Have you ever felt like your business is stagnant? That so much of company time is wasted without anything to show for it? That there must be a better way?  That's what Kaizen is all about: making things better. Paul Akers has learned directly from the Japanese how to implement kaizen at Fast Cap, and he's excited to share it with you! Paul's experience with kaizen in Fast Cap has given him the knowledge and skills to travel the world and educate people on the kaizen philosophy. We'll share with you the insights Paul shared with us and give you ideas of how to implement kaizen in your business.

What is Kaizen?

Kaizen is the Japanese word for improvement, but Paul tells us there is so much more to it than improvement. He told us: [su_quote]Kaizen isn't just improvement. It’s continuous improvement every day. Kaizen is a mindset that starts when you wake up and goes throughout the day.[/su_quote] The practice of Kaizen goes back to after WWII when Japan was rebuilding and many American quality control experts were in the area. The Japanese took the lessons learned from these quality control experts and made it their own. The most famous adoption of kaizen is the Toyota Way, a leading philosophy in lean manufacturing. Toyota has been utilizing the Kaizen philosophy for a long time. The Toyota Way combines Kaizen with a people-first mentality to create a culture of respectful, continuous improvement. Paul says: [su_quote]Kaizen makes you happy. It improves your life. It improves your work. It improves your mentality.[/su_quote] [su_quote]It's basically solving problems so they don't keep occurring.[/su_quote]

What Are the 5 elements of Kaizen?

The five elements of Kaizen are:

• Teamwork- Working toward a common goal
• Personal discipline- Holding oneself responsible for doing what is right
• Improved morale- Higher levels of happiness
• Quality- Fewer flaws, better craftsmanship
• Suggestions for improvement- Openness to ways to improve

Based on research and the interviews with Paul, it appears to me that when you look at these together, they all feed into each other and almost naturally push a person or company to greater heights. Throughout Kaizen history, there seems to be a focus on the positive. The focus on the positive tends to create more ideas, improvement, and productivity. When ideas are turned into processes, they create higher quality and greater teamwork, which creates improved morale. Then they keep on feeding each other.

What are the main principles of kaizen philosophy?

According to the Kaizen Institute, Kaizen Philosophy is based on 5 basic principles:

• Know Your Customer
• Eliminate Waste or "Muda"
• Practice Gemba (be where work is performed)
• Empower Your People
• Measure and Honestly Share Data

Let's dig into each of these.

Know Your Customer

Knowing your customer is an essential first step to starting a journey of continuous improvement. Whether being applied in a business sense or your personal life, improvements need to create a benefit for those it impacts. Creating improvements for others requires knowing what is important to them. How do we establish what is important to our customers though? Here are some ways you can establish what is important to your customer:

• Customer satisfaction surveys
• Database of customer suggestions and complaints
• Industry Trends
• You are your customer
• Demographics
• Behavioral Research

Most of these will require good data management, which I will talk about momentarily, but many businesses are started because you are the customer. That was the case with Fast Cap. In our interview with Paul, he told us: [su_quote]I created Fast Cap because I wanted a quick way to make the cabinets I build look better.[/su_quote] That's what it means when I say you are the customer. You created the product to improve your own life. In this scenario, you can think about what you are like and create a customer profile based on your characteristics. In Paul's scenario, the customer for Fast Caps would look like this:

• Carpenters, Craftsmen, Cabinet Makers
• Care about Efficiency
• Care about Quality

Those three things can help him identify places to reach customers, like union publications and trade magazines, which will also help keep track of industry trends.

Eliminate Waste or "Muda"

The Japanese call waste Muda and believe that eliminating waste creates a happier, more productive life and business. This approach to process improvement can be done occasionally in what is referred to as a kaizen blitz or can be a daily focus on continuous improvement. Either way, eight types of Muda can be eliminated:

1. Overproduction-producing too much of a product
2. Waiting- Wasted time
3. Transportation- Sending goods out of the way during the supply chain
4. Overprocessing- Adding unnecessary features
5. Movement- Taking steps that don't contribute to the process
6. Inventory- Storing too much product and tying up cash
7. Making Defective Parts- Wasting inputs.
8. Underutilized Talent- Failing to allow employees to contribute as well as they could.

Practice Gemba

Paul told us: [su_quote]Gemba means investigating the scene of the crime.[/su_quote] [su_quote]Every time you see me I’m on the shop floor. Not in some office away from what’s going on. That’s where the action is. I’ve got to be here to actually find things that aren’t working well.[/su_quote] The only way you're going to get ideas for improvement is by being where the work is performed. That’s where meaningful changes can be made, but management can’t be the only people involved in Kaizen and Gemba. Kaizen works best when all employees are actively involved in the process of generating ideas and looking for improvements. They perform the work every day, so they know what doesn’t work. Employees told us: [su_quote]Kaizen increases teamwork by making the processes readily known. If I don't know the process, it's harder to help other employees with their job.[/su_quote] Watch the video below for the full conversation.

Empower Your People

Kainen is all about empowering your people. Management can't identify every waste or need for improvement in the company process(es). Therefore they have to rely on their people to identify opportunities to improve the process(es) they are most familiar with. Companies do their best when their employees are happy and engaged. In the workforce, they describe that as company culture, but Paul views making his employees happy as the entire point of Kaizen. He told us: [su_quote]Happy employees are productive employees. The whole point of kaizen is to get rid of the things that bug you. If you get rid of them, you make all our lives easier, and we can work better as a team.[/su_quote] Here’s how Paul does that. His team doesn’t have to get permission to fix something that is bothering them — they just have to develop a solution, inform the team lead, and share it on the WhatsApp workplace improvements chat. That keeps everyone on the same page so they can jump in to help other areas of the team.

