The start-up costs for running a taxi company is high for several reasons. These reasons are explained in detail below:
Insurance: This is the highest cost factor involved in running the taxi company and the greatest hindrance in getting started. Taxis are usually insured at a rate high enough to account for a weekly charge. Taxi insurance is hard to obtain and is billed at between $60.00 and $100.00 per week to the company. This type of coverage is not even first class insurance, as the market for this type of insurance is so small. Other companies' careless use of taxi insurance has lead to the high rates. It is a challenge coming up with the premium down payment, which is usually set at around 20% (partially offset by broker down payments) of the total annual policy. Once insurance is obtained, however, the Lakeview Taxi system would eventually drive rates down in regards to our particular company due to the careful screening and other safe driving incentives mentioned earlier. Still, the obstacle is formidable, but not insurmountable.
Licensing: The cost of licensing is roughly $3000.00 per year and is not a problem if all of the taxis are painted and equipped for inspection.
Office Costs: Would be minimal. The customer never sees the office and therefore the primary consideration for space is simply a location with plenty of parking. The cost for space like the type that is being described here would be roughly $1000.00 per month.
Radios: This cost would also be borne by the broker at start-up, and would be minimal for the company.
Tower and Frequency Allocation: Would be minimal due to the fact that all tower operators wish to have their radio equipment purchased and will cut down the cost of tower space for exclusive purchasing of their equipment.
Meters: Are paid for by the brokers and installed by a servicing company. The meters are then set at a rate determined by the city.