Automobile Renting Business

This study examined the factors involved in the successful formation and operation of an automobile renting business. The study tested the hypothesis that, in the formation and operation of an automobile renting business wherein borrowed money provides the bulk of the required capital, it is possible for the venture to earn a net profit in the second full year of operation. The data required to test the hypothesis were obtained from both primary and secondary sources. Primary source data were obtained through the administration of a survey questionnaire to a sample of operators of automobile renting companies. The questionnaire was an nineitem instrument. Eight of the items were closedended in character, and sought specific information, while the ninth item was openended to permit respondents to provide additional data they considered relevant to the problem investigated. None of the members of the research sample provided additional information in responding to this questionnaire item. Secondary source data were obtained from published material relevant to the problem investigated. These data were used to support and amplify the primary source data reported in this chapter. A total of eight subproblems were defined in relation to the research hypothesis. These subproblems concerned (1) formal business organization, (2) financing, (3) insurance, (4) asset purchase, (5) legal issues, (6) maintenance, (7) business location, and (8) marketing. The results of the analyses are presented separately in relation to each of the eight identified subproblems. Formal business organization referred to the legal structure of the venturesole proprietorship, corporation, and so forth. The type of formal business organization is relevant to the problem investigated, because limitations in capital accessibility apply to some types of organization. The principal advantages and disadvantages associated with the various typesof formal business organization relate primarily to taxation and liability. A summary of the responses by the members of the research sample to the questionnaire item related to this subproblem (questionnaire item number one) is presented in table 41, which may be found on the following page. As the data presented in the table indicate, all of the respondents indicated that a corporate form of organization had been adopted for their ventures. The great majority of the firms were organized as straight corporations, while a minority adopted the Subchapter S form, which permits the equity owners the option to be taxed as a partnership. A total of four (40 percent) of the respondents indicated that the primary motivation underlying the formal organization decision was liability protection, while three (30 percent) indicated that the primary motivation was taxation, and three (30 percent) indicated that liability and taxation considerations contributed equally to the decision. Those respondents whose firms were organized as straight corporations, in all instances, included liability protection as either the primary or one of the two primary motivations for the choice of formal business organization, while those respondents whose firms were organized as Subchapter S corporations, in all instances, included taxation as either the primary or one of the two primary motivations for the choice of formal business organization. More at https://realcar.nyc