Insights and news from the ATOM Mobility team

So you have chosen the type of vehicle. And of all the transportation means available you have decided that you’ll use cars for your sharing business. Congratulations! You have done the most challenging part. Congratulations! 🥳 😆 The next step is to create a business plan. As this too is not the easiest of tasks, we’ve created a guide for you highlighting the most important things to consider before starting hands-on.

There are a lot of different approaches to start from, but let's start with the one that opens up a wider perspective of your future playground. And this is all about the market assessment. So why not start with the demographic assessment that will later help you to define your target audience.

Demographic assessment is the understanding of your customer profile and finding out how many people meet those criteria in the area you are planning to operate. For example, if your customer profile is young people without their own cars, but for whom having one would make their life easier, you are in the right place. However, it could be that the same age group is not interested in using the car-sharing service because, for example, distances are too small or young people are working in the city nearby and coming home just for the weekend and have no need for a car. There might be different scenarios and each of them should be analyzed separately.

Look at competitors

If there are competitors in the area you’re interested in, this could be both a good as well as a not-so-good sign. It is also a good sign in terms of demand - it means that the service is required in the area in question. However, it could be that market is too small for several companies to operate in, so you should carefully research how many players the market can take.

In addition, consider obtaining all the information you can have about your competitors - their fleet size, how many rides each vehicle makes per day and per month, and their pricing strategy. Any credible source of information works. For example, consider looking into local media. Sometimes company representatives are talkative about their success and future plans so it could be useful for you to analyze the market. You can also use their service and, for example, analyze vehicle odometers from time to time to calculate the distance that a vehicle travels within a week.

There are also talkative customers, who might be willing to share their likes and dislikes about your competitor’s service with you. This could also be a very important source of the information about the business.

Wide range of possible future customers - B2C, B2B, P2P

At the beginning of this article, you might get the feeling that car sharing is about the business-to-consumer (B2C). But your customer could also be another business. For example with the help of your service companies can rent out their vehicles to corporates as well as to logistics, delivery, or even construction companies if the appropriate vehicle type is available. These are not very common solutions and car-sharing is used more often to offer vehicles to people, but some companies also operate very successfully in B2B settings.

However, there are several types of B2C car sharing. There is an option where are the owner of cars and you rent them out with the help of your platform. Car owners could also be other businesses that rent out cars to regular consumers while they are not using them. Another option is peer-to-peer (P2P) renting - people rent out vehicles to other people while they are not using them.

In all these cases, your car-sharing platform is going to be a tool that will help to make cars available. For you, the platform is going to be the most important driver of your revenues.

Regular or electric?

There are fans and supporters of both - regular as well as electric cars. However, personal opinions do not play a crucial role here. What really matters is financial reasoning:

- What is the price of the car? What's the difference in price between regular and electric cars?

- If you have to take a loan, does the bank somehow support one or another type of car?

- Can you get support from the state or the city council? For example, are there special fees for parking electric vehicles that could reduce your costs while the car awaits the next driver?

- What about taxes? Do reduced taxes apply if you use environmentally friendly vehicles?

Price and costs

When you make your choice, in the framework of your business plan you should also plan one step further and look at values like insurance and maintenance costs. A vehicle is one of the most important assets if you decide to have one, but also it generates most of your costs.

At this point, you should already focus on deciding what the price for your service will be. In addition to all nuances mentioned above, you should also take into account the prices that your competitors offer, as well as other costs - salaries for your employees, premises’ rental, etc. And, last but not least, what is your profit going to be and how will you earn money?

One more cost item that you should consider is marketing costs. However, this is a bit easier as these costs are relatively easy to predict and control. Bear in mind though that if you don't invest enough in attracting customers, you won't generate enough revenue. And marketing doesn't end with advertising campaigns. It’s important to create your brand and find your unique selling point - how are you going to be different? You can read more about marketing and other things to keep in mind in this blog post “How to launch a vehicle sharing business in 6 steps?”