Measure and Honestly Share Data

To encourage the team to truly make meaningful incremental changes requires measuring and honestly sharing data. Many companies like to control their data by only sharing it on a need-to-know basis. If you have worked with a major publicly held company recently, you have probably heard management tell their employee base some really big lies. My first day at major building control and defense contractor started with a team meeting, and the first thing the employees asked is: [su_quote]Are we going to get raises this year?[/su_quote] The answer was no, they couldn't afford it. Meanwhile, they did a $100B stock buyback and recorded record profit. Shockingly, I didn't stay long because the workers were miserable and the workplace lacked an appealing culture. The moral of the story the employee's hard work paid off for the organization, but management chose not to share information honestly.

How Does Kaizen work?

The kaizen process is meant to be a daily improvement process.  Paul explains the process and gives examples in Part 1 of our interview. [su_youtube url="https://www.youtube.com/watch?v=Zah9panf7ag"] It's 4 basic steps:

• Plan
• Do
• Check
• Act

It's simple — first, you plan out what you need to do, then you perform the task, after that, you check what worked and didn't, then you enact change. Later in the interview, Paul explains the importance of team meetings to help people develop a kaizen approach to their work. One of his workers explains: [su_quote]When I came into the organization, I didn't really think about processes like this, but the benefits of kaizen are undeniable. I feel like I waste less time, have a more positive work environment, and am able to increase my productivity. The team meetings really help me improve.[/su_quote] Paul told us: [su_quote]Having a different employee manage each daily meeting really benefits the organization because it gives everyone a sense of ownership. It helps teach them the Plan-Do-Check-Act mentality.[/su_quote] So far we've been talking about the kaizen philosophy as a process of continuous improvement, but there are other ways to approach kaizen. Keep reading to find out how.

Kaizen Events

Kaizen events are basically a short-term focus on creating process improvements. There are two main kinds of Kaizen events — the Kaizen blitz, and a Kaizen workshop.  Both focus on making meaningful changes quickly. Both are typically led by a Kaizen expert. These can be excellent for big changes like when FastCap did a Kaizen blitz for their injection molding machine. Let’s look at each to understand how they are similar and different.

What Is a Kaizen blitz?

A kaizen blitz is a business process that is focused on developing and implementing ideas to fix a specific problem.  During this time, the processes involved in the problem will be evaluated, and implementing a solution will occur. These are meant to make large improvements quickly to reduce waste caused during manufacturing. Companies often do this to help get buy-in from their employees. Paul’s purchase of an injection molding machine is an example of a kaizen event because it was a major improvement, but it is also a kaizen blitz because it focuses on one specific issue. They spent months planning how to get this major change implemented. Then they implemented it once they decided on the best way. Watch the discussion on the injection molding machine below:

What are Kaizen workshops?

Kaizen workshops are similar to the blitz, but they take a much wider view. They are looking to create positive changes throughout the organization in a short period of time. They incorporate resources from all parts of the organization to see if solutions arise from teams of different backgrounds getting together. The Municipal Research and Services Center describes workshops as longer than a blitz or event. There will typically be 8+ meetings spread over weeks or months to get better results. This lets people process the discussion and plan for improvements more efficiently. Note to the reader: The terminology for events tends to vary based on the source. During research, I have seen workshops, events, and blitzes used synonymously, but also as having different objectives.  I interpret this difference to be based on people’s understanding of the subject matter, cultural differences, and the desire to use the Kaizen terminology for something that is only partially adopting kaizen philosophy.

Continuous Improvement Best Practices

Paul spends much of the time we spent with him discussing kaizen best practices. Let's look at some of the kaizen best practices he uses at Fast Cap to help small teams achieve successful results using kaizen.

• Start your day with the 3S- Sweep, Sort, Standardize. Watch Paul explaining the 3S.
• Daily team meeting to get everyone involved in creating better change.
• If it bugs you, change it.
• Share your solutions so they can be standardized.

Paul tells us: [su_quote]Remember, Kaizen is a daily thing, not an occasional thing. It's developing the way you think and act on a daily basis.[/su_quote]

What are examples of kaizen?

By now, I'm sure it's obvious this Japanese manufacturing strategy improves quality, productivity, and the work environment, but what are some actual examples of effective kaizen solutions? One example Paul showed us was connecting a screw to a magnetic block to make sure you don't lose them. See the picture below. Losing screws can really slow down productivity. This is a great solution that can save a ton of time across many industries. Another example Paul showed us was using markings to show where commonly needed tape lengths are. While this might not save a ton of time, it's far quicker than finding a ruler, measuring the tape, and cutting the tape. You just pull to the right length and are ready to continue the job. Watch the second part of the interview with Paul for more great tips on easy kaizen solutions to improve your work environment. [su_youtube url="https://www.youtube.com/watch?v=H5HSsDhkbjQ"]

Influencers

We've provided you a ton of resources related to kaizen system management. We hope you’ve got an idea that can help add value to your business. We find following successful social influencers beneficial to generating new ideas. If you haven't already, follow Paul Akers on LinkedIn and YouTube. In addition, check out this list of 20 continuous improvement influencers to follow.

Do you love cars? Are you already putting a lot of time and money into your automobile? Then it may be time to make money with your passion for vehicles. To help you cash in on your passion, we interviewed Ronnie Danelian, owner of Legends Car Rentals in Los Angeles. Ronnie began his entrepreneurial endeavors as an internet marketing master. However, with his love for classic cars, he transitioned his business venture into the company of his dreams. Starting with only a $10,000 investment, his business rents exotic and classic cars to the LA upper class and now rakes in over $175k a month! The car rental industry has a $92 billion global market share and is expected to reach $214 billion by 2027. In this article, we'll take Ronnie's expert advice to help you claim your share of this growing market. So sit back and buckle up! This is our step-by-step guide on how to start a car rental business from scratch.

1. Get Experience with Cars

Ronne owned an internet marketing business and explained that he had no experience in the car rental industry before starting Legends. It's true that the proprietors of some of our success stories also had little or no experience in their industry. However, it always helps to have experience in a business before investing your time and money. In the car rental business, knowing basic car repair and the ins and outs of the industry will go a long way towards the success and profitability of your business.

