Early this month, a Facebook friend contacted me upon reading my status about our ride hailing management business. He had jumped on the Uber train when the company opened office in Nigeria in mid-2014. Together with two of his friends, they bought five Toyota Camry cars. A year later, all but one of the cars were out of business. In March 2016, he took back possession of the remaining car from the driver and said bye bye to Uber.
When he heard that we have been managing several cars for people on the Uber/Taxify (Bolt) platforms, with about 70% of these cars belonging to Nigerians in the diaspora, he sought to know what he and his friends might have done wrong, and if it is possible for us to guide them to achieve a reliable secondary source of income.
As it always happens, a few questions were enough to reveal the mistakes they made, similar to what a lot of people make in the ride hailing business in Nigeria.
The three top mistakes people who invest in the Uber-type business make boil down to three factors: Vehicle Type, Driver, Working Conditions.
Let’s get straight to them:
*Mistake #1: VEHICLE TYPE*
When I tell people looking to have us manage their vehicles that the Vehicle Type is the most important factor in a Uber business, they are often surprised. Yet they ought not to be.
It is our observation that an inappropriate vehicle will make a good driver become bad, yet a ‘bad’ driver may become good if the right vehicle merges with good working conditions.
When choosing the most practical vehicle to use, you want to consider the following factors: Fuel economy, good air conditioner, reliability, maintenance cost, life span, resale value etc.
You want a vehicle that would give the driver as little problems as possible, especially in terms in fuel consumption. Uber business is a game of distance covered and how much fuel is expended in the process. Therefore even the most loyal driver will return your car, even worse start defaulting, when he is unable to recoup his investment in fuel.
The cars that have been proven winners in this Uber game are: Toyota Corolla, Toyota Yaris, Kia Cerato, Hyundia Elantra, and Hyundai Accent.
I will do a followup post on detailed reasons why these are the best cars in the market for Uber business, but this list will serve for now. Stick with this, and thank me later.
NB: We have noticed that car dealers have noticed the obsession with Corolla cars for Uber and are packaging unwholesome Corolla brands for unsuspecting buyers. We provide free car inspection services for our clients.
*Mistake #2: DRIVER*
When we survey the reasons clients choose to turn over their cars to us, seeking to avoid problems of drivers is the number one reason. People would rather someone else handle the business of managing the Uber driver.
We understand. There are really some unscrupulous elements that would rather use your cars and not remit as stipulated in the agreement.
We have observed that many cars do not conduct background checks.
- If a driver would not provide the number of the last employer he worked for for verification, it doesn’t matter what he says.
- If he would not show his ratings on Uber and Taxify, he cannot be trusted.
- If he would not do a test drive with you on the highway, at roundabouts, and for those in Lagos, on Third Mainland bridge, how do you ascertain that he didn’t just pay to get his driver’s license.
While it is true that all these do not provide 100% guarantee that all will go well, they will drastically reduce your chances of getting the wrong driver.
It is our observation that body language of the driver during the interview process is also very important. Unfortunately, picking body language clues comes with experience. It can’t be taught.
Perhaps that’s why people just prefer to use our services instead of dealing with the hassles.
*Mistake #3: WORKING CONDITIONS*
Often, many car owners tend to forget that Uber drivers are humans. They heap on them conditions that prove burdensome.
Car owners are investors and should take the long term view. To be quite frank, asking a drive to remit N35,000 weekly is burdensome in our experience.
You have to remember that it is from the proceeds of the business that the driver would buy fuel for its numerous commutes. It is from the proceeds he will refill for the Air Conditioner. It is from the proceeds he will pay Uber and Taxify their 25% and 15% commissions respectively. It is also from these same proceeds he will likely make minor repairs so he does not have to have to disturb you all the time.
I dare say that the reason there is high turnover rate of drivers in Nigeria is because of these conditions.
For our services, while we have weekly remittances of N30,000, the vast majority of the clients make do with N20,000 per week.
Sounds small? Let’s do some quick maths:
A N35,000 weekly remittance for 12 weeks (96% of drivers quit after the first 2–3 months of rideshare) gives N420,000.
A N20,000 weekly remittance for 12 months (our average turnover rate) gives N960,000.
What’s more? We always have drivers quitting partners with even N30,000 weekly conditions to come work with us. So our car idle rate is the shortest we know. At the time of typing this, we have three cars available, with 7 drivers jostling to drive them.
I will say it again: Drivers are humans. If you make life easy for them, they will also make life easy for you. It’s simple, really.
We also ensure that all our cars are insured, this way heavy repairs do not cost the drivers their arms and legs.
Also, because we understand that Uber driving is a career path, we do our best to provide training and mentorship. We have experienced drivers in our network and they are always there to provide guidance.
If you can provide something like these, you will have less problems.
Ride-sharing services like Uber and Taxify are really good investments, but they just have to be done the right way.
Master these 3 areas of Vehicle Type, Driver, and Working Conditions, and you will see a lot of success…
And if you would like to learn more about having a successful ride hailing business (Uber/Taxify), or better still, having us manage your vehicles on Uber and Taxify, then you should check this out…