Money in starting a taxi business

Commuter taxis. When you start a taxi business, you will be assured of a minimum of Shs80,000 on a daily basis. Photo by RACHEL MABALA

What you need to know:

  • The taxi business is one where you are assured of receiving some cash on a daily basis. Dorothy Nakaweesi tells you what you need to do to make some money from this trade.
  • When starting this business, refrain from borrowing money. Instead if you don’t have the actual amount to buy a new vehicle, a second hand version will do the job.
    In order to benefit more from this business, Mr Buteraba says it would be wise for you to be the conductor.

You may have heard some negative stories about the taxi business by those who have been there.
But have you ever pondered as to why the population of 14-seater commuter taxis on our roads is increasing?
The truth of the matter, like any other business, is the handlers may be irritating but there is a lot of money if you invest in the taxi business.

This article expounds on how you can make some money when you start a taxi business in Uganda.
Mr Newton Buteraba, the chief executive officer House of Wealth – a local firm offering business advisory services in an interview with Prosper Magazine, shares: “If you have learnt how to manage the people (employees) and the different routes, taxi business is very profitable and in just two years, you will be able to plough back your investment.

Investment capital
So, what does it take start? Business experts think one can start small with a second-hand vehicle.
Not only is it cheaper but it will also help you learn how to run the business.
For most taxi businesses, the single greatest startup cost is in the vehicles. Starting your business with only one vehicle can set you back around $13,812 (Shs50 million) for a brand new one, depending on the type of vehicle and its manufacturer.

But again, if you don’t have this amount of money, go for the second-hand vehicle. One in good condition would cost you about Shs25 million or less.
On a daily basis, you will be assured of Shs80,000. This means with 26 days of operation in a month, your turnover will be about Shs2 million and Shs24million at the end of the year.
Then, bit by bit, you can expand as you begin to profit.

“Before you start driving, consider whether there is a demand for a taxi service in your area and make sure you apply for all necessary driver’s and business licences and insurance. Research the competition,” Mr Buteraba shares.

Know-how
Mr Arthur Mayanja, a resident of Namungoona, ventured into this business 11 years ago with one taxi. Currently, he boasts of 23 taxis plying different routes across the country.
Sharing his experience in this business, he said: “Initially, I used to employ a driver and conductor to manage the first taxi I bought. Because I was strict on them, I was able to plough back the initial investment within 18 months,” Mr Mayanja shares.

He then used the savings from the first commuter taxi to buy the second one and that is how he has been able to amass wealth.
Every day, Mayanja banks Shs2.3 million and he smiles to the bank with Shs50 million in profits monthly.
His advice to those who want to invest in this business, is to keep alert and monitor the movement of your vehicle or vehicles.

Challenges
Just like any others, investing in a taxi business is not immune to challenges. But how you mitigate them matters most.
Mr Mayanja shares the worst experience he has had is dealing with some employees who leave the taxis with their colleagues. The danger with this is when they get accidents, he incurs the losses.
“Sometimes, employees don’t remit their daily collection (money) which disorganises business,” Mr Mayanja says.

Advice
When starting this business, refrain from borrowing money. Instead if you don’t have the actual amount to buy a new vehicle, a second hand version will do the job.
In order to benefit more from this business, Mr Buteraba says it would be wise for you to be the conductor.
“Being a conductor gives you an opportunity to manage the finances and if you really can’t do it, then recruit someone you trust,” he says.

In the event that you don’t have enough starting capital, Mr Buteraba says form partnerships with some people and share the risk.
If you are going to employ other people to manage the business for you, install tracking devices to know which routes they are plying away from the agreed places.
When it comes to servicing the vehicles, it is always advisable to assign a specific mechanic whom you will always be contacting to handle any breakdown and service the vehicle.