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Old 30th August 2011, 12:50   #1
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Default Starting up a Transport Business

Hello Team.

Me and a good friend of mine are thinking of a transport business startup.There were a few questions and i thought the best way to get asnwers is our team itself.

1. In case of any accidental incident death/injury/crminal incident by the driver/passenger, will the owner of the company be held responsible?

2. What is the procedure of getting a transport licenece?

3. Would you recommend going in with our vehicles/ hire vehicles by the current taxi owners?

4. Any other suggestion/ Input?

5. Can there be any bond/ agreement between a taxi owner and the company to levy his services?

6. Considering the firm to be based out of pune, any suggestions on profitable routes?


P.S. Mods, kindly move the thread to approriate section if any. Shifting gears?

Last edited by Mr.Beat : 30th August 2011 at 12:52.
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Old 30th August 2011, 15:38   #2
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Default Re: Startup, Transport Business.

Congrats on your new venture, hope you succeed.

Regarding point no.1: The owner will be partially responsible, as in the truck/bus/car in question will be in police custody, the owner will have to go for court hearings; but with regard to being sent to jail, then no. The authorities can cancel your transport licence of your company vehicles are reported to have a high accident rate.

It would be good if you have a rapport with the respective authorities before hand.

Best of luck and do keep us informed with your proceedings.
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Old 30th August 2011, 16:32   #3
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Default Re: Starting up a Transport Business

Mr. Beat, firstly congrats on the initiative! I am all for entrepreneurship

While I don't have answers to your questions, here is some solid advice nevertheless. You are only 24, and are entering an industry that you have no experience in. WORK in the transportation industry first. Get a job with an established player, work hard, learn harder, evaluate as an insider and then decide if you want to invest in this business. Believe me, there can't be any better education than this if you are serious about the business. Be sure to choose a company that you can learn significantly from.
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Old 30th August 2011, 16:42   #4
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Default

Quote:
Originally Posted by GTO
Mr. Beat, firstly congrats on the initiative! I am all for entrepreneurship

While I don't have answers to your questions, here is some solid advice nevertheless. You are only 24, and are entering an industry that you have no experience in. WORK in the transportation industry first. Get a job with an established player, work hard, learn harder, evaluate as an insider and then decide if you want to invest in this business. Believe me, there can't be any better education than this if you are serious about the business. Be sure to choose a company that you can learn significantly from.
100% agreed with GTO. My current partner in the venture had transport business earlier, he got tired of legal hassles and errant drivers so he sold the 20 trucks that he had. The business was safe as he earned directly from Safeexpress. But then he was single man army. I too have left my cushioned corner room job and have gone back to basics to learn more. Howsoever, business means making money and I will also press you work for a couple or least one year to know more from inside a company.

Also, setup basic guidelines and hire a good lawyer to define the partnership. Also, you will love me for making this suggestion. Spend money to make this a LLP limited liability partnership. This will be a separate entity and the company owners will be have limited liability incase things don't work out or go wrong.

If you are in NCR, we are looking for good transport company to carry our perishable goods. We will also have two canters of our own working so I will be able to contribute to your knowledge soon. Cheers!
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Old 30th August 2011, 17:37   #5
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Default Re: Starting up a Transport Business

Fully with GTO. Mr.Beat, cheers for the thought and best luck to you. But, transport business, even if you get associated with a particular organization can be quite a learning, tiresome, money and time consuming, posing quite critical and un-known financial, transportation, logistical situations, requiring bonding with authorities (kindly do not translate this into under the table way), and which may not only have to do with asset/fleet acquisition and management. Unless one is wary of many of them one should rather not get into it. This is not to dishearten or make you deviate away from your aim for the startup. You may end up starting it off if all things favor. You may get various feedbacks from people on the forum if there are indeed people in this business on the forum willing to share the information. However, best will be to understand the whole gamut from grass root level. And get a proper legal advise on many of the aspects as mentioned above. If you are looking at this because it is done in your family/relatives, you may want to gear up in the home grown business first. Or as GTO already suggested, join a biggy in transportation industry to learn the secrets of the trade and get hands on with it and then jump into it.
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Old 30th August 2011, 18:17   #6
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Thanks for the Wonderful Feedback guys. Yes, i am 24 and am into my 2nd year of MBA.
I agree with all of you that experience is any industry is vital, you do get to know many important things about the working of the whole world around it. Now the thing is, which company to join in case of such business NEETA? and as a MBA what profile you think i will get? Will the industry remain as attractive as today say after 2 years? And as a 24 YO, next 2-3 years will see more responsibility after which taking a risk will be next to impossible.

