entry, and any relevant regulations.
The main objective of this section is to help the reader understand the size and attractiveness of the market while demonstrating your solid understanding of the industry.
Begin with the demographics and segmentation subsection, providing an overview of the addressable market for your taxi and minicab firm, the key trends in the marketplace, and introducing different customer segments along with their preferences in terms of purchasing habits and budgets.
Next, focus on your target market, zooming in on the specific customer segments your taxi and minicab firm aims to serve and explaining how your products and services fulfil their distinct needs.
For example, your target market might include individuals who are looking for reliable transportation. This could include people who are travelling between airports, within cities, or for special events like weddings or corporate meetings. These customers might be seeking a more comfortable and private transportation experience than what a bus or train offers.
Then proceed to the competition subsection, where you introduce your main competitors and highlight what sets you apart from them.
Finally, conclude your market analysis with an overview of the key regulations applicable to your taxi and minicab firm.
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5. The strategy section
When you write the strategy section of your taxi and minicab firm business plan, remember to cover key elements such as your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.
In the competitive edge subsection, elaborate on what makes your company stand out from competitors. This becomes especially important if you're a startup, aiming to carve a place for yourself amidst established players in the marketplace.
The pricing strategy subsection should demonstrate how you plan to maintain profitability while offering competitive prices to attract customers.
Outline your sales & marketing plan, detailing how you'll reach out to new customers and retain existing ones through loyalty programs or special offers.
For the milestones subsection, outline your company's achievements to date and your main objectives for the future, complete with specific dates to set clear expectations for progress.
Lastly, the risks and mitigants subsection should address the main risks that could affect your plan's execution. Explain the measures you've put in place to minimize these risks, assuring potential investors or lenders.
Your taxi and mini cab business could face a variety of risks. For example, you may face a risk of driver liability if the driver is involved in an accident or other incident while on the job. Additionally, you might face a risk of property damage if one of your vehicles is vandalized or stolen. Both of these risks could potentially lead to financial losses, so it is important to have a plan in place to mitigate them.
6. The operations section
The operations of your taxi and minicab firm must be presented in detail in your business plan.
Begin by addressing your staff, specifying the main roles and your recruitment plan to support the anticipated growth. Outline the qualifications and experience needed for each role and discuss your recruitment strategies, which may involve using job boards, referrals, or headhunters.
Next, clearly state your taxi and minicab firm's operating hours, allowing the reader to gauge the adequacy of your staffing levels. Additionally, mention any considerations for varying opening times during peak seasons and your approach to handling customer queries outside regular operating hours.
The key assets and intellectual property (IP) required to run your business should also be highlighted. If you rely on licenses, trademarks, physical structures like equipment or property, or lease agreements, ensure they are well-documented in this section.
You could have two key assets and IP that a taxi and mini cab might have. Firstly, they may have a fleet of cars that they own and manage. This could involve purchasing, leasing or renting vehicles from other companies or individuals. Secondly, they might have access to a booking system that allows customers to book a car online or via an app. This could involve having access to a software or technology platform that helps manage bookings and payments.
Finally, provide a comprehensive list of suppliers you intend to collaborate with, along with a breakdown of their services and main commercial terms, such as price, payment terms, break clauses and contract duration. Investors often seek insight into the reasons behind your supplier choices, which may include a preference for higher-quality products or established relationships from past ventures.
7. The presentation of the financial plan
The financial plan section is where we will include the financial forecast we talked about earlier in this guide.
Now that you have a clear idea of the content of a taxi and minicab firm business plan, let's look at some of the tools you can use to create yours.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
What tool should I use to write my taxi and minicab firm's business plan?
In this section, we will be reviewing the two main options for writing a taxi and minicab firm business plan efficiently:
- Using specialized software,
- Outsourcing the drafting to the business plan writer.
Using an online business plan software for your taxi and minicab firm's business plan
The modern and most efficient way to write a taxi and minicab firm business plan is to use business plan software.
There are several advantages to using specialized software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You are guided through the writing process by detailed instructions and examples for each part of the plan
- You can access a library of dozens of complete business plan samples and templates for inspiration
- You get a professional business plan, formatted and ready to be sent to your bank or investors
- You can easily track your actual financial performance against your financial forecast
- You can create scenarios to stress test your forecast's main assumptions
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here.
Hiring a business plan writer to write your taxi and minicab firm's business plan
Outsourcing your taxi and minicab firm business plan to a business plan writer can also be a viable option.
Business plan writers are skilled in creating error-free business plans and accurate financial forecasts. Moreover, hiring a consultant can save you valuable time, allowing you to focus on day-to-day business operations.
However, it's essential to be aware that hiring business plan writers will be expensive, as you're not only paying for their time but also the software they use and their profit margin.
Based on experience, you should budget at least £1.5k ($2.0k) excluding tax for a comprehensive business plan, and more if you require changes after initial discussions with lenders or investors.
Also, exercise caution when seeking investment. Investors prefer their funds to be directed towards business growth rather than spent on consulting fees. Therefore, the amount you spend on business plan writing services and other consulting services should be insignificant compared to the amount raised.
Keep in mind that one drawback is that you usually don't own the business plan itself; you only receive the output, while the actual document is saved in the consultant's business planning software. This can make it challenging to update the document without retaining the consultant's services.
For these reasons, carefully consider outsourcing your taxi and minicab firm business plan to a business plan writer, weighing the advantages and disadvantages of seeking outside assistance.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Why not create your taxi and minicab firm's business plan using Word or Excel?
Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write a taxi and minicab firm business plan is a terrible idea.
Why?
For starters, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.
As a result, it is unlikely anyone will trust your numbers unless - like us at The Business Plan Shop - you hold a degree in finance and accounting and have significant financial modelling experience in your past.
The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.
And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.
Also, using software makes it easy to compare actuals vs. forecasts and maintain our forecasts up to date to maintain visibility on future cash flows - as we discussed earlier in this guide - whereas this is a pain to do with a spreadsheet.
That's for the forecast, but what about the written part of my taxi and minicab firm business plan?
This part is less error-prone, but here also software brings tremendous gains in productivity:
- Word processors don't include instructions and examples for each part of your business plan
- Word processors don't update your numbers automatically when they change in your forecast
- Word processors don't handle the formatting for you
- ...
Overall, while Word or Excel may be viable options for creating a taxi and minicab firm business plan for some entrepreneurs, it is by far not the best or most efficient solution.
Takeaways
- Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
- A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
- A business plan has 2 main parts: a financial forecast outlining the funding requirements of your taxi and minicab firm and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.
We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your taxi and minicab firm business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.
Also on The Business Plan Shop
- How to write a business plan to secure a bank loan?
- Business plan pricing strategy
- Market analysis in a business plan: example and tips
- How investors and lenders look at business plans
- Key steps to write a business plan?
- Top mistakes to avoid in your business plan
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