The Progres Of My New Year's Plan for 2014

The Progres Of My New Year's Plan for 2014
For 2014, I need to do just three things: save money, plan for a taxi business, and actually start the business.

After again being hampered by procrastination, I've finally gotten of my butt and did some serious thinking about that taxi business.

And here's what I came up with. (file link after the break.)

It's not a business plan (though I have a draft of that too), and it only has a basic ROI (plus a little risk planning).  What it is though, is a basic projection of what the finances would look like.

And after going through it, here's what I concluded:
(Taxi ROI.xlsx)

It's a high-capital business

My initial projection of Php300,000 probably won't cut it. That's just good enough for the franchise fee, 20% downpayment on the car, and a little extra if ever. The extra might be good enough for an insurance policy.

But the worst thing about starting it on just 300k, is that I would not be financially prepared for the risks - and it turns out there's a lot of them - that could hamper my monthly payments.

With such a small amount, basically most things have to go right for me. I've always figured I've had a lucky life, but I'm not inclined to test it here.

Income is capped

There's a real "max"income I can have. It's not like a retail business where I buy and sell more (at profit) to grow my profits. Even if everyone in the city suddenly decided to ride taxis, my income per day (the boundary) doesn't change.

It's like a zero-sum game and I have to focus on limiting my risk exposure, rather than growing my revenues or profits.

I can theoretically keep adding taxi units, but that takes much more capital. I can barely come up with the 300K now, so that's a little too far in the future.

It's not a skill set match

I don't have extensive experience with personally checking or fixing cars. Change oils, flat tires, and the like would not be a problem. However those are minor; the problems (and risks to my balance sheet) are with the engine.

I've got friends and family who know stuff, but I'd have to really know those things myself. Otherwise I'd probably get ripped of; either by my driver or the mechanic.

So I'd have to upgrade my skills first; plus work out a plan to minimize this.

However, I still like this business for two reasons:

  • It's income-generating; well ok, all businesses are.
  • It's a semi-passive income stream. The day-to-day stuff only includes checking the car for damage when it's returned and receiving money. 

Occasionally I'd have to take it to a mechanic for maintenance, have damages fixed, find replacement drivers, and possibly receive emergency calls at night because the driver got in a fender bender.

But all businesses have problems and take up a lot of time. So those aren't exactly unreasonable trade-offs.

So what should I do?

Well, that's easy - nothing. I don't have the 300K anyway, so it's a simple and easy decision.

Well ok, I can't actually just not do anything. While saving up for that 300k, I'll have to come up with a more detailed financial plan for this taxi. Specially for expansion; how do I get it to grow to 4-5 taxi units?

And I need to verify some of the estimates. I've already asked the 150k franchise cost. I still need to verify a few things about the boundary: how much can I really charge for a 12-hour shift? How old does the taxi need to be before the boundary needs to go down? How much lower am I really supposed to charge on weekends and holidays?

Plus a few other details I need to check: How much is the insurance? (I "penciled in" 30k, assuming it would be higher than a private car's) How much is the franchise renewal fee? What other permits do I need? What's the breakdown of the 150k?

However, I'm going to look for other opportunities as well.

Do you guys have any suggestions? Name a business and I'll research and try to come up with estimates and ROIs.

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If you're interested in a taxi business, here's a few webpages I've found that are either helpful, enlightening or insightful:

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