Things to remember if setting up a taxi company in UAE

If I had eight hours to chop down a tree, I’d spend six sharpening my axe…..Abraham Lincoln

Entrepreneurs often feel encouraged to start their own taxi business since it is easy to set up and seems to be a thriving and profitable venture. However, as with any venture, it requires careful planning, market research and expert advice to succeed. Before committing capital to the business, some salient characteristics need to be examined.

Market Segmentation

The range of options is high depending on the level of investment starting with a one-man taxi business, a standard taxi company with several drivers and taxis, or a taxi cab company that leverages on software apps and freelance drivers just like Uber. Everyone is aware of the success of Careem, the Emirati company based in Dubai set up in 2005 and sold to Uber for 3.1 billion$ early this year. It is still operating and as a separate entity competing with its parent Uber. Is there room for a third competitor given more than 10 operators that are well established in the city?

The answer lies in undertaking market research on the competition, performance of various players and market growth particularly in view of the imminent Expo 2020.

Dubai has a dynamic market that is governed by demand and supply but also regulated by RTA to ensure quality standards. A business outlook report will consider preparedness and investment required to adhere to regulatory norms related to comfort and safety requirements and other stipulations such as capability to maintain an office, parking lots and a workforce. A report produced by experts with market experience, knowledge and sound analytic expertise will offer the sound advice and guidance required to start right and go well.

Business Set-up

A major decision that any business in Dubai makes is on the legal entity to establish for operating in the city. Investors have a variety of options between mainland and free zones.

In Dubai, Mainland LLC formation falls under Commercial category and can be formed with a minimum of 2 shareholders to a maximum of 50 shareholders in the license. The liability of the shareholder is limited to the shares invested in the company. In this license, the 49 percent shareholders will be an Expat while the 51 percent shareholder must be a Local Emirati. There are established ways of registering ownership based on investment. Other factors that influence the decision on the legal entity relate to limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and taxes.

Regulatory requirements

Another important consideration is the insurance, cover required by transportation suppliers. An expert will be able to map insurance cover that is mandatory, advise on cover that the investor should take and on cover that is not necessary so that the investor can budget accurately. In addition to insurance many documents are required for company registration. Knowledge of registration process will save time and heartburn at the outset.

Finance & Marketing

The budgeting exercise and a sound business plan are also essential to attracting investment from banks, financial entities or investment houses. This will include the rationale for crucial decisions that will impact the business – location, technology and manpower.

Finally, Marketing Strategies to position the service should be in place so that customers are won and retained while brand awareness and corporate identity are continually built up.

Initial investment in expert advice will impact the business at every stage in terms of return on investment and capability to break even early.

For detailed information, professional advice, and cost-effective assistance to start a business in Dubai or anywhere in the UAE. Contact us today!


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