Car rental during Covid: Calculating the minutes between expansion and survival

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Hind Al Soulia - Riyadh - Hasib Khan is the founder and CEO of Udrive, a UAE-based on-demand mobility startup that is now looking to raise investment through crowdfunding. 

For many startups, the ultimate goal is to ‘scale up’ to ‘establish’ and ‘expand’ and to gain attention from customers, investors, and media. However, you need to learn to walk before you run, and build a solid business foundation before you can expand.

Our business story is the same.  Since launching Udrive, the region’s first on-demand car-sharing platform in 2017, we’ve had our fair share of startup experiences, both positive and negative while scaling at triple digits across revenue, users and fleet.

In 2020, the outlook was very different from the previous year with new challenges brought about by the pandemic. As with other counties, we have seen and are continuing to see the impact of Covid-19 on both individuals and business.

The question was clear:  how is this going to affect our customers? Would they work from home? Shop online? And will they continue to schedule cruising dates with our Mustangs?

With the tourism industry impacted the most, a contingency plan for survival was necessary to measure risks.

Being prepared for something that could last for one week or one year was the biggest concern as we measured the impact on our business.  This was concluded across three steps:

  1.  A tailored strategy with key priorities: Focus was placed on operational efficiency and preserved revenue.
  2. A reduction of fixed costs: This included a reduction in fleets, office space, employee counts and working hours when revenues dropped by more than 10 per cent.
  3. An emergency fixed cost reduction:  Evaluation of fleet size, employee count with a focus on the preservation of net earnings if revenues continued to drop more than 25 per cent.

The strategy quickly changed from growth and expansion to survival or failure. We put our plans in place, briefed our staff and implemented our strategy.

In March this year, schools closed and work from home became mandatory. Furthermore, the requirement of 12-hour sanitisation became essential, as with operations going on hold from 8pm and 6am.

We started making difficult decisions without any insight into the foreseeable future. We worked very closely with partners and suppliers to meet existing and new agreements, with the aim to ride out the storm.

Our investors looked at “strategic” technology that enhanced operational efficiency including fleet management, cleaning, and task management. This included a complete overhaul of our customer service platform including call centre and ticketing. Innovating to change and embracing the new environment without wishful thinking, allowed the majority of our staff to operate from home.

In hindsight, decisions we made helped the business keep going so that everyone had something to come back to.  We not only managed to dramatically reduce our fixed costs, but we were also able to focus on future contracts and better pricing that would improve our unit economics so we could thrive post-Covid.

Within three months of change in strategy, including improving operations, introducing employee training with new simplified processes and reduced operating costs, we were closer to profitability than we had ever been. Most importantly, we were excited to see that we could scale profitable unit economics rather than loss earlier than we had thought possible.

In September 2020, after experiencing consistent demand, we increased our fleet and in October 2020 decided that now was the time to continue our Series A with Eureeca, a plan that originated in January 2020. The demand and interest were far above the metrics we had originally expected.

 As part of Udrive’s safe travel initiative in partnership with the Roads and Transport Authority , Department of Transport Abu Dhabi and Sharjah Municipality, we also revamped our customer service technology with the release of additional smart solutions to enable a safe, affordable and hassle-free service for all riders. This helped us to hit the one million trips milestone, of which we are very proud. Our plans now include expansion into Saudi Arabia and Turkey.

The difference between pre-Covid Series A and today's Series A is the recognition that our community, made up of partners, strong and understandable team, suppliers and customers have been instrumental in our growth and survival of Covid. We are also more confident now than ever about the importance of a business strategy, processes, continuity plan and other important elements of the business mix that we practice daily to create a strong home-grown UAE brand – for the community, for partners, for the new generation bringing on-demand mobility concept closer to consumers in the region. I am sure many businesses had to make tough decisions this year, but the reality is that without such decision there wouldn’t have been a place for many of us to return to.  

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