How to Start a Scooter Rental Business

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Quick Reference

Scooters have become a popular way to travel short distances.   They are fun, easy to ride, and convenient.  If you’re in an area where scooters are used for transportation or recreation, a scooter rental business may be a great way for you to make money, have fun, and be your own boss.

Business Overview

A scooter rental business offers electric scooters for rent to customers by the hour, half-day, or full-day.  Local customers may rent them for a quick way to get around, and tourists may rent them to explore the area or just for fun.  Some scooter rental businesses also offer scooter tours of an area to see places of interest or landmarks.

Industry Summary

According to Markets and Markets, the global bike and scooter rental market is projected to grow from $2.5 billion in 2019 to $10.1 billion by 2027.  According to IBIS World, the demand has grown rapidly in metropolitan areas and on college campuses.  There has been some concern about the industry due to the lack of knowledge of the rules about scooter use on public roads, leading to regulation of the scooter rental industry.

Industry Trends

Dockless e-scooter rental is expected to see the largest growth within the industry.  Dockless means that scooters can be located and unlocked using a smartphone app.  This allows users to find the nearest scooter without having to go to a central location.  Scooter rental customers like the convenience, the avoidance of traffic congestion, and the eco-friendliness of emission-free transportation.

Target Market

Your target will be tourists, people who work or live in metropolitan locations, and potentially college students if you choose to locate near a campus.

Skills, Experience, and Education Useful in Running a Scooter Rental Business

There are several specific skills and education that you will need to open a scooter rental business.

  • Experience.  Some knowledge of how scooters work will be helpful, and knowledge of scooter rules and regulations is essential. You also need to know your market and where people want to use scooters, and where they will want to visit.
  • Mechanical knowledge. If you know how to maintain and repair scooters yourself, you will save a lot of money.
  • Business knowledge and experience.  You will need to have some basic knowledge of marketing, finance/accounting, and human resources.
  • Customer service. You’ll need to build rapport with your customers so that you retain them as customers and gain repeat business and referrals.

Costs to Start a Scooter Rental Business

Here are the typical costs you will face when you open a Scooter Rental business.

  • Setting up a business name and corporation costs approximately $200.
  • Business cards, brochures, postcards for marketing $200 – $300
  • Website setup $100 –$200 for a basic, do it yourself website, $1,000 – $2,000 for a professional site
  • Scooter fleet with 10 scooters to start – $6,000 +
  • Vehicle to transport scooters for repairs, maintenance or battery charging $10,000 +
  • Scooter app development $5,000 +
  • Location rental $1,500 – $3,000 + per month
  • Liability insurance, worker’s comp, property-casualty insurance, scooter insurance $1,000 – $3,000
  • Initial marketing such as Facebook ads or search engine optimization for your website, flyers, and postcards, $500 -$1,000

Steps to Starting a Scooter Rental Business

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your scooter rental business should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.

Related:
How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect scooter rental business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).  Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

RelatedComparison of Business Entities

Step 4: Select your Location

Your scooter rental business location is critical!  You need to be in an area with tourists, a metropolitan location, or near a college campus.  You must be somewhere with a large pool of potential customers and little competition from venture funded companies.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

Some cities have specific licensing for ridesharing businesses which may include scooter rentals.  Not following the local regulations properly can result in significant penalties or even restrictions in operating. Additionally, check with your state for specific license requirements for your scooter rental business, and contact your department of motor vehicles for scooter license and registration information.

Some other common local, state, and federal registrations a Scooter Rental business may need include a sales tax permit and an Employer Identification Number.  

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a scooter rental business is another.  In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.  Some entrepreneurs will tap into their own funds, a home equity loan, or credit cards, however, funding from the bank or investor may be necessary due to the high costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 8: Get your Marketing Plan in Place

A scooter rental business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a scooter rental business include social media marketing and online advertising, as well as flyers.  Developing a website can be a significant expense, but it can also give your scooter rental business greater visibility online. Your location visibility and signage will also be a critical part of your marketing.

If you are fortunate enough to find a market without competitors or scooter startups like Lime or Bird or even ridesharing companies like Lyft, Uber, Skip, or Spin,  consider how you would market against them if they operated in your community.

Related: Low-cost ideas to market a new business

Step 9: Get Business Insurance

A scooter rental business needs several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage. Considering this type of business is renting to riders with little experience driving a scooter, liability insurance is critical to protecting your investment.

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working. This is critical in a Scooter Rental business in case one of your employees is injured.

Property and casualty insurance protects you if your equipment is damaged.

You will need specific insurance for your scooters and customers, so talk to your insurance agent about what is necessary.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hiring Employees

You may need employees to help you run your scooter rental business, particularly to collect and redistribute scooters if you have a dockless rental business.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your scooter rental business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business

How Much Can You Potentially Make Owning a Scooter Rental Business?

Prices for scooter rental are about $1 and 15 cents per minute.  If you have a consistent customer volume, you could make $50,000 – $100,000 per year in revenue before expenses.

Things to Consider Before Starting a Scooter Rental Business

Running a scooter rental business or any small business will have its challenges.  You need to be prepared and make sure that you know what you’re getting into.

The costs to run a scooter rental business are high and include ongoing insurance, maintenance, licensing, and more.  Also, scooters that are ridden often will need to be replaced fairly regularly.  Being ridden by multiple people creates a lot of wear and tear, so the average life span of a scooter is only 3 months. Don’t only look at the purchase price of the scooter. Consider the manufacturer’s quality and durability in the pricing calculation.

Another cost to be aware of is the cost of vandalism and theft, as these are major problems in the industry. Do you have a plan to reduce these costs, such as implementing GPS tracking to automatically set off an alarm or smart lock technology, or are you charging enough to replace your scooters?

Ongoing marketing will also be necessary to grow your customer base.  You need to have enough demand in your area for scooters to be successful, so if you live in a city where scooters have not gained popularity, you will have a rough time.

Another challenge is that a scooter rental business will be seasonal to a certain extent, so you will need to plan for your downtime.

Finally, there is some danger involved in scooter riding, so you need to be aware of liability and safety precautions, and regulations.  Make sure that you have proper insurance coverage to protect you in case of injuries.

Talk to other business owners for tips on starting a business and do your homework to determine costs.  Research other scooter rental businesses to see what they offer and what prices they charge.

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