Business Idea #1 Passenger Van Network

This is #1 in a series of posting various business ideas I’ve come up with over the past few months, mostly for my own amusement.

 

The Problem: In many areas of the country, especially the Southeast, there are very limited resources for intercity and interstate transportation if you don’t own a car. Greyhound and Amtrak exist, but these companies are seldom on time. Megabus is better, but has very limited offerings in the South. Most people elect for renting a car or paying for costly flights from one regional airport to another.

The Solution: An app-based transportation network where franchised contractors offer daily passenger van rides between cities at affordable prices. Riders would use the app to book their ride and see the current location of their van before departure. Drivers would use the app to alert riders when the van is departing, keep updated on traffic conditions, and handle all of the logistics. Riders can spend their time productively as each passenger van has mobile wi-fi and fold-down trays for laptops or paperwork.

Scaling: Once the app is ready for production use the company would create a proof of concept by picking a centrally-located Southern city and setup daily trips to two to three nearby cities. This would entail leasing vans, wrapping them with brand info, and hiring drivers. Once the concept is proven by a full quarter of trips, the next step would be to seek funding to expand the network to new cities by offering franchise opportunities for drivers to retain a larger share of the proceeds. Drivers would supply their own wrapped van and the company will supply customers, a mobile internet access point, and a fuel card.

Pilot program: Three vans, seven drivers. Two vans will each make two round-trips to Atlanta each day and the third will make three round trips to Charlotte each day. Atlanta round trips are 6 hours and Charlotte round trips are 4 hours. The pilot program will run for six months.

Departing Greenville for Atlanta: 4:00am (van#1), 5:00am (van #2), 12:00pm (van #1), 1:00pm (van #2)
Departing Greenville for Charlotte: 5:30am, 9:00am, 3:00pm
Departing Atlanta for Greenville: 8:00am (van #1), 9:00am (van #2), 4:00pm (van #1), 6:00PM (Van #2)
Departing Charlotte for Greenville: 8:00am, 12:00pm, 6:00pm

Number of GVL-ATL bus trips per week: 28 (6 hours per trip) = 168 hours
Number of GVL-CHT bus trips per week: 21 (4 hours per trip) = 84 hours

Mileage: 290 miles round-trip to/from Atlanta, 204 miles round-trip to/from Charlotte
Van #1 14 x 290 = 4060 miles per week
Van #2 14 x 290 = 4060 miles per week
Van #3 21 x 204 = 4284 miles per week

Total of 252 driver hours per week means that 6.2 drivers are needed based on standard 40-hour work weeks. Drivers would be contractors that are paid per round trip and not hourly. Every other Saturday each van will not have one scheduled trip so that routine maintenance can be performed.

Pilot Program Cost Estimate

$90,000 3 one-year old 15-passenger conversion vans $30,000 each (brand new MSRP is 35k)
$10,000 Initial app development, if I act as project manager. 2k data architecture, 2k web app, 2k iOS, 2k Android, 2k for overages.
$39,312 Projected driver payroll for 1 quarter (252 hours/week based on $13/hr rate, median rate is $10/hr per Salary.com)
$15,000 Car wraps for 3 vans.

Total: $154,312 plus driver salaries for six months, gas and maintenance fees, legal fees to setup the business, insurance, and other incidentals. Let’s call it $250,000 as a rough guesstimate. Of course, this is based on purchasing the vans, not leasing. If I were seriously interested in this business idea, I’d get some numbers on leasing the vans and going from there.

Think this is a viable idea or a horrible notion? Leave a comment and let me know!


Image: US Army