How do I start an auto-rickshaw or taxi advertising agency in India?

Let me first say that a few years ago, I had explored this as a viable business opportunity but decided to comeback to my core field of finance. Also, I have used this medium to promote my business, with very satisfying results, so this is not just theory or guesswork but a result of my market research.

Procedure for starting the firm
– There is no long and arduous procedure as such.
– Form your business entity- proprietorship, partnership or private limited. apply for the requisite tax registrations.
– Open your bank account.

Operations
– Simultaneously, open talks with the rickshaw/ taxi (henceforth, for the sake of brevity I will be using the all encompassing word of taxi to refer to both) unions or the individual vehicle owners themselves.
– Convince them to display ads by your company i.e. ads that your company will display on the behalf of your clients.
– Once they agree, you are in business.

There are certain pros and cons in dealing with either the union or the taxi owner directly.

1) the union
You approach the union leaders and negotiate a deal with them. This deal is binding on all the vehicles registered with them. You will also have to typically commit to a minimum number of vehicles.

Pros
a) Ensures stability and fulfilment of contract.
If you have a pre decided contact with them to display your ads for one month on a certain number of rickshaws plying a certain route, you can be relatively assured that the contract will be fulfilled and you will get your money’s worth. The union has the muscle to ensure that the drivers adhere to the contract agreed upon by the union on their behalf.

b) Wider reach
With the union, you get in touch with all the drivers registered with that union or as many as you can afford. You will need a minimum number of vehicles to make an impact right? How many individual drivers will you approach? There are also different unions for different localities so you will have to decide which unions you want to approach based upon your marketing strategy.

Con’s
a) Costly.
The unions will typically charge you more than what you would have paid if you had approached the drivers directly. Although the above the line charges for both would roughly be the same, take into consideration the commission you will have to pay the union leaders.

b) Higher working capital
There is typically an advance amount involved and higher the number of vehicles higher is the advance amount.

2) Individual drivers
You approach the individual drivers, preferably at the queue for the gas or taxi stands and negotiate directly with them.

Pros
a) Cheaper
The individual driver can be negotiated to a lower rate than the one charged by the union.

Con’s
a) No guarantee of execution
If you decide upon a verbal agreement with them for displaying your ads for 1 month, if somebody else approaches with a higher sum, they will remove your ad in the blink of an eye. They sell to the highest bidder. Period.

b) Lower reach
How many individual drivers will you approach? This will increase your lead time quite a bit.