How to Start a Shuttle Service

Shuttle services offer convenient transportation options, often from airports to hotels and vice versa, but can be hired for a variety of reasons, such as the transportation of multiple people to a corporate event. Shuttle services are part of the transportation industry which is worth more than an astounding $7 trillion globally.

You could get into the industry and make a healthy living by starting your own shuttle service.

But first, you’ll need to understand the business. Luckily, this step-by-step guide has you covered with all the business insights you need to get your shuttle service on the road to success.

Step 1: Decide if the Business Is Right for You

Pros and cons

Shuttle service industry trends

Industry size and growth

• Industry size and past growth – The global transportation services industry was worth $7.31 trillion in 2022.((https://www.precedenceresearch.com/transportation-services-market))
• Growth forecast – The global transportation services industry is expected to grow 8.11% annually from 2023 to 2032 to reach $15.94 trillion.

Trends and challenges

Trends

• Electric shuttles are expected to become increasingly popular.
• New opportunities are emerging for shuttle services to provide shared transportation for employees to get to and from work.

Challenges

• High fuel costs are cutting into the profit margins of shuttle services.
• Labor shortages are making it difficult for shuttle services to find drivers.

Demand hotspots

• Most popular states – The most popular states for shuttle drivers are West Virginia, Rhode Island, and Vermont.((https://www.zippia.com/shuttle-driver-jobs/best-states/))
• Least popular states – The least popular states for shuttle drivers are Florida, Arizona, and Nevada.

What kind of people work in shuttle services?

• Gender – 23% of shuttle drivers are female, while 77% are male.((https://www.zippia.com/shuttle-driver-jobs/demographics/))
• Average level of education – The average shuttle driver is high school educated.
• Average age – The average shuttle driver in the US is 47.4 years old.

How much does it cost to start a shuttle service business?

Startup costs for a shuttle service range from $20,000 to $45,000. The largest cost is, of course, the shuttle bus. The low end assumes you will purchase one, while the high end is for two.

You’ll need a handful of items to successfully launch your shuttle service business, including: 

• Shuttle buses
• Booking software

How much can you earn from a shuttle service business?

You can generally charge about $12 per person per trip on average. If you start with one vehicle and drive it yourself, your profit margin should be about 80%. 

In your first year or two, you could do three trips per day five days a week for 10 people, bringing in $93,600 in revenue. This would mean $74,880 in profit, assuming that 80% margin. 

As you gain traction and add a fleet and drivers, sales could climb to 20 trips per day seven days a week. This would reduce your profit margin to about 20%. With annual revenue of $873,600, you’d make a tidy profit of $174,720.

What barriers to entry are there?

There are a few barriers to entry for a shuttle service. Your biggest challenges will be:

• Funding the startup costs
• Breaking into a competitive market

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a shuttle service, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research shuttle services in your area and online to examine their services, price points, and customer reviews.

• Make a list of shuttle services that offer similar services. 
• Review your competitors’ services – their features, pricing, and quality – and marketing strategies.
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the local market is missing a shuttle bus service for company employees, or a service that has a shuttle vehicle with a wheelchair lift. 

You might consider targeting a niche, such as campus shuttles.

Here are different service types that you can provide:

1. Airport Transfers: Always in demand, especially in busy cities with frequent travelers, both business and leisure. Tailor your services by offering luxury options, family vehicles, or budget-friendly rides.
2. Corporate Shuttle Services: Companies, especially large corporations or those in areas with expensive or limited parking, might hire shuttle services to transport employees from satellite parking areas or between different office locations.
3. Event Shuttles: Concerts, festivals, weddings, conventions, and other large-scale events often need shuttle services to ferry attendees from parking areas to venues.
4. Medical Transportation: Especially for elderly patients or those who need regular medical appointments but can’t drive themselves.
5. School and College Shuttles: Parents might be interested in a safe and reliable shuttle service for their children, especially for extracurricular activities or for colleges that have multiple campuses.
6. Senior Citizen Services: As the population ages, services geared towards senior citizens, especially those that offer additional assistance, can become more in demand.
7. Tour and Sightseeing Shuttles: In areas with tourist attractions, offering guided or non-guided shuttle tours can be a good opportunity.
8. Hotel Shuttles: Many hotels offer shuttle services to nearby attractions or transport hubs for their guests. Partnering with them could be lucrative.
9. On-Demand Shuttle Services: With the rise of ride-hailing apps, on-demand shuttle services (especially those that can be booked through an app) can appeal to those looking for more cost-effective options than traditional taxis or for those traveling in groups.
10. Eco-friendly Shuttles: Using electric or hybrid vehicles can appeal to environmentally-conscious consumers and could also result in savings in the long run.
11. Rural to Urban Shuttles: For people living in rural areas but working in urban centers, a daily shuttle service might be more convenient than public transport.

