6 Challenges a Bike Rental Company Faces While Starting Up

While there is an immense demand for two-wheelers, the process to procure a motorcycle could take anywhere from a week to six months, if not more
6 Challenges a Bike Rental Company Faces While Starting Up
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CEO and Co-Founder, Royal Brothers
5 min read
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As an engineering student in Bangalore, the chief technology officer and I had taken a trip to Pondicherry to get inspiration that we hoped would spark an entrepreneurial idea from the cottage industries dotting the city’s landscape. As a tourist could testify, finding transport that was affordable and gave us freedom to explore was hard to come by. But as luck would have it, that’s when our Eureka moment struck. A few days later, while sitting in our college cafeteria, we sealed the deal on kickstarting a bike rental company.

In the industry, the fact is that there is an immense demand for two-wheelers, though the process to procure a motorcycle could take anywhere from a week to six months, if not more. Let us look at five major challenges that I faced when starting up after registration and formation of the company.

Licensing

As a bike rental company, you will need to first register your bikes with the regional transport office, a process that can take close to a month to process. Under Section 75 of the Motor Vehicle Act 1988, there are a number of checklists that needs to be ticked under the Rent a Motorcycle Scheme, 1997. An application costs around INR 1,000, though one licence may cover a number of motorcycle registrations. This is a huge cost for a start-up and it is always a catch-22 situation.

Statements of Purpose

Our intention was to make mobility accessible to anyone with a penchant for travel. We acquired commercial licenses for our first five Royal Enfield Classic 350s and took our maiden voyage into the shared economy space. The most fulfilling feeling for us was having customers experience travel like we hadn’t before. Imagine riding out on the open road on a motorcycle, and paying a fraction of the cost with minimum liability. Before we could get off the high of our flagship ride, we were contacted by customers through word-of-mouth. Back in 2015, Bangalore was emerging as a bustling city, and transport became a major issue for millennials. We handled bookings over the phone ourselves and initially maintained an Excel sheet to handle inventory. We established being transparent from the start, taking online payments and personally delivering motorcycles to customers. This started with a few bikes in a week but quickly morphed to three-four bikes every hour and without standard operating procedures, our WhatsApp and Excel sheets were no longer able to handle the customer calls and management of all the bikes at our multi-city locations. We had to sit and create SOPs that would work for us and could be implemented by everyone in the team. In hindsight, we should have done this earlier. Whatever the scale of business, put your SOPs in place first.  

Inventory

In our first year of entrepreneurship, we met with a significant hurdle—financial institutions refused to finance us because we didn’t show up with our two-year income-tax returns. It was also initially a challenge to procure inventory that met with the standards that we were looking for. Financial institutions didn’t share the same passion we had about starting our own enterprise. With the goodwill of family and friends, we managed to bootstrap our rental company. We also began tweaking our original business plan and now invited franchise models and partners to come on board as investors with whom we could share funding. So learning from this, you need to assemble enough seed funding/angel investment to be able to create an inventory that you can run the business with.  

Security

Make sure that your assets are protected. A customer who had rented from us, promptly changed the number plate and sold the bike to an unsuspecting buyer. Thanks to GPS and the police, we managed to nab the culprit in time. Having your technology in place goes a long way in preventing untoward incidents, leaving a fledgling start-up reeling. We had our KYC process in place, so it was easy to nip it in the bud. And the next best step is to acquire commercial insurance.

USP

When we started out in 2015, our competition charged hefty deposit fees. But we wanted to do what was best for customers—our target group is tech enabled, and likes going places—and we gave them that opportunity. And for us, that’s a win-win. In the first year, we exceeded expectations because we kept up to the standard and made sure we had customer support a phone call away. Also, for a motorcycle, that first servicing is very important for vehicle health.

Sustainability

The first year of any start-up is a shaky one, especially in the shared economy space where we don’t have case studies to help with manoeuvring pitfalls. The challenge is that within that first year, you also need to start planning for the second year. One of the first things we did was to hire a team that shares the same core values as the company. We also work hard to build trust with our customers, because they are the best advertisers through word-of-mouth.

For first-year entrepreneurs, the advice I would give is to never give up, to be willing to improvise and change business models, if necessary. The hustle is real.

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