Yes, i do have a relative who runs a similar business and they are doing very well. However, our business model is very different.

Now, the questions that i did ask was about the most critical part of this industry. Once we are okay with the risks involved only then things will move forward.

@Sn1p3r: I will definetly consider the LLP part of it. .

Any web resources for information about various industries?
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Old 30th August 2011, 19:11   #7
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Default Re: Starting up a Transport Business

Good to hear you are into final yr of MBA. No wonder the urge to kick-start on own. Since you do have links to an existing similar business, why not an apprenticeship in the same? Even if the finer traits may be different from your aim, there will be many common pieces and I guess you will learn a hell lot and who better than own people to guide you? Looking at your queries is this by any chance taxi fleet business you are aiming for? Just curious. I am by no means any good at advising on your exact venture but very happy to see you up to it.
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Old 30th August 2011, 21:18   #8
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Default Re: Starting up a Transport Business

Quote:
Originally Posted by Mr.Beat View Post
Me and a good friend of mine are thinking of a transport business startup.There were a few questions and i thought the best way to get asnwers is our team itself.

Step 1:- Go to a law book shop, and buy a copy of the (1) Motor Vehicles Act, with central act and rules as applicable in your state - MH in your case. (2) A copy of the Motor Vehicles Act - this one may be difficult to source though.

Step 2. Memorize the rules in the books you purchased above.

Quote:
1. In case of any accidental incident death/injury/crminal incident by the driver/passenger, will the owner of the company be held responsible?
Criminally - no.

But you will be financially liable for the claims. SO, keep your vehicles insured, with unlimited third party personal and property damage. The standard policy already covers owners against claims under the Workmen's Compensation ACt - that covers claims by drivers and staff.

[quote]2. What is the procedure of getting a transport licenece?

Quote:
3. Would you recommend going in with our vehicles/ hire vehicles by the current taxi owners?
Ah ha. So, you are a newbie to the business. So, best option right now would be to enter into arrangements with owners of taxis, get business, and send the taxis to the customers. Once this line flourishes, get your own vehicles. Keep own vehicles at less than 1/5th of average daily requirement for first give years - at least.

Compare profitability of owned vehicle with "arranged" vehicles before deciding to get more own vehicles.

Several owners will be happy to keep vehicle at your exclusive disposal for a fixed minimum monthly business. That is also a hint about the risks involved.

Quote:
4. Any other suggestion/ Input?
Golden rule about business - if you need to ask, you do know enough about it. Dont.

Quote:
5. Can there be any bond/ agreement between a taxi owner and the company to levy his services?
Can you elaborate? What exactly do you have in mind?

Quote:
6. Considering the firm to be based out of pune, any suggestions on profitable routes?
?? Means??

Taxis operate for specified areas - not routes.

Edit:- Please re-read GTOs' post - and his signature.

Last edited by BaCkSeAtDrIVeR : 30th August 2011 at 21:19.
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Old 31st August 2011, 07:56   #9
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Default Re: Starting up a Transport Business

Getting into the Transport Business is a for me. Hope you succeed

The best thing I like about the Transport Business is that the finance part is pretty organised and you have insurance. Which means that your capital can by multiplied easily to procure better assets and your risks get covered minimising losses.

Few rules that I would go by if and when I start my business:
- Work within your limitations. If 2 vehicles are all you can manage, then stick with that. Its better to earn 10,000 from two vehicles than earn 10,000 from five vehicles
- Pay off the loans before the warranty. If you are buying a Bus, then you should be able to recover the cost of the bus within 3,00,000 kilometers - which is the extended warranty period
- Crew is very important, there still are good drivers out there - seek them out, pay them well and give them lots of respect and a very good working environment keeping attrition at zero - good Crew on your side is half the battle won.

One piece of advice - "If your itch is to own a vehicle, then buy one and attach it to some Agency. If your itch is to run the business, then don't buy vehicles, get them attached to you"
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Old 31st August 2011, 08:48   #10
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Default Re: Starting up a Transport Business

Quote:
Originally Posted by Mr.Beat View Post
Will the industry remain as attractive as today say after 2 years? And as a 24 YO, next 2-3 years will see more responsibility after which taking a risk will be next to impossible.
Firstly, I know nothing about the transport business to venture an opinion on the intricacies. However, even if the next 2-3 years may perhaps not be upbeat and possibly the next five, the global goom should peter out sometime. And with the India story still being maintained, why not. Transportation will be crucial in one form or the other.

