Showing posts with label start up. Show all posts
Showing posts with label start up. Show all posts

Monday, December 15, 2008

Carsharing for Retirement Communities

I regularly get inquiries from people in retirement communities who realize that many residents are spending a lot of money owning vehicles that mostly sit around and realize that carsharing could be the answer.

I've heard that a few urban retirement complexes have had carsharing vehicles at them, most retirement communities are not located in urban centers, so doing-it-themselves is the only option at the present.

The most important issue to figure out is vehicle insurance - after that everything is easy. As everyone interested in carsharing finds out very fast, the carsharing concept is not embraced (or even very well-understood) in the insurance world. The insurance options vary depending on the business model that's set up - so it's a sort of catch-22 situation - you can't get a quote until you decide what kind of company you're going to be and you're not sure what kind of company you should be until you get an insurance quote.

It's worth noting that most commercial carshares have a 70+ age cut off, after which technically the member needs to provide an annual letter from a physician indicating they are fit to drive. That requirement by itself will often get a senior's blood pressure up a couple of notches all by itself!

To anyone contemplating starting a carshare, I would pose a couple of questions:

How large is the group of residents that wants to participate? If it's 5 or 10 households it's possible that doing something informal will be easier than trying to set up a formal business. Set up an LLC company to own the vehicle(s); agree the financial issues and on how to reserve the vehicles and how you'll notify each other. I'm told that Progressive has written a business policy for non-related individuals. Don't give up, keep asking.

If you see the service expending to more than 3 vehicles, you're probably looking at a creating a separate entity - nonprofit (or possibly for profit business) - to manage things. The options would be to set up a nonprofit or to build consensus within your group to have the management of your retirement community run the service (after all they probably already provide some transportation-related functions like vans to events). They could add the vehicles to their corporate liability policy (if they wanted to).

Establishing a nonprofit to operate the business itself seems the most likely. It could contract with a local garage to maintain the vehicles and clean them twice a month. The board would establish policies on membership, payment, reservations, gas reimbursement, etc. Many nonprofit organizations get their insurance from Non Profit Insurance Alliance of California, which works through brokers in many states.

Establishing a nonprofit corporation is very easy in most states. Don't worry about getting federal tax-exempt status for your nonprofit at this point, it's not nearly as important as you might think. It's primary benefit is to enable people who make donations to your nonprofit to write them off on their taxes. Any nonprofit can offer that right now by setting up a deal with organizations such as this or this.

A final possibility is to contact Enterprise WeCar, U Carshare or even Zipcar to see what their terms might be.  Typically, they will be looking for a minimum guaranteed usage revenue - probably over $1,000 per month and a minimum number of vehicles.  It's not worth your time to start talking to these companies until you have a pretty good idea of the number households that might be willing to use the service and how much they might drive.

If the majority of trips are likely to be a full day or longer - this is the domain of car rental and things are pretty straightforward. So a final option would be to try to make a deal with a local car rental operator, which in smaller communities may also the local car dealer, to set up a satellite rental "office" at your complex.  In this scenario your carsharing members would fill out car rental paperwork in advance, similar to joining one of the national car rental company's "number 1 club" with prearranged car rental preferences (such as supplemental liability coverage) and authorization. If the vehicles would come from your members, perhaps the rental company would agree to a management fee per rental or per month rather than providing the vehicles themselves.  

Of course this post doesn't get into technology or any of the other management issues which will be somewhat specific to the decisions made above. The best single guide to starting a carshare continues to be the short and long publications by City Carshare in San Francisco. Other resources can be found in the library at including my now somewhat out of date 2004 guide for startups.

So here are a couple of more questions for small scale operations to get you started:

1) Are the vast majority of the trips your members will take going to be more than 12-18 hours?

2) Will a large percentage of the households in your potential carsharing group not own any car/truck at all?

If you answer yes to both of these, then consider a car rental model - easier insurance being the big advantage.

This is a start. I hope many others will contribute their ideas, suggestions and experiences below, as well.

Monday, September 26, 2005

If I were an indepedent carshare today...

Given the recent news that both Zipcar and Flexcar have received substantial new funding and are now going to seriously undertake expansion to many new cities, there will be several US cities (and perhaps some in Canadian cities, eventually) where competition with local independent carsharing companies is likely to happen.

First, it's worth remembering that Zipcar and Flexcar have been competing with each other in Washington DC since 2002 and both appear to be doing well there, with cars busier than ever and more cars on the way every month. And doesn't seem to have been a problem for the local governmental agencies - City of Arlington, WMATA (transit agency), to name two, either.

And it's worth realizing that competition can be good - if you use the experience to your benefit - sort of like judo or aikido where you take the other person's energy and use it to your advantage. Yes, the old days of having the city all to yourself is over, or soon will be. Get over it. So, whatever your organization's shortcomings are now, they will be magnified in the process - for you, the public and your board to see.

In any case, competition between carsharing companies is probably inevitable in most bigger city markets. So what are you going to do about it?

So, if I were an independent carsharing operator in the US right now, I'd be asking myself, what do I offer to my customers, and to the city in general, that the big guys don't? How can I distinguish myself in my customer's eyes and my partners' eyes.

First, and probably most important, are you doing what you say do really well. If my customer service is a little slow, it's time to get on top of it. Sure, people will put up with lot's of things because they believe in you and because you're the only game in town.

Another thing to ask yourself is how can I add value to my service? With the increased visibility that carsharing will have in the new competitive marketplace, you should be able to form more partnership (though perhaps not exclusive partnerships) and deals with other organizations than ever before.

Look at your organization - are there any functions you could outsource or restructure to your advantage - such as billing? Perhaps this is the time for independents to band together to take care of common functions.

Another area you may be tempted to distinguish yourself with is pricing. You may think you have lower prices, but be careful. If you calculate out how your hours+miles pricing works out per trip compared to the hourly with (most if not all) miles included, you may find that your pricing is closer than you think. And the big guys have lower up-front joining costs. So what does your customers get for their money with you?

Another area is vehicles - perhaps you let them become the "premium" carsharing brand. For example, you could take a page from CommunAuto's book and keep your vehicles in service a few years longer and lower your cost of ownership considerably.

And what about marketing? Do you have a real relationship with your customers? Are you taking advantage of your "local-ness" in recruiting new members? Although it probably doesn't hurt to play the "buy local" card, either - keep more money in the community, support local business, etc., it will only get you so far.

So if you're an independent, ask yourself, deep down, do I feel like I'm under attack from the new company(s)? If so, it's time for some serious attitude adjustment, because the public, the government agencies and the press don't respond well to whining. Note: your friends may not be the best gauge of whether you're whining or not, either.

Finally, here's a little heresy - if you're a non-profit, another possible way of looking at the situation might be to say, we've accomplished what we set out to do - commercialized carsharing is here so we can get out. If you aren't in debt up to your eyeballs, you may be able to sell your service and make a good experience out of the change for everyone. But it will be a change - and change, even just letting to, can be difficult (I speak from experience on that matter).

A related strategy might be to attempt to partner with the big guys. Possibly, you can continue to do the socially-innovative stuff - low income, car-free housing projects, etc. and let them build the overall market.

San Francisco looks like it's going to be the first testing ground of non-profit/for profit competition, but it's inevitable in other cities, I'm sure. Stay tuned.