Repair Classes and a Rental Clerk Position

A simple way to get experience is through your local community college. Many offer classes on auto repair and have onsite dummy repair vehicles for hands-on training and experience. If classes aren't viable, there are other options to learn basic auto repair. To gain industry knowledge and learn how to start a car rental company, you can apply for a position as a car rental clerk. The position allows you to explore the back-office systems car rental companies use for sales and to maintain their fleet. You'll also gain valuable insights on customer service and how car rental businesses buy, sell, and trade vehicles.

2. Determine Your Type of Car Rental Business

Ronnie operates a business that rents out classic and exotic cars along with sprinter vans. However, there are many types of car rental businesses, and each style has its own advantages and disadvantages. Remember what Ronnie said about the industry, [su_quote]Everything that glitters is not gold.[/su_quote] We'll explore these different types in the next sections to help you decide.

Independent Rental Company

To learn more about Ronnie's business, watch part 1 and part 2 of our YouTube series.

[su_youtube url="https://www.youtube.com/watch?v=W_01eckETe0"]

The first style of car rental business we'll explore is an independent business. Typically, independent rental companies have smaller fleets (Legends has one of the smallest) and work in a specialized market. As an independent business owner, you call the shots at your business. All decisions fall on your lap, as does the responsibility and consequences of those decisions. It's up to you to shape your brand and business model and put in the work of marketing your business. Finances are another responsibility of the owner, which includes any problems that may occur. It helps (but isn't a deal-breaker) to have a nice cash cushion if you're starting an independent operation.

Car Dealership Rental Office

Opening a car rental company as part of a car dealership is another option to explore. In this style of business, your company rents to customers who brought their car in for bodywork or other repairs. In this scenario, you don't need to keep a large inventory, which helps with startup costs. However, it limits the number of customers you have and ties your success to the success of the dealership.

Existing Business

If you're not interested in starting a business from scratch, you have two options: purchase an existing business or invest in a franchise. We'll explore franchises in the next section, so let's look at existing independent businesses. The key advantage to buying an existing business is that the structure of the business is in place, and it most likely already has an existing customer base. However, you must conduct extensive research before purchasing. It's important to understand the value of the business and its market. Ask questions like:

• Does this business fill a market need?
• Will the customers continue to be loyal under new ownership?
• Would the ownership transfer run smoothly?

3. Opening a Franchise

If investing in a car rental franchise, you're purchasing the right to an established brand and business model. There are many brands, and each offers a long list of pros and cons.

Who is the Cheapest Car Rental Company?

Here are some top contenders and their initial fees and/or requirements:

• Hertz - $55,000 franchise fee and investment from $300k to over a million
• Dollar - Requires a net worth of $500,000 or higher and liquid capital of $150,000 or higher
• Thrifty - A net worth of $500,000 or higher and liquid capital of $150,000 or higher
• Budget - $20,000 franchise fee and with an investment between $150,000–$450,000

Franchise Advantages

The key advantage of buying into a franchise is that the business is "turnkey." This means the business model is simple and pre-determined. You pay to enter a franchise, but there is support from the company along with recognized branding and advertising built into the cost. Franchises can also help find a suitable location for your business and finance some of the startup costs. It always helps to have support that will relieve the burden on your pocketbook when starting out.

Franchise Disadvantages

When investing in a franchise, the owner loses autonomy over the business, and there are other costs associated with owning a franchise. For example, a franchisee will pay ongoing royalties to the franchise besides the initial fees. Also, a sense of creativity in the business is lost as you lose control over your advertising and marketing decisions. Franchises also determine the range in which you can set prices, so there is little leeway in running deals or specials. If you love vehicles but a car rental business doesn't sound right for you, check out some other vehicle based businesses like:

• Food Trucks
• Mechanics
• Mobile Detailers

4. Write a Business Plan

Every business requires a business plan to be successful. After choosing a business type, this plan will help create your vision, strategy, and outlook. It isn't just an outline. This is a detailed document used in every aspect of your operation (including loan applications and investor pitches!). Your business plan should include items like:

• Executive Summary of the Business
• Objectives and Mission Statement
• Keys to Success
• Company Summary
• Inventory
• Market Analysis
• Marketing and Advertising Plan
• Management Summary

Templates

To help write your plan, here are some free templates!

• Small Business Administration (SBA) Business Plan Guide
• Car Rental Business Plan Sample
• Business Plan Template for a Small Business
• State-Specific Business Plans

5. Location, Location, Location

Coined in 1944, this chant is still on repeat in the real estate and business worlds. And for a car rental startup, the location is the lifeline of the business and links to your target market (see the next section). This means that the availability and price point of a prime space can determine your target market. Or, you can seek a spot to fit the needs of a predetermined target market. Use this 10-point slideshow to help you choose the best location for your business. It's best to consider two key factors: the property size and its vicinity to complementary businesses or services. For example, if you're starting a car rental company that caters to business travelers, then the business should be near a travel hub like an airport or train station. Or, if your business is focused on industrial or commercial rentals, then choose a spot in the proximity of a sizable industrial or commercial zone for added convenience to the target market. Last, be mindful of the saturation of the market in your location. As Ronnie explained regarding his business, [su_quote]A lot of people got in on it. At least five exotic car rental companies started in the last three years around us.[/su_quote]

6. Who is Your Target Market?

Before starting a car rental business, you must determine your target market. In most instances, your target market is contingent on your location. This will help you determine several market factors, such as:

• Income level
• Age
• Occupation
• Zoning

It's important to align the needs of your market with your fleet to ensure success. For example, if your rental business is near an airport and has high traffic of executives, your fleet should suit those tastes. Or, if your business is in a tourist destination that caters to high-income, middle-aged clientele, create a luxury fantasy experience with a fleet that includes high-end and sporty vehicles. Legends Car Rentals specializes in classic and exotic cars they rent to luxury-focused clientele and producers for movie and music video shoots. They have a niche market, especially in Los Angeles, and cater to their clients like a boutique shop. Other specialized markets include:

• Outdoor and Recreational Vehicles
• Commercial Vehicle Rental
• Tourist Rentals
• Long-Term Rentals
• Delivery Drivers

Check out our interview about Trellus, a delivery company. It's up to you to research your market and figure out what will work in your area. Fortunately, the SBA offers resources to help.