And regarding your second thought about risk taking after 2-3 years, I think there is no cause for worry. I myself have ventured later than that, and I dont think age/responsibilities should be a consideration since you have an education to fall back on. And that apart, dont worry about what could go wrong, there are many more things that could go right. And you will be proud of the risk you took if it does not work out rightaway.
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Old 31st August 2011, 11:22   #11
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Default Re: Starting up a Transport Business

Quote:
Originally Posted by BaCkSeAtDrIVeR View Post
Criminally - no.


Golden rule about business - if you need to ask, you do know enough about it. Dont.

Can you elaborate? What exactly do you have in mind?


Taxis operate for specified areas - not routes.

Edit:- Please re-read GTOs' post - and his signature.
Thanks for the knowledge.

The thing is i do not want the taxi owners to strike a deal with the client when they go to service them, how can i stop/deter that?

Our business model is little different and will go through a proper market research before being implemented

Quote:
Originally Posted by TheARUN View Post
- Crew is very important, there still are good drivers out there - seek them out, pay them well and give them lots of respect and a very good working environment keeping attrition at zero - good Crew on your side is half the battle won.

One piece of advice - "If your itch is to own a vehicle, then buy one and attach it to some Agency. If your itch is to run the business, then don't buy vehicles, get them attached to you"
How do i get a good crew? Anyone has info as to how much these guys make in a month? or how much are drivers paid?

Quote:
Originally Posted by pravingmh View Post
And regarding your second thought about risk taking after 2-3 years, I think there is no cause for worry. I myself have ventured later than that, and I dont think age/responsibilities should be a consideration since you have an education to fall back on.
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Old 31st August 2011, 12:48   #12
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Default Re: Starting up a Transport Business

Mr. Beat,

I congratulate you on your intentions.

My personal advice to you (which is an echo to earlier posts) would be that you get your hands dirty first in this sector before investing. The transportation industry is a highly cut-throat one. And no matter how much you read up or listen to people, you wouldn't understand the finer points unless you get down to it yourself. I am sure you would have experienced this even during your MBA. So lookout for someone tough to work with and you would learn a lot.

Another important point in this business is the crew. They can make or break you very easily. So begin your scouting right from day 1.

All the best to you. When it comes to transportation business, I hope you would be the one replying to our queries in the near future!

Aj
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Old 31st August 2011, 12:49   #13
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Default Re: Starting up a Transport Business

Quote:
Originally Posted by Mr.Beat View Post
In case of any accidental incident death/injury/crminal incident by the driver/passenger, will the owner of the company be held responsible?
The answer to this query would depend on the facts and circumstances of a particular case.

Presuming that your vehicle would be driven by a hired driver having a valid driving licence and if you take adequate precautions then there is 99% chance there there would be no liability on the owner. Take the following precautions:

1. Have a driver who has a professional licence for driving commercial vehicles.

2. Be sure that he has a valid licence and if possible check about the antecedents of the driver with the local police.

3. Go for comprehensive insurance of your vehicles and renew your policies in time.

4. Have valid RTO endorsements for your vehicle; register them as commercial vehicles. If your vehicles are CNG or LPG there should be an endorsement to that effect in your RC book.

5. Have valid route permits.

I must add that there are two kinds of liability in case there is an accident: Criminal and Civil.

So far as criminal cases are concerned the driver alone is liable for "rash and negligent driving".

For Civil liability the injured / family members of the deceased can claim for compensation against the driver / owner. However if you have a valid insurance coverage and have taken all precautions then it is the insurance company which will pay the compensation.

I must also hasten to add that the at the end of the day people who are able to "manage" things end up successful in business and that is the sad part of the story.
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Old 31st August 2011, 13:01   #14
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@Mr Beat,

I must appreciate your thinking to start a venture off your own. I agree with what most of them have said about the risks involved without any prior experience, but any business cannot be successful without some calculated risks. Maybe you can start on small scale and then ramp up. Start thinking on the lines of venturing intially in your city limits and then think about going state/national. Everyday on the job is a learning day and you will defintely learn the tricks of the trade faster enough.

Few suggestions:
1) Know the Municipal officials dealing with transport dept.
2) Know the Laws/rules of Motor act.
3) Engage some experienced drivers who know the city in and out.
4) Insure the vehicles.
5) If you have sufficient funds buy your own vehicles, else hire.
6) Be positive always since you might not see the fruits of your labour initially.

All the best. Think Positive always.
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Old 31st August 2011, 13:53   #15
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Default Re: Starting up a Transport Business

Our BHP ian Backseat driver has a long haul first hand experince, he should guide you as he has done earlier
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