Many people wish to start Uber business,but is it profitable?
Money sense..Lets crack open the figures together..
I would say no for owners contracting drivers but a yes for owner/driver..
As entrepreneurs we need some basic accounting knowledge and at it we learn about depreciation and apportioning of expenses.
What entices many to Uber is the thought of an earning of KSH40,000 per month when they hand one over to a driver and retreat back to the office. But will rarely look at the cash and to a very large extent the non-cash expenses (read depreciation).
To be practical if I acquire an Uber car say Honda fit at KSH800,000, then definitely I can only sell it at KSH550,000 after one year. The variance of KSH250,000 is the depreciation which should be seen as a cost to business which is largely ignored or goes unnoticed.
Insurance is paid annually at KSH50,000 meaning already you have an annual expense of ksh50,000+250,000=300,000 over one year..total expenses to apportion is ksh300,000 and divided by 12 months you get a monthly expense of ksh25,000..
That uber car giving you KSH40,000 per month needs service of KSH5,000 per month, totaling to KSH30,000 expense every month. What’s the net pay? Only KSH10,000 per month from an investment of KSH800,000
I started by rooting for driver owner simply because the driver pays himself KSH40,000 per month. Added to the net income from the car of KSH10,000 then at least he takes home KSH50,000( if the driver is the owner)
Enter into Uber business to employ yourself..