Manage your start-up cost
When starting out for the first time, you need to determine what start-up cost you need to incur in order for you to market your service, secure your first customer, and deliver the first service to your customer.
The most basic would be a computer loaded with the required software and tools of the trade, a mobile phone, a printer, an Internet connection, and a PayPal account.
Software and applications do cost money.
If you are a graphic designer, you need the relevant software to create the product for your customers.
Should you buy a new car to do rideshare with?
Absolutely not.
The only reason why you would get a new car is if you wanted one and have the financial means to fully pay for it without relying on any rideshare income.
If you are going to rely on rideshare income to pay for your new car, it’s going to be a terrible idea. Rideshare rates are constantly getting slashed. It will become increasingly more difficult to turn a profit with a car payment around your neck.
Because a lot of people only do their ridesharing business part-time, there wouldn’t be any profit margin left to be making any car payments on it.
Buying a new car will only work for those who will be working full-time, who will put in a lot of hours, who are very, very hard working, and those who work in a good, high volume market.
Permits
For ridesharing work, you may need to buy a permit from your airport in order to make the pickups legal.
In some locations, you cannot make airport pickups without it. You could be subject to heavy fines if you are caught making airport pickups without the proper permit for it.
You need to work out if it is feasible or profitable for you to purchase an airport permit to make airport pickups.
Factors to consider include:
- How busy your airport is?
- How much permits cost?
- The average ride distance from the airport?
If your airport is not busy, then it is not a good idea to buy a permit.
If you plan on hanging out at the airport on a daily basis or you plan on making a lot of airport pickups, get an airport permit.
Count all your ongoing cost
Taking all of your expenses into account can help you manage your budget and even reduce your spending.
Do remember that most cost or expense associated with income producing activities is tax-deductible.
For a rideshare driver, there are a number of expenses that could eat into your pay and profitability:
- Car loan repayments if your car under finance.
- Car insurance – Comprehensive or compulsory third party (CTP) and third-party property damage cover.
- Petrol – This will be relative to how many hours you work, how much you use your car outside of rideshare driving, how fuel efficient is your car, and the local road conditions.
- Retirement fund contributions
- Phone (and Internet) plan – With a phone plan, it is possible to claim it as an expense when it is 100% for the gig business. You may need to have a phone plan that gives you a fair amount of data and calls and GPS use each month. This also applies to the Internet cost, home office stationaries, etc – do apportion between private and business use.
- Car maintenance – This can include car repairs, tire replacement, repairs, and upkeep of the car (i.e., engine oil changes). This will differ depending on how old your car is, what type of car it is, how often you drive it and how you drive it.
- Parking and fines for breaking the road rules.
- Food and water – You might even notice a few extras such as gum, water or even magazines.