7. Name, Registration, Structure, and Licensing

A name in the rental car industry isn't as key as in other industries. You can easily name your business "Bob's Rentals" and have great success. However, as we'll explore later on, web marketing is essential in the rental car industry. Before choosing a name, check to see if the domain is available and register it with a domain service like Google, GoDaddy, or Namecheap. Also, think about how you spell your business name as easy access via web search will help drive revenue. Note: If working with a franchise, a business name will only be an entity on legal documents.

What Type of Business is a Car Rental Company?

With key elements in place, you can now take the steps needed to create a legal company. You must register your business at the federal and state levels and establish a legal structure. Registering online is easy and will save time. However, choosing a business structure (Limited Liability Corporation, Sole Proprietorship, Corporation, S Corporation, or Partnership) is a much more complicated process. Be sure to work with an accountant and/or business attorney to maximize your legal and tax benefits. The SBA and IRS have extensive resources on business structures. Typically, a car rental business will be set up as a Limited Liability Corporation (LLC) to avoid exposure of the owner's personal assets to legal action. However, an attorney or accountant will know how to best gauge the options for the business.

Licenses and Permits

After establishing your legal structure, determine whether your business requires specific licenses or permits to operate. The SBA has a tool to help you check at the federal and state levels. Be sure to check at the county and city levels as well.

8. Clean Up Your Finances and Secure Funding

Money is one of the biggest hurdles for opening any business. But before you open your doors, you must organize your finances and secure funding.

How Much Does it Cost to Start a Car Rental Business?

Ronnie started his car business with a $10,000 investment. However, Ronnie's business is highly specialized. In general, a rental car service is not the cheapest enterprise in terms of startup costs. Even starting with one or two cars can cost over $50k, and a mid-to-large enterprise can run from $500k up to $2 million. Here is a list of startup and ongoing costs to consider:

• Business Registration and Licenses
• Business Attorney
• Accountant
• Location (deposit)
• Marketing and Advertising (website and social media)
• Office Supplies
• Inventory or Fleet (See the next section)
• Insurance
• Maintenance (Mechanic)
• Employees

We asked Ronnie about his biggest ongoing expense now and he said, [su_quote]The biggest one currently is the car payments—roughly about $60k [per month].[/su_quote] Remember, the largest costs will be your insurance, advertising, and fleet of vehicles.

How Do I Fund My Business?

Funds to launch your business can come from:

• Personal Funds
• Personal loan from family or friends
• Business investors (Ronnie split his startup costs at $5k per investor)

If you want to learn more about raising capital for your business, we created a two-part video series on seed funding startups.

How to Open a Car Rental Business with No Money

The business plan you created comes in handy at this stage of your enterprise as it is a requirement to apply for SBA loan programs and other funding programs the administration has available for small businesses. Other funding options include crowdfunding, a home equity loan, or a rollover for business funding from your retirement plan (ROBS). You can also apply for a credit card with an interest-free period to help kick things off if you have good credit. There are also business loans, like equipment financing or a business auto loan, you can use to fund specific aspects of your business. These loans are easier to acquire as the equipment acts as collateral. Educate yourself and understand the risks of loans before applying.

9. Inventory (The Fleet)

To start a car rental business, you'll need cars! It's the most important aspect of your business. The biggest question is whether you'll purchase or lease your vehicles.

Purchasing Your Fleet

Obviously purchasing vehicles outright will be costly. However, owning vehicles could be the best path for your business financially as you can sell and trade in (see section on sales) for profit. Here are 3 options for purchasing your fleet:

Local Dealer

Hopefully, you have some experience purchasing cars from a dealer, but it’s not the end of the world if you don’t. There are tons of resources and books out there on the art of purchasing a car. Remember these 3 golden rules: [su_note note_color="#d2dde7"] 1. Know exactly what you want to buy and what it’s worth before going on the lot. Research vehicle values through a trusted auto pricing source like Kelley Blue Book or Edmunds. 2. Put down at least 20% on the price if taking out a loan. 3. Don’t buy any add-ons like extended warranties or gap insurance. [/su_note]

Other Consumer

Many Americans love to buy and sell cars, and there are thousands of local sellers who post cars on sites like Craigslist, Cars.com, and eBay motors. In this situation, you’ll most likely purchase a used car, so be sure to educate yourself on the ins-and-outs of purchasing used vehicles.

Auction

The final option is to purchase a car from an auction. Large rental companies, like Enterprise, make large profits by purchasing entire fleets of cars in bulk at auctions. However, their business also acts as a used car dealer, which grants them access to dealer-only auctions. Here are some non-dealer auction options to help you get started. Be mindful of salvaged and damaged cars, and only shop for clear-title vehicles.

• IAAI
• Auto Auction Mall
• Purple Wave

Leasing Your Fleet

Another option is to lease your fleet from a car dealer. It's like subletting your car. Before leasing a vehicle you intend to rent out, review the terms of your lease agreement to make sure they allow this practice. Also, be aware that the dealer requires you to pay the lease regardless of if you rent the vehicle.

Partner Cars

Ronnie stated about starting his business: [su_quote]We had the clients, but we didn't have the cars.[/su_quote] Instead of renting or leasing vehicles, Ronnie sourced partner cars from people who let him lease their cars out on commission. If you're having trouble purchasing or leasing vehicles for your fleet, remember Ronnie's advice: [su_quote]If you don't have the inventory, you find the people with the inventory. And it's a win-win situation.[/su_quote]

What Cars Do I Buy?

