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How do I start a private metered taxi business?

The country’s metered taxi industry is set for growth.

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Unlike other countries, South Africa metered taxis don’t generally patrol the streets searching for fares. You have to phone a taxi company to get a ride, or find an area where they park. The sedan based, metered taxi industry only accounts for about 10% of the taxi transport market in South Africa.

How the meter taxi system operates in South Africa

In South Africa’s major cities such as Durban, Johannesburg and Cape Town the metered taxi companies negotiate “ranking” facilities at the hotels, airports (via ACSA) and with large retailers and at shopping malls such as the  Waterfront in Cape Town and Sandton City in Johannesburg. But the majority of their business is obtained by telephone bookings.

Who grants licences to operate?

The Provincial Taxi Council grants licences to private operators or drivers after consultation with local government and existing operators. The system is demand-driven, responding to requests from the private sector, rather than supply-driven, whereby licences are offered to those who qualify.

[box style=”gray,info” ]Steps for Registering Your Taxi Business[/box]

The grading system

Metered taxis are graded in South Africa. There are three grades.

  • Grade A: Vehicles not more than five years old as determined by their first date of registration. They have air conditioning, advanced braking systems, electric windows and other attributes determined by the grading board.
  • Grade B: Vehicles not more than eight years old as determined by their first date of registration, with air conditioning and other attributes as stated by the grading board.
  • Grade C: These are smaller and or older vehicles of types, standards and attributes determined by the grading board.

Regulations for metered taxis

The conventional non-shared taxi metered taxi has to follow certain regulations. No meter may be used or installed unless it has been tested and sealed by an accredited laboratory) or another institution approved by the SABS.

Meters must be designed so that they cannot be adjusted after being sealed. The seals are not allowed to be broken or tampered with. They must be fitted so the fare is visible to the passengers.

Records

Operators of metered taxi vehicles must ensure that the driver keeps a logbook containing the following:

  • Date and time passengers picked up and dropped off for each journey
  • List the number of passengers carried
  • The origin and destination of each passenger conveyed
  • The fare charged and the number of kilometres travelled between point of origin and destination
  • The holder must maintain all the logbook records for a period of five years

Tariffs

In Johannesburg, Safe Cab charges R7.50 per km and R1.70 standing time. Most companies charge between R7.50 and R10 per km, but, as of yet, there is no standardised tariff system in place. However, this is expected to change before the 2010 FIFA World Cup™.

[box style=”gray,info” ]What You Need to Know About Setting Your Prices[/box]

Legal requirements

Other legal requirements to start a taxi business will vary from one area to another so it is best that you contact your local municipality for the complete list of documents and permits that you need. You will also have to register your company, prepare a business plan and register with SARS.

A Few Other Basics

Insurance

Insuring your vehicles is essential. It’s unlikely that you would have the cash reserves to replace stolen or damaged vehicles or to deal with the serious insurance issues that come with transporting the public.

Maintenance

Many meter taxi companies do not run a fleet of cars. They work on the system that the taxi driver must own his/her car and as the owner are liable for maintenance of the car.

Reputable companies that operate in this manner have a safety officer to inspect the cars that represent the company. If you have your own fleet, maintenance is for your account and must not be neglected as your business depends on reliable and safe transport.

Where to find meters

Many local metered taxis are fitted with “Tel-A-Fare” which is a locally designed and assembled meter. It uses the latest technology and components. The meter offers a choice of two separate fares and a built-in memory which records all accumulated trips and takings. They retail at R1600 including installation.  Cell phones and radios work well as forms of communication with drivers. Two way radios can be installed in vehicles from around R750.

Where to get a Taxi Permit

Any person wanting to start a taxi service must apply to the National Transportation Commission or a local road transportation board for a permit to operate a taxi.
Other laws that will affect road transportation are:

  • Cross-Border Road Transport Amendment Bill: Draft (Gazette 29190, Notice 1297)
  • Cross-Border Road Transport Act (No. 4 of 1998)
  • National Land Transport Transition Amendment Act (No. 26 of 2006)
  • National Road Traffic Amendment Act (No. 20 of 2003)
  • National Road Traffic Act (No. 23 of 1996)
  • National Roads Amendment Act (No. 24 of 1996)
  • Road Traffic Laws Rationalisation Act (No. 47 of 1998)

For more information

Department of Transport website on http://nasp.dot.gov.za

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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2 Comments

2 Comments

  1. andywassung

    Jan 15, 2014 at 16:10

    Anyone have any idea how insurance works for the current Tuk Tuk’s that we see around Joburg? Do insurance companies insure these kinds of public transport?

