In the fast-changing gig economy, a promising career as a rideshare driver can quickly become an expensive headache without a well-prepared plan. It’s your job to drive, and to look at the big picture. If you’re smart about minimizing the number of surprises you may encounter, you’ll save time and money. This checklist will help you keep your foot on the gas toward greater earnings.
Checklist Item 1: Conduct Your Own Market Assessment
A market assessment will uncover hidden variables and opportunities that will impact your bottom line over time. Not every market is created equal. San Francisco rideshare drivers face different challenges than those in Detroit. With a full picture of the challenges and the opportunities that exist in your market, you can prepare and plan for the worst and the best of what your city offers. Here are some things to consider:
- Competition: To assess competition in your market download the Uber and Lyft mobile apps and pop them open at several points throughout the day to see the number of drivers who are in your area. Markets with a high supply of drivers can translate to lower earnings per hour during times of low demand. Rideshare drivers can make as little as $5 per hour by some accounts. If you work in NYC, or San Francisco assume a high supply of drivers at most hours of the day, so plan to work more weekends and evenings to make up for the slow times. Are you prepared to do this?
- Urban Density: In some places, you’ll have to cover more miles to get from one job to another. This requires more gas, more miles, and possibly more car maintenance over time than driving in a dense urban locale. These markets can still be lucrative, but look closely at the economics of a car rental with unlimited miles.
- Tolls: Not all tolls are covered by the rideshare provider or with a surcharge. Even when riders are charged to cover a toll, a driver will likely have to foot the bill to return to where they came from.
- Hot spots/events: Drive around your city and look for local events. Ask yourself ‘are there restaurants near me’? Are there college campuses around? Music festivals? Farmers markets? Scan local papers and event sites to turn what might typically be slower periods in the day into beaucoup bucks.
Checklist Item 2: Account for Start-Up and Recurring Costs
This business is not exempt from the concept ‘it takes money to make money.’ It’s critical to understand the total costs you’ll incur for starting and maintaining a rideshare job:
- A car: And not just any car, but one that meets the Uber car requirements or the Lyft car requirements.
- Insurance: Your personal insurance won’t do in most states. In fact, if your insurance provider learns of your new job, it could drop your coverage. You’ll want rideshare insurance, and options vary state to state. For a good tutorial on this coverage, check out this article.
- Maintenance: No matter what way you slice this gig, your car is going to incur some heavy wear and tear. Being proactive will likely save you money, but it’s going to mean spending smaller amounts more often. You’ll want to rotate tires, replace tires, flush and change fluids, and keep your car clean to earn better ratings. And most importantly for every mile you drive, your car (if you use your own car) depreciates in value. When you deduct this depreciation from your bottom line, it’s an eye-popping amount.
- Roadside assistance: For your own safety, you’ll want to purchase a roadside assistance package in case of an emergency. There are some cheap ways to get it, or you could only pay for what you use.
- Gas: When your job is to drive, you’ll burn through gas faster than you’re accustomed to. Download this app to find the cheapest gas price near you. You might also consider purchasing a Costco membership to take advantage of the ultra-low gas prices.
Checklist Item 3: Chart a Success Plan
A critical component of your success will be holding yourself accountable to goals and a schedule. As an independent contractor, the companies you drive for aren’t expecting you to clock in and clock out. With this new freedom, you’ll want to plan for things like:
- Time off: Everyone needs to recharge, but demand tends to increase around the holidays with people out of work. If this is your full-time gig, or your side hustle, be cautious of any time you’ll want off, including sick days.
- Tax planning: Don’t forget to take money out of your earnings to pay for taxes because the government won’t forget to collect at the end of the year. Keep a close accounting of what money you take in, and what money you pay out in recurring costs for your job as all of it could impact your tax bill.
- Schedule: In addition to scheduling time to drive, you’ll want to schedule time to clean and maintain the car, ideally when there isn’t high demand for rides with too few drivers on the road.
Checklist Item 4: Expand Your Earnings Potential by Driving for Alternative Services
Welcome to the gig economy, a landscape of infinite opportunities to drive someone or something to a destination. Most workers will become Uber and/or Lyft drivers, but having other services in your corner during slower rideshare hours can go a long way in supplementing your income. Here are some services to investigate:
- Roadie: A package delivery service with the freedom to choose the jobs you want when you want them. Roadie might also come in handy if you forgot to clean your car or just need a break from people.
- Grubhub: A food delivery service with serious expansion efforts underway.
- Deliv: A same-day delivery service of groceries, meal subscriptions, and other fresh items for businesses and individuals.
- HopSkipDrive: A ride service for kids powered by parents and caregivers. The caveat here is that the service is looking for individuals with 5+ years of childcare service, so if children are foreign to you this might not be the best fit.