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The thing about business, and most things in life, is that you often don’t know what you should do differently until you’ve already done it.
I started my Turo business in January, 2018, with one vehicle I already had. I saw it as a great way to cover the payment and insurance on that vehicle, and have it as a winter backup, so I could buy the Fiat Spider 124 convertible I’d had my eye on. I didn’t expect to build a business out of it. But I did. About fifteen months later I had a fleet of 20 vehicles, retired from corporate life young, and began building other businesses.
Turo has been a great experience for me, giving me more freedom, and serving as a bridge to get me from where I was in life to where I really wanted to be. Almost everything about my Turo journey has been positive. But looking in the rear-view mirror, if I could go back and begin all over again, here is what I would do differently.
Better anticipate Turo policy changes
When I entered the Turo game, it was the wild west. Turo was hungry for hosts and vehicles, their most valuable assets. Policies leaned heavily in favor of hosts, particularly with reimbursements and incidentals. I remember the $1,000 mileage overages, the $50/hour late return charges, the zero deductible 75 plan, wide-open pricing controlled by hosts, and the very loose rules for cleaning and smoking incidentals. It was a gold mine, easy money, which made financing or leasing vehicles very safe with success much more predictable.
For some reason I thought this was just the way the Turo business was and it would always be that way. I should have known better, especially given all of my years in the corporate world. Fairly soon after my entry, policy changes came and began leaning more in favor of the guest. Lots of changes came. And for a while, all of those changes strongly favored the guest and began eroding my profit margins.
Looking back, all of those changes were the right moves for Turo to make to become a self-sustaining, profitable company. Hosts were bleeding them dry, particularly unethical hosts. The internet was awash with bad reviews from guests. Turo had to make these changes. Day in and day out Turo has to hold in balance the best interests of their host community, the best interests of guests to build a loyal customer base, and the best interests of the company for long-term sustainability.
Thankfully, more policy changes have come recently tilting the balance back in favor of the host community. But looking back, had I better anticipated that policy changes favoring guests were inevitable, I probably would have structured my business a little differently from a financial standpoint.
Make my business more recession-proof
Things were great, business was booming, and the economy was roaring right along in 2018 and 2019. Now, I’ve lived through a few economic downturns in my life, including the Great Recession. I should have known that economic changes, affecting my business, could and would happen. But I don’t think any of us could have anticipated what would happen in 2020.
Most of my fleet was leased, with a couple financed, and a couple cash paid vehicles. My profit margins were in the 40% range (30% is considered strong in the rental car industry) and again, I didn’t anticipate any of that to change. But then, 2020.
As the pandemic went mainstream and lockdowns began, I won’t lie, I got pretty freaked out. For about two weeks my whole fleet sat parked and I worried that would be the case for months to come. Thankfully it wasn’t and I ended up sold out through much of the pandemic, but all along the way I thought about how freeing it would have been to not have to worry at all, even when my vehicles were parked.
If I could go back and do it again, I would pay cash for more of my vehicles, bank a higher percentage of profits for a “rainy day,” and position myself better to relax through seasonal downturns and economic disruptions.
Better align my business with my long-term goals
My plan, for many years, was to retire young, build businesses, and spend the majority of my time living and working abroad, with a home base but a nomadic lifestyle with time and location independence.
On day one of my “retirement” I found myself locked into a schedule that revolved around my customer’s plans and schedules, and locked into a location with twenty vehicles needing tended to and taken care of day after day, seven days a week. This was the exact opposite of what I had planned. Turo is not a passive income business! I often found myself unable to impulsively escape for the weekends or take long vacations. Now, I did enjoy a level of freedom far above what corporate life gave me, but I was not aligned with my long-term goals.
If I could begin again, I would begin with the different economic framework I described in the last point, to increase profit margins, which would allow me to hire a fleet manager to handle day to day operations for me, while I lived the lifestyle I had wanted.
If you’re just getting started, plan now for the life and business you want later.
Maybe you’re just now thinking about getting started. Or maybe you’ve just begun with a vehicle or two. Now is the time to think seriously about these three things and make sure the business your’e creating is the business you truly want down the road.
Are you prepared for unexpected policy changes? Can you, your business, and your financial health survive abrupt and prolonged revenue disruption? And are you building a business that will actually give you the life that you want?