  2. Entrepreneur

    Mar 31, 2014 at 13:17

    Hi Natalie, apologies we have now fixed the link.

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Start-up Industry Specific

How Do I Start A Transport Or Logistics Business?

An all in one guide to starting a transport and logistics business.

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Thinking about starting a transport business?

Forecasts indicate that the demand for freight transport will grow in South Africa by between 200% and 250% over the 15 to 20 years.

Some corridors, (high volume transport routes that connect major centres), such as the corridors between Gauteng and Cape Town (which amount to 50% of all corridor transport) will increase even faster.

The scope in the transport and logistics industry is varied – from a one-man show using a small truck to transport goods and offer services, to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads.

Road transportation includes commuter transport from taxis to bus transportation.

It can be a tough industry and there are many threats facing transport businesses but if you get it right, you can build a successful business.

What is covered in this guide:

  1. How to start your transport and logistics business
  2. How to get funding for your transport business
  3. What are the costs involved
  4. Finding customers and getting transport contracts
  5. Getting onto suppliers lists
  6. Buying trucks and employing drivers
  7. What are the regulations and risks
  8. Where to find guidance to start your business.

Ready to get going? Click the arrow button to learn how to start your own transport business.

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Start-up Industry Specific

How Do I Start A Security Company In South Africa?

There are two kinds of security companies, one that sells products and one that sells services or you can combine both.

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To start a security service company in South Africa you must register with the Private Security Regulatory Authority (SIRA). There are two kinds of security companies, one that sells products and one that sells services or you can combine both. It is estimated that the private security industry in South Africa employs over 400 000 individuals.

If you’re looking at starting a security guard company in South Africa, the following guide will be able to assist you in the deciding if it’s the right decision for you.

You need a lot of capital

Starting a security business requires a good deal of capital outlay and it’s highly recommended that one should have a background in this field.

Decide what kind of company you want to start

There are two kinds of security companies, one that sells products and one that sells services or you can combine both. Each sector falls under its own regulatory body.

What about area competition?

Greg Margolis is the CEO of NYPD Security, a niche security company that has operated for the last five years in the leafy northern suburbs of Johannesburg.

“To run your own security service company I think that you have to be well rounded in terms of not just being a good business person, but you also have to be a people person, a marketing person and know a good deal about the business.

“There’s tough competition, but I love what I do and wouldn’t sell my business even if I was offered triple what its worth. I am passionate about what I do”, says Margolis.

Starting a Security Services Business

To start a security service company in South Africa you must register with the Private Security Regulatory Authority (PSIRA). This includes paying a registration fee of R2 280 and writing an exam. Once you have passed the exam, proved that you do not have a criminal record, SIRA will conduct an inspection to establish whether or not your business meets the infrastructure requirements. A further fee of R1 710 is charged for the assessment. Each year the business is re-accessed which costs a further R500 plus the annual renewal fee or R520.

The following documentation is required for registration:

  1. An authenticated copy of the CM1, CM2, CM27, CM29, CM31 and CM 46 (apply at Registrar of Companies or Attorneys), if the applicant is a company;
  2. An authenticated copy of the Partnership Agreement if the applicant is a partnership;
  3. An authenticated copy of the trust deed and the letter of authorisation to the trustees from the Master of the High Court if the applicant is a business trust

Related:Steps for Setting the Right Prices for Your Security Business

Also required:

