How to conduct market research when starting a taxi firm
Starting or expanding a taxi firm is a big decision. It often requires risking personal finances and involves hard work. It is therefore important to make sure you’re making the right decisions so you don’t waste time, effort and money. Making the right decisions starts with market research, helping you better understand what you want to achieve and how you intend to achieve it. The ‘what’ is often quite easy, but the ‘how’ can be troublesome.
Knowing what you intend to achieve is a good starting point. For example: what are your business goals? Where are you willing and not willing to service? Who do you want as customers? Asking yourself these questions can help you define your market. You may wish to work within a certain radius of your home, but you can refine the market further by defining who your customers will be, your working times and your specific offering. The next step is to research your market to determine whether your intentions are achievable. If they are not, you will have to adapt. For example, is it realistic to achieve the required level of income by servicing your defined geographical area? Market research involves getting to know your intended customers and your competitors so you can position yourself effectively.
Understanding your competitors should be fairly simple if you’ve determined the area you intend to service. First, a quick search on Google will reveal other taxi firms operating in your area. You can also visit the local bus or train stations, taxi ranks, takeaways and restaurants to see where other drivers are operating and advertising. Once you know who you are competing against, you should investigate further to see how they operate and how successful they are. Some may be self-employed drivers with a single car, others may be taxi firms with a fleet of cars. Ultimately, it would be good to find out how many cars operate your patch at any given time and, therefore, whether there is room for you.
You may determine that there is not enough room for you to expand into an area to generate the income required. But looking elsewhere may not be necessary. It is important to understand your customers because other taxi firms may not be servicing their needs. For example, you may have identified numerous other drivers, but they may not be effectively servicing the school run, or Friday nights, or people with mobility issues, as examples. This suggests that simply knowing your competitors is insufficient, that you must also identify whether they are effectively servicing your target customers.
This ultimately highlights that market research helps you to refine your offering, to understand the relationship between yourself, your competitors and your customers, so you can develop an offering that achieves your goals. If you find that your goals cannot be achieved given your defined market, you must change your offering, your market, or your goals. Hence, growing your taxi business requires making informed decisions. Business is about taking risks, but risks are calculated based on information. Knowing your market is therefore essential if you are to be successful in the long-term.