Renting a Dodge Viper in Maui in 1997 wasn't enough for
Steve Bandovich. When the 35-year-old Roselle, Illinois, founder
and owner of the one-person Cloud 9
Specialty Car Rentals returned from his Hawaiian vacation, he
decided Chicago sorely needed its own specialty car rental
service.
One perk of starting a car rental business is that you can start
from home, as Bandovich did, with just one or two vehicles.
Bandovich took out a $50,000 home equity loan to purchase a used
1996 Dodge Viper GTS, which he later replaced with a Dodge Viper
SRT-10. He has also added two Hummers and a Porsche 911 to his
fleet. With another $12,000 of his own money for attorney and
accounting fees, a computer, advertising, and other various startup
necessities, getting started in 2001 was relatively smooth for
Bandovich-until it came to insurance. He says, "Finding a
company that would insure me for liability and collision-that was a
major hurdle."
Experts agree, insurance is one of the biggest challenges in
this industry. Insurance brokers are looking for "loss
experience"-an indication of how much premium you paid during
a given year and what your loss ratio was. "It's very
difficult to get insurance when you don't have any loss
experience," says Rocky Dellapenna, founder and owner of
Paoli, Pennsylvania-based Champion
Enterprises, which rents both standard and high-line cars via
Champion Car & Truck Rental and Champion Exotic Car Rental.
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Short of buying into a franchise program, where the insurance
and financing are already in place, Dellapenna-an industry veteran
of 30 years-advises buying an existing business. "If you were
to buy an established [business], then they would turn you right
over to their insurance services, broker and so forth," he
says. "As long as you had good credit and good backing, you
could step right in and go turnkey."
Bandovich didn't need to go that route. He's got full
coverage, at about $200 to $500 per car, per month. But operating
in Chicago, he does have to plan for the inclement weather that
keeps many people off the streets-not an issue for those in warm
climates. "Our Hummers help get us through the winter,"
says Bandovich, who brought in more than $100,000 last year and is
shooting for $175,000 in 2004.
Bandovich's secret is operating lean. He spends $150 a month
on rent for his office space and less than $200 a month on
advertising. Marketing tactics have included driving the Viper to
car shows and handing out a few thousand business cards.
Remember, if you decide to operate a standard car rental
business, you'll be marketing to a different kind of
customer-one who needs to rent a car, not one who wants to drive a
nice car just for kicks. "With car and truck [rentals], the
first thing people do is go to the Yellow Pages," says
Dellapenna-and that kind of advertising can cost upwards of $9,000
annually. "But you have to have an Internet presence for
high-line cars. People look for it there."
So what's your best bet-cars and trucks, or Vipers and
Hummers? "There are more people renting the high-line cars
right now," says Dellapenna. "They figure, [that] instead
of going out and buying one of these expensive cars...they'd
rather rent one for a weekend or a week."
Opening Bid
In
Start Small, Finish Big: Fifteen Key Lessons
to Start-and Run-Your Own Successful Business (Warner Books),
Subway co-founder Fred DeLuca, with co-author John P. Hayes, shares
15 lessons to start and run your business on a shoestring. Lesson
Six-Ready, Fire, Aim!-reminds entrepreneurs that lack of experience
shouldn't stop you from opening your business. "In other
words, I learned it by doing it and not just thinking about
it," writes DeLuca, who started Subway with $1,000. "With
clarity about the idea for Subway and at least a glimpse of the
vision, I went to work the next day!"
While there's much to be said for plotting your course, you
don't want to let the planning process consume your will to get
started. At some point, you just have to do it-otherwise, you never
will.
That's why it makes sense to start your business on a small
scale, leaving yourself some wiggle room. "If you make a
mistake," DeLuca says, "if your aim is off, you can fix
it and fire again-and adjust again, and again, as needed.
"If you're willing to fire before you aim perfectly,
you probably won't hit your target precisely; but you'll
have taken that first step in the journey of a thousand
miles."
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