  1. The Suretyship form (SIRA 4) to be signed by the natural person who has taken full responsibility of the security business
  2. Every director, member, partner (as the case may be) applying for registration as a security business must have successfully completed, at a training establishment accredited in terms of law, at least, the training courses Grade E to B
  3. An authenticated copy of the Tax Clearance Certificate from the South African Revenue Service (SARS)
  4. An authenticated copy of the VAT Registration Number from SARS.
  5. An authenticated copy of the PAYE number from SARS
  6. An authenticated copy of the COID number (Compensation for Occupational Injuries & Diseases) from the Department of Labour
  7. Sufficient information in writing to enable the Authority to ascertain that the applicant security business meets the requirements with regard to the infrastructure and capacity necessary to render a security service;

This include, inter alia, the following:

  1. Submit a business plan to the Authority including the location and activities
  2. A resolution by the applicant security business stating that it will be able to operate for the next year
  3. The applicant proves that it has an administrative office that is accessible to the inspectors of the SIRA
  4. The applicant must have equipment which is necessary for the management and administration of the security business, e.g. fixed telephone, fax machine, a hard copy or electronic filing system for the orderly keeping of all records and documentation
  5. Show that the affairs of the applicant security business are managed and controlled by appropriately experienced, trained and skilled persons
  6. The applicant security business has at its disposal a sufficient number of registered and appropriately trained and skilled security officers for the rendering of a security service for which it has contracted or is likely to contract
  7. The security officers must be properly controlled and supervised
  8. The applicant security officer has at its disposal sufficient and adequately skilled administrative staff members for the administration of the affairs of the applicant
  9. The business must have has all the necessary equipment, including vehicles,  uniforms, clothing and equipment that must be issued to its security officers
  10. The applicant security business is in lawful possession of the firearms and other weapons that are necessary offer security services in respect of which it has contracted.

Related: Get going with a One Page Business Plan

Landing contracts

security-contract

The most important thing you can do to start and operate your own business is to develop a good business plan.

It’s invaluable because the business plan forces you to come to terms with your business. Selling the business concept seems to the problem, said Margolis. These are his five tips that will help to get the business going.

“The security industry in South Africa is very competitive. You have to get out there and you have to keep knocking on doors, there isn’t an easy solution”, explains Margolis.

Top Tips

1. Look at your business plan and decide if you have a competitive advantage. If not, work out how you can make the market understand the unique value your small business has to offer.

2. It is important to make yourself known. It isn’t difficult or expensive to increase awareness about the business. Attend ratepayer meetings, spend time at the local police stations, and attend meetings the police have with residents and businesses in the area. This way people get to know you and respect you and half the battle is won. Networking is the way to go.

3. It’s my experience that bigger companies are reluctant to give security contracts to a company that is a one-man show. Make sure that you have a structure in place. Clients need to know if something happens to you, the business will not fall apart, and the services they have paid for and you have agreed to supply, will not cease. Clients need to understand that besides experience, that you are credible and that all the checks and balances are in place. This must be one of the key selling points.

4. Consider taking on a partner. Choose a partner who has the attributes that you lack. The ideal partner would be one with strong links and contacts in the community that you want to work with. Let your partner control the selling side while you handle areas you’re strong in, such as expertise and service delivery. The other option is to employ sales staff.

5. Stay abreast of new trends in the field, and update your skills. This is something that I strongly believe in. You have to be well rounded in terms of not just being a good businessperson, but you also have to be a people person, a marketing and sales manager and know a good deal about the neighbourhoods you work.

 

Are you new to starting a business? Read 15 Things Every Newbie Needs to Know About Starting a Business

Security products

What are the requirements to start a security product supplier business?

If you are starting a security company that sells electronic alarm systems and other security products it’s wise to become a member of SAIDSA in order to provide your business with the credibility it needs to be taken seriously by the public and security service providers.

The objective of SAIDSA is to upgrade the quality and standards of electronic security and to protect the public from unscrupulous, “fly-by-night” operators. When a security system is purchased, an ongoing relationship is entered into between the purchaser and the security service company concerned.

The security service product supplier must have the infrastructure and the required expertise to support the relationship continuously.

Security Sector Regulatory Bodies

The security industry has established a number of bodies to regulate itself. Membership in these bodies is voluntary. They include:

Ready to get going? Here’s 10 Steps to Start Your Business For Free (Almost)

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How To Start A Farming Business

Keep these nine points in mind when launching your new farming business.

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