Technological challenges

The sharing business is complicated from a technological perspective as vehicles should be connected to the software that is connected to the platform used to operate the business. And the platform is also connected to the app used by customers. Everything should work smoothly together. At ATOM we are making life better for those who are willing to use ready-made solutions. However, there are companies that are thinking of creating technical solutions from scratch. This is possible, but you should really ask yourself is it worth it? In this blog post “A white label solution or building your own software - what to choose for your vehicle sharing business?” you can find out more.

That's it! After all these decisions have been made, it seems like you could be ready to go! Finally, let's sum up how much time it takes from business plan to launch:

- ideas and draft of your go-to-market strategy - 1-2 weeks;
- market analysis by taking into account competitors as well as customers - 2 weeks;
- tech decisions on cars and IoT solutions - 1-3 weeks;
- preparing the budget - 1 week (+ at least 15 weeks if funding is required;
- operational plan - 2 weeks;
- hiring - 3 weeks;
- software - 2-4 weeks (in case of using white label solution);
- testing & soft launch - 1 week.

So the most optimistic scenario is that you will be ready to launch your car-sharing business in three to four months. A critical component in managing a successful car sharing operation is reliable technology. Car sharing software plays a fundamental role in automating bookings, managing fleets, and enhancing customer service. To explore our solutions, learn more about our car sharing software. Contact ATOM for additional information. We are here to help our clients succeed.

Software is an essential part of your vehicle-sharing business. And it doesn't matter what vehicles your customers are going to share. They will do it through the mobile app. So here is the decision to make – are you going to create the vehicle-sharing software from scratch or choose one of the existing solutions on the market. Hopefully, this article will help you with this decision.

Which one of these two options should you choose? There is no one correct answer and there are advantages as well as weaknesses to both of them.

Imagine that this is your first vehicle-sharing business and you have decided to do everything on your own. You are full of enthusiasm and you approach your CTO or IT partner and promise to come up with the brief. The task doesn't seem too complicated for the software you need. However, the vehicle-sharing business is the one that makes creating the brief so complicated. There are many small details to consider.

First step - long and costly research

If you really have decided to start to develop software from scratch, you should take one step back. Your CTO or IT partner must start with the investigation on what functions you might need and how one thing might lead to another. This might take a lot of time and money. In addition, sometimes you can get an impression of what clients need only by operating in the market. For example, ATOM is operating in 23 countries. Their software that is also a white label solution for vehicle-sharing businesses already includes over 100 different features and settings that users might need. And those features are a collection of suggestions from users made over the course of several years in those markets.

However, the aim of the research is to understand what the vehicle-sharing software might look like. If the investigation is done, you can start to prepare the brief and documentation for developers. Here is a list of some other things that you should consider before starting work on a technical solution:

- backend, as well as frontend of the solution - both should be developed and supported so your team can manage operations;

- there should be two versions of the mobile app - one for users that has a device operating on iOS. Other - for the owners of devices that run on Android;

- whenever Apple or Android updates their operating systems or other 3rd party makes an update, you should be ready to check if everything works on your apps;

- apps should be compatible with smart locks in the case of bikes or IoT solutions in the case of scooters, mopeds, cars that are used on the vehicle;

- the IT solution must be properly tested and debugged - the industry average shows that testing the app takes approximately two-three months;

- if your vehicle fleet has over 100 vehicles, most likely you will have a service team. The most convenient way for the service team to operate is by using the phone app. This means that there should be one more app for the service team. And your team members might also have iOS as well as Android operating systems on their devices. So again – there are two more apps for you to build;

- additionally, you must have an invoicing option and also the option to create reports, see statistics, analyze routes, distribute promotions, launch referral programs, etc. And this list can go on and on.

The software development usually costs from EUR 100,000-400,000 depending on the complexity and features that you might want to include. In addition, you have to keep in mind that nothing ends with development. The software requires testing, private launch, debugging and support. And only then will the software be ready for the public launch. However, more bug fixing should probably be done.

One year and you are ready to go!