Before purchasing or leasing your fleet, realize that you don't always know which cars will be a hit. Ronnie explained the hit-or-miss principles he experienced at Legends, and it applies to the entire industry. Ask yourself these questions before determining your fleet style.

• Does the vehicle accommodate my target market?
• Can I get a good return when I sell the vehicle?
• Does this model have maintenance issues?
• What does my market research say about this vehicle in my market?

A great way to test a car's viability is through your business website or on social media with a "coming soon" page or post. See what pre-reservations you get and how people react to it as a test. Note: If you invest in a franchise, some offer fleet supplier programs, and some don't. Also, they will have data on the best cars to rent in your area.

Re-Fleeting

Get rid of cars and re-fleet during the slow times. [su_quote]If a car is getting a little older, then it's the right time to sell and get another car.[/su_quote] [su_quote]We don't want to sit on inventory and let it go old. We want to sell at the right time and buy at the right time.[/su_quote]

10. Insure the Fleet

We asked Ronny how many cars in his fleet have been involved in an accident. He said: [su_quote]Every single one of them. Something has happened to every single one of them.[/su_quote] Car insurance is a legal necessity of any vehicle, and you'll need a policy to cover your fleet in case of an accident. Customers can pay more for coverage when they rent to cover the costs of the insurance, but remember what Ronnie said about the car rental business: [su_quote]I don't think you're ever off the hook in this business.[/su_quote] Insurance can be tough to acquire for a new business, but here is a roadmap you can use to secure it. However, expect it to be one of your highest startup and ongoing expenses. For Legends, Ronnie stated, [su_quote]Insurance is about $4,000–5,000 [per month] depending on how many cars we have running in the fleet that month.[/su_quote]

11. Set Financial Goals

With your business structure set up and a fleet of vehicles on hand, you can budget and set financial goals for your business.

How Do Car Rental Companies Make Money?

Most car rental companies make money in two ways: reselling vehicles at a premium rate and upselling contract add-ons, which go directly to the bottom line. The rental of the vehicle is purely operational revenue unless you have a specialized business like Ronnie. Luxury, high-end, and classic cars rent out at much higher rates and easily cover their note. However, insurance and maintenance fees can eat into your profits if you're not careful.

Car Rental Business Profit Margin

With these models in mind, a standard car rental location shoots for 5–10% annual profit margins, while exotics and classics make 35–40% profit margins. To put things into perspective, a good day for Ronnie is renting 5 cars and making $10k in revenue. Whereas revenue management of a standard car rental business has been compared to nuclear physics. Ultimately, it will be up to you to calculate the value of your fleet and determine the conditions in which you should re-fleet (sell) your vehicles to generate profit.

12. Contracts

The most important document, aside from a business plan, in the rental car industry is the rental contract. This document is an agreement between your company and the customer and explains the responsibilities of both parties. It is up to the business to ensure that the customer's insurance is valid and that they can cover the costs in case of an accident. As Ronnie explained, the biggest mistake of any car rental business is to rent to someone you shouldn't. [su_quote]Do your homework before you let the car out. Once the car leaves the lot, it's too late. So, you have to do your homework before: verifying the insurance, verifying the credit card, address, who the renter is.[/su_quote]

Car Rental Agreement Template

You can use this car rental template as a base for creating or reviewing your contract. However, we strongly advise that you work with a qualified legal professional as this is the most important document protecting your business.

13. Marketing Strategy

Marketing in the car rental industry is a multi-billion dollar business. Ever notice how many car rental commercials you see during the Super Bowl? Unless you're partnered with a franchise, your small business will need to find creative ways to reach the market.

Create a Website

Don't worry if you have no experience creating a website or in digital marketing. It's easy to find a knowledgeable web designer and webmaster to create and manage your website. However, if you want to create your own site, you can use a web development company like Wix to design your site and logos.

Start a Digital Marketing Campaign

Ronnie stated that the best bang for his buck marketing-wise has come through Google advertising. He first started with a budget of $300 and now spends over $8,000/month. However, Google ads can be expensive and less effective without experience. To help with your Google campaigns, use this resource before setting anything up. Or you can always hire a freelancer through Upwork with a specialization in Google Ad Campaigns. Remember: word-of-mouth advertising is your greatest ally. There's no better way to get word-of-mouth customers than by providing outstanding customer service!

15. Customer Service and Profitability

Customer service in the car rental industry is unique and tied directly to the profits of the business. Here are the best tips to follow industry standards and drive your profits through the roof:

• Don't compromise exemplary service for a cheap deal or extras.
• Upsell but don't force the customer into add-ons they don't want or need. They just want to rent a car!
• Consistently ask for reviews and feedback at the closure of the rental agreement.
• Monitor your online reviews and respond to every review, whether positive or negative.
• Train yourself and employees to speak to customers like a person and not a robot.

Is the Car Rental Business Profitable?

Yes! The car rental business can be a profitable venture—but not without the highest standard of customer service. As Ronnie explained: [su_quote]By providing the perfect experience, they always keep coming back to us.[/su_quote]

Conclusion

With this guide, you have all the knowledge needed on how to start a car rental business. With that, we'll leave you with one final bit of advice from Ronnie for entrepreneurs looking to get into the industry: [su_quote]Bend all the rules. Don't take no for an answer. Every day, get up and go as hard as you can. There'll be so many failures and every one is closer to success. Every day, start off trying to achieve more than the day before.[/su_quote]

Have you always wanted to start a business, but felt like you couldn't afford the startup costs? We'll show you how to start a business with no money. Upflip is here to help you. We're going to walk you through the steps of how to start a business with no money. We'll share some of the business ideas that Paul Akers from Fast Cap and Mike Andes of Augusta Lawn Care Services see as great opportunities. In addition, we'll share information with you from Russell, an 18-year-old making over $100k/year by starting Legends Lawn Care Services. He started with $2,000 and explains how you can do it with less. We'll cover the following aspects about how to start a business without money:

1. Coming up Small Business Ideas
2. Market Research
3. Business Plan
4. Funding
5. Name the Business
6. Structure the Business
7. Preparing for Opening Day
8. Tips on how to start a business without money

Keep reading to learn how to become an entrepreneur with no money.

