Tapping into the taxi industry

South Africa has a very good and effective transport system. It plays a crucial role in our economy as well as in the economies of our neighbouring countries.

South Africa has a very good and effective transport system. It plays a crucial role in our economy as well as in the economies of our neighbouring countries.

Within the transport sector alone there are many niche markets one can tap into and make a decent living. There are many industries in public transport, namely rail, road, airlines, goods transport and freight transport. And there are many customers in all these categories.

With October being public transport month, it is appropriate to dedicate this week's issue towards furnishing you with information about the growing niche in the public transport sector - the taxi industry.

This has been one of the fastest growing industries for the past 27 years.

As the taxi industry has grown, it has reduced the size of the bus industry.

As countries and governments become more conscious of global warming and air pollution caused by too many cars on the roads, public transport, especially the taxi industry, is likely to boom.

To reduce environmental pollution and traffic congestion in urban areas, the Transport Department initiated public transport month to encourage the public to leave their cars at home and use public transport.

Car Free Day also takes place this month.

The ever-increasing petrol price is also making it difficult for people to use private cars - many are forced to use public transport. With more people using taxis, the industry is likely to make a killing.

Also strengthening the position of taxis is the Soccer World Cup in 2010. With huge numbers of visitors coming to South Africa during the tournament, the current rail and bus industry will obviously not be able to transport them all.

The government is aware of the significant role the taxi industry will play during the 2010 tournament. There are different gestures the government is making in an indication to transform the taxi industry.

Through the Transport Department, the government is trying to transform the industry by subsidising public transport.

Sounds great, but where and how does one start a taxi business?

The first thing that comes to mind are vehicles if you think about any transport business. It is therefore imperative to know where the money to finance the vehicles will come from.

With the constantly increasing interest rates and the introduction of the National Credit Act, it is no longer that easy to obtain credit to buy a vehicle.

You must also know exactly which method of purchase will suit you best. The ways to pay for a vehicle include cash purchase, instalment purchase and lease purchase.

Under cash purchase, you pay the full amount for the vehicle and the vehicle becomes yours immediately.

An instalment purchase method allows you to pay the deposit upfront and then to pay the balance in monthly, equal instalments over an agreed period.

The lease purchase method allows you to take the vehicle without paying a deposit, but you pay equal instalments over an agreed period to redeem all or part of the purchase price.

Depending on the nature of the lease contract, you may or may not be expected to include a final payment equal to the residual value when the lease expires. It is important to find out what the conditions are when the lease term expires.

Purchasing the vehicle is not the end of the process because there are still legal requirements to meet before you can start operating your business.

You need to find out from your provincial department what these procedures are.