This whole process mentioned above takes approximately one year. Of course, fingers crossed that the solution as well as the integration with smart locks or IoT solutions works. There is just one problem - the vehicle-sharing industry is changing very rapidly - new players are coming in, others are expanding, new means of transportation are used for vehicle-sharing. And there are a lot of things that might happen and change in a year. It might be hard to catch up.

Furthermore, competitors are constantly offering and creating new features that were not in the market previously such as subscriptions, which is currently a new trend. For example, ATOM Mobility has created a white label solution for the vehicle-sharing market that constantly collects knowledge from their clients and adds new features. Later those features are integrated into solutions offered to other clients so everyone is up to date. In the case of a custom-made solution, everything is on you - it might take additional time and money.

One more thing that speaks in favor of the white label solution - let's imagine that your business is very successful. You have developed a vehicle-sharing software for the one-vehicle type and you would like to grow by adding other vehicle types. Sorry, not possible. You will have to make significant changes to the existing software or develop the new one. So probably you will have to start over again.

The same problem might apply to extending the fleet. If your business becomes scalable, the software might not be appropriate for a fleet with 20 000 vehicles. White label solution providers are usually ready for such success of their customers as they have already supported thousands of vehicles for some time.

When it is worthwhile developing a custom solution?

However, there are times that it is worth considering developing a custom solution - your own software for your vehicle-sharing business. It is worth doing this, if:

1) You already know that you might need some very specific features, but the company offering white-label solutions can't provide them to you. For example, you want your car sharing software to run on the blockchain. Or you want to create a decentralized sharing service. However, it is only worth investing in such a specific solution if it is a real game-changer for you and you have the data to proof it;

2) You have EUR 500,000 or more available in funding and you have a very strong team of developers that you would like to keep working for your company. You consider them to be your asset. Then, if you are lucky, after some time, someone might be interested in buying your company just because of the team and, of course, the solution you have developed;

3) The co-founder of the company is a very good CTO with high-level technical skills and the ability to lead the team. Then it is probably worth building a team. However, most likely you will build a technological and not a vehicle-sharing company in the end and spent more on development than actually on vehicles.

4) For some reason one of the requirements is to have a source code. Companies offering white label solutions won't be able to help you with that.

There is a power in sharing and this doesn't just apply to vehicle-sharing. You always get access to a strong network when you are working hand in hand with the industry leaders. That's what we at ATOM emphasize in collaboration with our clients. We are ready to share as much as we can because we do really care about our clients’ business. It is important for us that they grow and constantly have access to the latest achievements within the industry.

E-scooters have reshaped how commuters, tourists and residents navigate our cities, providing a fun, low-carbon mode of transport. But while the pandemic has seen an upsurge in ridership because scooters offer a socially distanced mode of travel - the fact that they are permitted has not solved the challenges posed by their deployment. Crowded sidewalks, vandalism, charging-related issues, you heard about it already…

We are happy to share insights about the unit economics of docked based scooter/bike sharing operations with the help of our friends from KNOT - innovative company providing docking stations for scooter services. 

Docked e-scooters not only remove the obstruction that scooters cause when left on pavements, but also are far less lightly to be vandalised. Another advantage of stations is that operators can provide video and other guidance to counsel users on how to ride safely and helmets can be made available at the stations.

But what about docking infrastructure economics? More investment beforehand for a less operational expenses? Where we can situate the break-even? Find our numbers below!

Free-floating vs. dock-based economics

Docking stations reduce operational costs – scooters are locked and charged at the station – meaning there is no need to employ staff to collect scooters every night to swap batteries. The cost breakdown compared is impressive, operational expenses per scooter goes down from almost 6 € to 1 € per day.

On average it costs €0.03 to charge one docked scooter per day, versus €2-6 for free-floating scooters, when all other operational costs are factored in, and the average docking station’s lifespan is 5 years. Also, scooters will be always fully charged, which means you can guarantee your services all day long, even for scooters with low battery capacity.

Station based services also helps to reduce the vandalism impact, increasing the lifespan of the scooter and reducing the overall maintenance costs.