Step 1: Come up with Small Business Ideas

You know "I want to start a small business, but have no money." Small business ideas can come from anywhere. Some of the best ways to come up with business ideas include:

• Looking at what other industries do and how it can be applied to yours.
• Looking at what other countries do and how it can be applied to yours.
• Observing a problem and finding a way to solve it.

Let's look at each.

Look at what other industries do

Paul told us some of the products he sells came from other industries. Here are a couple of products that crossed from one industry to another. [su_quote]We have a product called the GlueBot. I took something from the food industry and moved it over to the woodworking industry. Today that’s one of the best products we sell.[/su_quote] [su_quote]CruisinCap was another product like that. I spilled my coffee on myself and went inside grabbed a Fast Cap and it kept my coffee from spilling. that's how CruisinCap was built.[/su_quote] CruisinCap sells billions of pieces worldwide. What business ideas could you solve with this type of thinking?

Look at what other countries do

Different cultures approach business ideas differently. When you travel, take note of what you see in the other places and consider how you can bring it back home. Paul told us about his travels to Japan: [su_quote]When I go to Japan, I’m very observant of what the Japanese are doing because the Japanese are very clever people, very resourceful people.[/su_quote] He went on to tell us about one of the products that he really loves out there, hot coffee vending machines. They bottle their coffee and keep it hot in the vending machine. That way you can have a hot coffee straight from a vending machine.

Observe a problem and solve it.

Paul discusses how he comes up with the business idea for Fast Cap in his interview. [su_quote]I came up with a situation as a cabinet maker where I was trying to cover a screw hole inside of the cabinet and the existing technology was plunky and difficult. I came up with the Fast Cap, now we have 800 products.[/su_quote] He goes on to explain how he goes about creating so many great products. [su_quote]Don’t complicate things, look for problems, and solve those problems with elegance and if you do that, pretty amazing things can happen in an individual's life.[/su_quote] Watch the whole video below. He tells a great story. [su_youtube url="https://youtu.be/CdxKZWfD4fA?t=152"]

What is the easiest business to start with no money?

The easiest business to start without money is the one that you already have the skills and tools for. Mike Andes told us: [su_quote]If you want to start your own business without money, the easiest way is to sell your time.[/su_quote] He gives an example of starting a weed-pulling business. It doesn't require any tools, just time and attention to detail. When I was growing up, I used to do this and make $20/hour cause the neighbors couldn't get normal landscapers to do it the way they wanted. Russell agrees that a lawn care business is one of the easiest ways to get started with little or no money. He told us: [su_quote]If you don't have the tools and the money to start a landscaping business, you can always require 50% upfront and go buy the tools with the retainer.[/su_quote]

How to Start an Online Business With no money

Personally, I think that being out in the sun all day, pulling weeds and operating machinery sounds like more work than I want to do. I tend to prefer using my mind over my body to earn a living that's why I do freelancing. Freelancing is taking on contract jobs online that businesses need help with but don't want to hire a full or part-time employee to do the work. As long as you have a computer and internet, you can start freelancing on companies like:

• Upwork
• Freelancer
• Fiverr
• Toptal
• 11 more freelancing sites

There are five types of jobs that employers are typically looking for on these sites:

1. Development jobs
2. Graphic Design jobs
3. Blogging and other writing jobs
4. Digital Marketing
5. Admin Work

If you don't have experience in these fields you should look for a mentor to gain experience. Let's look at each of these in more detail.

Business Idea: Software Development jobs

If you know how to build websites and work with coding languages, there is always a demand for software developers. Upwork has over 4,000 current listings looking for developers for projects. If you know any of these languages, companies are looking for help:

• JavaScript
• Python
• HTML
• Css
• Java
• SQL
• NoSQL
• C+
• Rust
• Perl
• Go

Learn more about each one at Berkeley Extension. Most of the languages have free tutorials if you go to their websites, which can make it easy to learn them. In addition, Youtube videos can help you figure almost anything. Just don't take on more than you can achieve because your ratings will impact what jobs you can get. I know people who bill up to $500/hr for development work. If you can book these types of jobs, you'll be well on your way to starting your own business.

Business Idea: Graphic Design jobs

Graphic design is another highly in-demand field where you can start a successful business with no money down. Upflip has nearly 3,900 graphic design projects looking for a designer. If you have some skills in Adobe Creative Cloud or comparable software, this can be a highly profitable online business idea.

Blogging and Other Freelance Writing Jobs

There are over 5,700 writing jobs on Upwork. This is my favorite type of online business because it gives me the opportunity to learn about new subjects and make money doing it. I will warn you, that it takes more than just writing about a subject. Other business owners want to see results quickly and a great blog is not the online thing that goes into business writing. You'll need to do Keyword Analysis and SEO Best Practices to help a new business get the most out of its content. At Upflip, we use SurferSEO to help us make sure we are writing the best blogs to give our readers exactly what they expect. For some blogs, I will also use rtyr.me to autogenerate content. Many writing jobs will pay a price per word, typically between $.02 and $.15/word. You need to be aware that you cannot assume that your WPM can be directly converted to your hourly. Each Upflip blog will normally include:

• 1-2 hours watching videos
• 1 hour finding and reading links
• 1 hour editing
• 2.5 hours writing ( I only type about 30 words per minute)
• 1 hour back and forth with the client
• 1-2 days struggling to figure out what story I want to tell (insert laughing crying face emoji)

So I might be able to do three blogs a week on a good week. at $.02/word, it would only be $92, which comes out to $11.50/hour, but they pay me far better than that. Just make sure you are aware of the time you spend on your business venture. If you bill based on 4 hours of time for the first 1,000 words and an hour for each additional thousand, you should be able to make a great living with this internet business.