How much should you charge for shuttle services?

Your prices should depend on market prices in your area, but also on your ongoing costs.

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on the niche that you choose, but if you choose to offer a variety of services, you should spread out your marketing to include Instagram, Facebook, and LinkedIn.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office with enough parking to keep your shuttle vehicles. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

Step 3: Brainstorm a Shuttle Service Company Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “shuttle service” or “shuttle bus”, boosts SEO
• Name should allow for expansion, for ex: “Urban Wave” or “OmniRide” over “AeroLink” or “MedMove”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Shuttle Service Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Provide a brief summary of your shuttle service business, highlighting its unique selling points and target customer base.
• Business Overview: Describe the nature and scope of your shuttle service, including the geographic areas you’ll serve, the types of vehicles you’ll use, and any specific niches or markets you plan to target.
• Product and Services: Detail the shuttle services you’ll offer, such as airport transfers, corporate transportation, or special event shuttles, and any additional services like Wi-Fi, comfortable seating, or bilingual drivers.
• Market Analysis: Analyze the demand for shuttle services in your chosen location, considering factors like population density, tourism, and transportation needs of businesses and individuals.
• Competitive Analysis: Identify existing shuttle service providers in your area, their strengths and weaknesses, and explain how your service will stand out through pricing, convenience, or unique offerings.
• Sales and Marketing: Outline your marketing strategies, including digital advertising, partnerships with hotels or event venues, and strategies for building relationships with corporate clients.
• Management Team: Introduce key team members responsible for operating and managing the shuttle service, highlighting their experience in transportation and customer service.
• Operations Plan: Describe the day-to-day operations of your shuttle service, including scheduling, maintenance of vehicles, driver training, and safety protocols.
• Financial Plan: Present financial projections for your shuttle service, including startup costs, revenue forecasts based on anticipated bookings, expenses for vehicle maintenance and fuel, and expected profitability.
• Appendix: Include any relevant documents such as vehicle specifications, safety certifications, contracts with partners, and marketing materials.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to shuttle services. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your shuttle service will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a shuttle service business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Business Licenses and Permits

Starting a shuttle service business requires obtaining a number of licenses and permits from local, state, and federal governments.

You and your drivers may need commercial driver’s licenses depending on the size and capacity of your vehicles.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. Each state has it’s own requirements so you will need to check with your state’s Department of Motor Vehicles or Department of Transportation for proper licensing requirements.

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your shuttle service business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Downtowner, or Shuttle Control, to manage your driver tracking, dispatching, and bookings. 

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Book Now”.  This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

1. Targeted Local Partnerships: Forge partnerships with local hotels, airports, and event venues to secure regular business and offer exclusive deals, expanding your reach within the community.
2. Social Media Promotions: Leverage social media platforms to run targeted advertising campaigns, showcasing the reliability, affordability, and convenience of your shuttle service to a broad audience.
3. Referral Programs: Implement a referral program where existing customers receive discounts or incentives for referring new clients, creating a word-of-mouth marketing engine.
4. Corporate Packages: Develop tailored transportation packages for businesses, providing cost-effective solutions for employee commuting or corporate events.
5. Community Events Sponsorship: Sponsor local community events, fairs, or sports tournaments, displaying your shuttle service prominently to increase brand visibility and attract potential customers.
6. Seasonal Promotions: Introduce seasonal promotions or discounts during peak travel times, holidays, or special events to entice more riders and capitalize on increased demand.
7. Customer Loyalty Programs: Establish a loyalty program offering perks such as free rides, upgrades, or priority booking for frequent users, encouraging customer retention.
8. Mobile App Integration: Develop a user-friendly mobile app for easy booking, real-time tracking, and exclusive in-app promotions, enhancing the overall customer experience.
9. Airport Lounge Presence: Establish a presence in airport lounges, providing information about your shuttle services and offering exclusive discounts to travelers in need of reliable transportation.
10. Vehicle Branding: Ensure your shuttle fleet is visibly branded with your logo and contact information, turning your vehicles into moving advertisements that attract attention wherever they go.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your shuttle service meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your shuttle service business could be:

• Reach your destination on time with our dependable shuttle service
• Seamless shuttle service for stress-free airport transportation
• Effortless commuting made easy with our shuttle service

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a shuttle service business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in shuttle services for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in shuttle services. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a shuttle service business include:

• Shuttle Drivers – transport customers
• Dispatcher – dispatch drivers to customers
• Marketing Lead – create and implement marketing strategies

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Shuttle Service – Start Making Money!

Starting a shuttle service is a great way to get into the ever-growing transportation industry. You’ll be providing a valuable service and making a good living. You could eventually grow your business to have a whole fleet of shuttles and become the go-to service provider in your area.

You understand the business now, so you’re ready to get your successful shuttle service on the road!