If we put it into the revenues prospective, the daily revenue per scooter (with 3 rides a day assumption) will be considerably higher, here below a rough calculation made on assumption of 3 rides per scooter a day for a fleet of 250 scooters:

Free-floating vs dock-based economics

Naturally, dock-based solutions require a substantial investment into infrastructure. For 250 scooter network cities would need to install around 60 docking stations with 8 slots each (if you opt for a 100% docked-based network), which represents around 250 000 € including scooter upgrade.

It means, to launch your system, you need to account from 35 to 60% more on the investment side, but you will save 30-70% on daily operations.

The bigger picture

Taking the time to look at the bigger picture can save cities a lot of trouble and money – in just seven to nine months the initial cost of a docking-based system starts to pay off when compared to a free-floating model. This investment is not just financially astute, it also creates infrastructure that can lead to a more secure transit ecosystem where e-scooters can be viewed not as nuisance or novelty but an integral part of the transit network. 

But as every city is different, there is no ‘one size fits all’ approach. For example, in Strasbourg, KNOT allows users to park two metres around the actual station if it’s full (the City of Strasbourg is against free floating e-scooters and doesn't allow it anywhere else in the city).Having flexible options that suit users’ needs gives cities a real opportunity to make the e-scooter a mode of transport that can be truly embraced.

As more countries and cities across the world look to e-scooters as a solution those responsible for their rollout need to consider how they can impact the change in their mobility ecosystem. Docking offers a wise investment and the chance to cement this micromobility mode into the urban landscape.

“It is a rapidly growing global phenomenon: bikes of different breeds zipping through cities, being picked up and deposited at will. They belong to companies, not members of the public. The future of cycling could be sharing, not owning one,” wrote The Bike Europe, source of industry news, data, and analysis for the e-bike and bicycle industry’s decision-makers, at the start of this year. And the pandemic hasn't changed the situation significantly. 

According to a recent eight nation survey Oliver Wyman conducted with approximately 6,000 respondents, 44% of riders said they would be willing to increase their dependence on the service (shared vehicles and ride-hailing) in the future. 34% said they planned to use it as much as before the pandemic. 

Accordingly, there is a pretty big interest in starting a business based on a bike-sharing service. Every business should start with a detailed business plan. Here, we are going to explain how to create a business plan that it would be appropriate to implement in your business.

Mind the differences

If you are a newcomer or even if you have ride-sharing business experience, the first thing to remember before preparing a business plan - every vehicle sharing model is specific and has its own differences to keep in mind. 

In regard to bikes, it is important to remember that users are usually willing to take the bike from one docking station and return it to another. Sometimes, it is located on the other side of the city. So the service provider should calculate capacity, as well as vehicle availability in the most popular parts of the city during rush hours. That might be crucial. 

Know your customer

Before taking further steps and making any decision you must know your audience. So it is the right time to do market research. The first thing to do is to define the characteristics of your customer by identifying:

1. Age - what is the age range of your customer more likely to use your services? What group of customer generations do they belong to? For example, people born in the mid-to-late 1990s and the early 2000s are referred to as Generation Z. There are some characteristics that identify their behavioral patterns, so you already know what they might and might not like. 
2. Gender - do you plan to communicate with men, women, or both sexes? There are differences.
3. Marital status and family - it might influence how the person is moving through the city. For example, if she or he must take into account the plans of their partner while scheduling their everyday activities.
4. Location - what are the most likely points which your potential customer is moving between in the city?
5. Income - how likely they are willing to use bike-sharing? And how much they would be willing to pay for the service?
6. Language - what language are you going to use to communicate with your audience? And what languages you should make available on your app.

Usually, several groups can be identified according to these characteristics. The next step is to find people that are representing each group, talk to them and test your hypothesis and assumptions towards them. 

You can also calculate quite precisely the size of your target market. You can find it out by calculating the TAM, SAM, and SOM. TAM is the total available market for the service, for example, the total amount of users. SAM is a serviceable available market in the area you have chosen to operate. SOM is a serviceable obtainable market - a portion of the available market that you are willing to serve.