Business Idea: Digital Marketing

Digital marketing is focused on helping businesses reach their customers. This can be through ads, social media marketing, or other marketing strategies. Businesses focused on this category will need to have familiarity with the platforms they are performing work on. The four major platforms that businesses really need help managing are:

1. Google- Check out Google Digital Garage to learn how to maximize the utility of their platforms.
2. Facebook-Check out Facebook Blueprint to learn how to maximize the utility of their platforms
3. Amazon- Check out Amazon Advertising Learning Console to learn how to maximize the utility of their platforms
4. LinkedIn- Check out LinkedIn Marketing Labs to learn how to maximize the utility of their platforms

Pay can be hourly, by the project, or based on performance. Make sure when starting off you aim for hourly. While you are developing your skillset there will be quite a learning curve. You'll be paying for your learning curve in its entirety if you charge by the project or based on performance. https://www.upflip.com/blog/most-profitable-businesses

Market Research

When starting a business with little money, or even no money, you'll need to research the product-market fit. A good business to start at a low cost is one that can be started with low upfront costs but has lots of demand for it. High demand and low upfront costs make a cleaning service the best business to start with little money. You already have the products you need at home and your target customer is anyone who needs help cleaning. (Let's face it everyone could probably use some help there. In other businesses, you'll have to do some market research to see whether your area needs them and how much money you can make when starting a business. Market research is simply establishing if there is demand for your product or service. Mike spends quite a bit of time discussing how to conduct market research. He shows the basic concept of market research by surveying his employees. Watch his take on conducting research below. [su_youtube url="https://youtu.be/xJ71lGDtSt4?t=456"] He discusses aspects such as demographics, online surveys, and target market. Let's look at each of these terms to better understand how to start a business.

What are demographics?

Demographics are statistical characteristics of a population or a subset of the population.  Some considerations you’ll want to consider are:

• Location
• Age
• Gender
• Other Interests
• Marital Status
• Do they have kids?
• Job title
• Income

How do I find out who my potential customers are?

If you have a new product idea potential customers may not be easily identifiable. If a business requires surveys and focus groups to establish what demographics are drawn to your small business idea, you may want to ask yourself? [su_quote]Is this the best business to start with no money?[/su_quote] As long as you have a few funds, you can use Facebook Ad Center to conduct surveys for less than $1 per action. PowerAdSpy has a great blog on how to use Facebook ads for market research campaigns. Paul has a great way of identifying your target market if you have a product. Just ask friends and family what they think of the product. [su_quote]If they offer to buy it off you, you have a winner. Anything else they could just be focused on not hurting your feelings.[/su_quote] Take note of the demographics of the people who are most interested and they'd be your target market.

Identifying your target market

A successful business needs to know who its ideal client is. Since you've just barely come up with the business idea, you'll need to figure out who buys the product or services you are selling. Facebook has got this down to a science, but their ads can be complex to use if you don't know what you’re doing. Wordstream published an infographic with all of Facebook's targeting options. If you want to get your target market as precise as possible, spend some time learning about each of the options.

A Business Plan for How to Start Your Own Business with no Money

Trying to start a successful small business without startup capital is going to be different than it would be when you decide to pursue a new business idea with available funding. The entire process will be focused on keeping costs low. Your business plan should be focused on this. The following points are an excerpt from our blog How to Write a Business Plan (Plus Examples & Templates) with comments that should be different when starting a business with no money:

1. Business Plan Cover Page
2. Table of Contents
3. Executive Summary
4. Company Description
5. Description of Products and Services- This section should only be a product or a service. It's hard to offer more than one until you have more money. Focus on one great minimum viable product
6. Marketing Plan
7. SWOT Analysis
8. Competitor Data
9. Competitive Analysis
10. Marketing Expenses Strategy-This section should probably have an original strategy based on low cost or free alternatives, then plans on how to expand based on extra cash flow.
11. Pricing Strategy
12. Distribution Channel Assessment- At first, this will most likely be yourself, print-on-demand, or electronic distribution models. Business models that let you make more money each time you sell a single unit of work are the most scalable. Then build to a more complex distribution.
13. Operational Plan- You'll be doing everything at first. Specify the division of your time and how the work will be delegated later
14. Management and Organizational Strategy- Current-you, future-provide chart.
15. Financial Statements and/or Financial Projections- Without any money whatsoever, you'll probably be starting a business slowly. Don't put insane projections like making $100k profit in the first year if you don't have clients. You might aim for that, but you'll have to invest in the business and keep up with your living expense
16. Funding- start with what you can do without funds, then what means you'll be able to pursue funding once your business idea starts generating more revenue.

Funding

The primary ways of funding are:

• Personal funds
• Loan from family or friends
• Business partner(s) – inc.com has a great blog on considerations about a partnership
• Business loans- Check out our partners

How much money does it take to start a business?

According to Shopify, starting a business normally costs $18,000 for business owners with zero employees, while a business with up to 4 employees spends $60k during the first year. Shopify included 300 business owners in their study and found that they funded their business in the following ways:

1. 198 used personal savings
2. 90 reinvested revenue
3. 69 got support from friends and family
4. 63 got a personal loan

In other words, you'll probably need some skin in the game because bootstrapping is the number one way of starting a business. Shopify goes on to explain the percentages a business should aim to spend on various aspects of the business. They suggest the following:

• Operations: 10%–15% - Software for managing business. This can be fairly low. For instance, Quicken is $100/year and will make keeping track of accounting easier. Cloud based services normally have free trial periods to get started.
• Product: 28%–36%: When selling goods divide the cost by.28 to get the price you should sell for. Use Printful to make this process easier.
• Shipping: 8%–12%=should be covered by the customer unless they spend over a certain amount.
• Online: 9%–10%=Cost of software directly attributable to selling product
• Marketing: 7%–12% =You or outsourced
• Team: 14%–30%=You starting off.

I have included some observations after Shopify suggested percentages. The good news is that you'll really only need about $1,500 per month to operate for a year. Let's look at some more commonly wondered things.