Choose what suits you best

After you have defined your target market and potential audience, you may start to consider what works best for your customer. There are three options to choose your bike-sharing business from and to put into your bike-sharing business plan:

1. dockless bike-sharing - bicycles are freely available to potential users and they are not located at docking stations. Vehicles can be unlocked using a mobile app and afterward returned to a particular bike rack or even left along the sidewalk. This model is more suitable for tourists and other short-term use cases. Usually, dockless sharing services offer single rides for a small fee, for example, $1 or monthly fees for continuous use. The biggest risk of this model is high operational costs, as well as a bigger risk for vandalism or damage to the bikes;
2. station-based bike-sharing - bikes are into docking stations and users can unlock them to have a ride. In addition, users must return the bike to the same or another docking station. Providers of this model usually offer payment of a flat membership fee plus the fee for the amount of time spent on the road. This is a good choice for the business due to low operational costs for maintenance or relocation. However, dockless bikes are becoming more accessible so there is a risk that a potential user will choose the service with no strings attached rather than one where he has to follow certain rules in terms of the place to leave his bike; 
3. corporate bike sharing - in this case, the service provider takes care of the maintenance and relocation of bikes, if needed, but bikes are owned by the corporation. Most likely, the owner will make bikes available to its employees or use them as a magnet for their business, for example, if the company additionally owns a hotel or entertainment park. This model is the best for any operator. The only and quite significant risk is that the corporate partner can decide to leave this business at any time.

To sum it all up, the dockless bike-sharing model is more convenient for users but involves higher risks for service providers. Station-based bike-sharing is less risky for the service provider, but not as convenient for the end-user. So while making the bike-sharing business plan, the choice should be made depending on the other market players and the risks you are willing to take. And if you have a corporate partner, who is willing to buy bikes and you have to operate the fleet - do it, but remember that you can be left alone at some point.

Calculate all costs

The most important part of the business plan is to find a balance between revenue and costs. If you haven't had a ride-sharing business previously, you would be wise to understand and consider all costs that you will have to cover with your revenue stream. Here are the most important positions you have to think of:

1. vehicle purchase costs - it is recommended that you start with a small fleet and test your business model. However, you will need a first investment to purchase your fleet. And keep in mind that after some time vehicles should be changed, so consider including depreciation costs in your bike-sharing business plan;
2. IT costs - vehicles are just part of the business. The other part is software and apps that allow people to rent a vehicle and you run your bike-sharing business. You can develop the software from scratch. However, there are already appropriate ready-made solutions in the market that have all the functions you might need. For example, ATOM has been operating on the global market since 2018 and has all the expertise you might need;  
3. marketing costs - what is the budget you are ready to invest so that people are informed about your service? Consider all options, for example, social media, local media, your own media (web site, newsletter). Think of the bonuses that you can offer to the client, for example, free rides. However, keep in mind that every bonus reduces your profit margin. Average statistics for fast-growing companies indicate that they invest 10-20% of turnover on marketing;
4. maintenance costs - proper service should be provided to expand the vehicle’s lifecycle as well as to provide clients with the perfect service. So you will need a team of people that can check vehicles every day all over the city;
5. costs for the customer support - your customers will look for options on how to contact you if they have questions while starting to use or using the service. You have to have somebody or even a small team ready to answer them.
6. other costs - you have to hire an accountant. You may require legal support. You will have to cover fees to be able to use the payment system. 

You should consider making a total investment of EUR 15,000-30,000 to launch a small test bike-sharing fleet (30-50 bikes). For a proper full-scale and successful launch with several hundreds of bikes, you will need a total investment of EUR 70,000-100,000. 

What is your bike-sharing business model?

Your business model is the way you will get revenues from your service. A lot of different business models exist in the bike-sharing market. When you think of yours, take a look at what your competitors are doing and think of ways how you can be more attractive to customers. In addition, you have to consider location and take seasonality into account. And one more thing - act fast! This can be crucial for your future success. ATOM allows you to launch your bike-sharing business within a few weeks with a bike sharing software. Learn more about ATOM's solution for shared mobility.