Can I start a business with no money?

Sure you can! It's not as easy as if you have money, but plenty of small businesses have been started without any money. Small business owners will normally need to be in a service-based business as they generate cash flow by selling their time. We've been discussing some of these throughout.

How to start a business with no money or experience

Get some experience and while you're getting the experience save money from getting a job in the field. Now you have money and experience. That makes funding a lot easier. People or businesses might even be willing to help you secure funding at that point. You can try talking to venture capitalists, but you may find that talking to people who run a profitable business puts you at risk of them taking the idea and going to market quicker.

How to start a successful business with no money and bad credit

You'll either need to get money from friends, family, a partner, or bootstrap it. Can I suggest getting a secured credit card and paying off your debts as you can? It is really difficult to find a business you can start with no money, but it makes it even more difficult if you have bad credit. The credit card expiration is one example of bad credit that can hold you back. If you can improve your credit score, you may be able to get a business loan or credit card with a lower interest rate, which can help you save money on the cost of starting your business.

How to start a business with no money or credit

Get a secured credit card ASAP, use it to fund the business, and earn credit by paying it off each month.

Structure the business

Licensing and legal requirements are a major part of starting a business. the business will need to comply with certain requirements including:

• Business Formation
• Getting an EIN from the IRS
• Getting a state/local business license
• Unemployment Insurance
• Workman’s Comp

Let's look at each

Business Formation

You need to establish the legal structure for your business. For best results, I'd normally recommend hiring legal representation that has experience starting a business, like an attorney, accountant, or tax specialist. They’ll help you get your business started quickly so you can focus on other aspects of starting a business. Since you are trying to figure out how to start a business from scratch with no money, you'll probably want to bypass the lawyers. Some law schools have programs that provide people with low cost/no cost legal services. Check with your local college to see if they can help.

Licenses, permits, and tax forms

Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to identify what your business needs. Keep reading for information on different legal structures.

Sole proprietorship

A sole proprietorship is the easiest way to start a business with no money, but the structure doesn’t protect the owner’s personal assets from legal issues. That means if something goes wrong, you could lose both your business and any personal assets you own. I would recommend this structure for the shortest time possible then upgrade to an LLC. Some places even allow free sole proprietorships. Just search starts a "sole proprietorship for free in my state". To start a sole proprietorship, fill out a special tax form called a Schedule C. Sole proprietors can also join the American Independent Business Alliance.

Limited Liability Corporation (LLC)

An LLC is the most common business structure used in the United States because the company protects the owner’s personal assets. It’s similar to partnerships and corporations but can be a single-member LLC in most states. An LLC requires a document called an operating agreement. Each state has different requirements. Here’s a link to find your state’s requirements. People may register in specific states due to the cost of doing business. Delaware and Nevada are common states to file an LLC because of their business-friendly laws. Here’s a blog on the top 10 states to get an LLC. You'll want to progress to an LLC once you have some revenue, but its not best for businesses to start with no money.

Partnerships and corporations

Partnerships and corporations are typically for massive organizations or legal firms. Unless there is a specific reason you need a partnership, it is better to do a multi-person LLC. Investopedia has good information about partnerships and corporations here. You probably won't need these, but they are good to know about.

Apply for an EIN

Every business operating in the United States needs an employer identification number. It’s like a social security number for your business. Apply for it on the IRS website. It’s used on tax forms when filing taxes and to tie employees’ pay to the proper employer. They don't cost anything so make sure to do this step.

State/Local Business Licenses

Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to identify what your business needs. Keep reading for information on different legal structures. Most places are fairly inexpensive for most industries, but you'll need to check for your location. Avalara has a great list of sale tax license costs by state.

Unemployment Insurance

The U.S. Chamber of Commerce has a ton of information on unemployment and also offers links to each state agency that handles state unemployment. You’ll have to pay $420 per employee on a federal level plus any state UI.

Workman’s Compensation

Workman’s compensation is basically insurance against injury or disability. Each state has different requirements. Check your state requirements.

Preparing for Opening Day

Preparing for your first day in business is not going to be like most people think of where they finally have an office space. You'll either be going around to neighbors houses or working on your computer because the best business to start with little money from home is an online business. Honestly this section should really be described as how to start an online business with no money. You've got a great business idea, but now you need to figure out how great business ideas become successful businesses. You'll need to find all the tools and free resources you can find to connect to potential customers. Here's a list of some companies that offer free software;

• Social Media Platforms-Your social media presence can help you find clients by creating a Facebook page. You can then share info from your Facebook page
• Free Websites- Wix has a 100% free website, but top10best compares other options.
• Free CRM- Check out this list of Free CRMs for the one that will work best for your new business venture
• Free Accounting Software- Fundera has a list of 8 Free Accounting Software Providers.

Most software providers have at least a free trial period that gives you time to set up your business online before you have to spend money. Some online advertising will also offer deals, but be careful when accepting them. I once accepted an offer for $500 for free when you spend $500. It started before I was ever given access to the account. I never got access to the account and 18 months later I got a call telling me I owed them $500 for services. Online businesses are great cause they allow you to deduct some of your living expenses like utilities, rent, and internet connection from your taxes. You get to be your own boss, and a lot of the expenses are fixed costs. From my standpoint, you definitely want to understand how to start a business with no money online. Keep reading for some tips on how to start a business without money.

Tips on How to Start a Business with NO Money

Here's some extra tips about how to start an online business with no money.

• Don't spend a lot of time on a registered trademark. It's a waste of money until you drive revenue.
• Avoid merchant cash advances and other forms of credit with interest higher than your profit margin. They are slowly driving losses.
• You'll probably be able to get personal loans or business cards before a small business loan. Small business loans need to be spent wisely because they aren't earned.
• Online courses are so essential to learning business skills in today's society.

If you own tools, you might consider starting a woodworking company too. Good luck on your venture into Entrepreneurship. Let us know what type of business processes you'd like more information on .