4 How To Start A Limousine Company

(doylc.com) How to Start a Limousine Company - The sedan business has grown at a compound annual rate of 2.7% over the past 15 years and has generated over $12 billion in sales in the US alone. While this means there is always more competition, it also means there is money to be made in the right market. If you're a sociable person who doesn't mind long hours, starting a limousine business may be for you, but you should plan carefully, market effectively, and vary your types of services to ensure your business is a success.

• How to planning limousine company

Know what you're getting yourself into. The limousine business isn't for everyone. It is based on customer service and availability. If you are not a sociable person, look elsewhere. If you want a 9-5 job, think again. Limousines are hired at any time of the day and the most lucrative jobs are on weekends. Make sure you are comfortable with long, irregular hours before starting the business.

Consider the cost of starting a business. If you want to start with your own car, insurance, and website, look at $50-$100,000 plus the monthly cost of gas and maintenance. Opening a virtual call center equipped with just business cards, a toll-free number, and a website can start for anywhere from $500 to $5,000, depending on how much you invest in your website.

Decide what type of business you are going to start. You don't even need a limousine to start a limousine company. Depending on how much you're willing to invest, you can start building a customer base as a virtual call center, buy a vehicle or two, or start an entire fleet.

Virtual Call Center - All you need is a business card, a website and a toll-free number. They take calls or web requests for rides and outsource them to Limo Services, earning you up to 20% commission. This is an inexpensive way to build a customer base and accumulate capital.

Drive a Vehicle - You must start with a black sedan (usually a city car) and/or a sedan (white is preferable at first), both of which require a significant investment. On the other hand, you can significantly increase your sales with your own vehicle.

Fleet – Starting a fleet is the riskiest way to start your business as buying multiple sedans and limousines requires a large capital outlay. You'll also need to hire a dispatcher and chauffeurs, who typically pay a flat fee to use your vehicles ($75 to $150 per day) or give you a percentage of their fares (usually a third). More vehicles on the road can mean more money, but also bigger losses if business stagnates.

Write a business plan. Whatever type of limousine service you choose, your business will benefit from a strategic plan to help you achieve your goals. More details on writing a plan can be found here, but broadly you should include the following:

Your business concept : your offer, your strengths and weaknesses, long-term goals and performance indicators that go beyond the bottom line and let you know if you are successful or not. The latter can include key metrics like the number of repeat customers and the number of inquiries you convert into sales.

Market research : type of industry, who your customers are (business people, airport transportation, weddings, etc.), what other limousine companies you will compete with, what prices they charge. Remember that the goal is to sell services. This is a luxury store; Being the cheap limousine company is not a good business model.

A marketing plan : How to communicate with customers and grow your customer base.

An operational plan : Identify the individual projects that will lead to the achievement of your larger goals. To start, these can be things like: hire a designer, register your domain and find a web host - all to build a website; or find rental car insurance, buy a car and select billing options - all to prepare your vehicle for service.

Financial Forecasts : This includes a list of assets before you start the business; Start-up costs such as creating a website, getting insurance, obtaining permits and buying a vehicle; marketing costs; and sales forecasts. You need to know how much trade to take at what price to make a profit and how long you can trade at a loss.

You can find a sample business plan for a limousine service here.

Consider hiring a consultant. There are consultants who specialize in the limousine business. They can help you identify lucrative markets, set prices, and advertise effectively. Especially if you are new to the business, you can still make money in the long term with a consultant despite the initial costs.

• Taking care of legal and tax matters

Consider hiring a business attorney familiar with the industry. A lawyer can help you decide on the best legal form for your business and can guide you through tax procedures and the required licenses and permits in your area.

Determine the legal form of your company. This affects how you file taxes and how much you have to pay. Most small businesses are sole proprietorships, which are the easiest to set up and require the least amount of paperwork. If you are considering another legal form, you should consult a lawyer who can help you choose the structure that is most suitable for you.

Sole Proprietorship – An unincorporated company run by an individual. There are no special steps required to form a sole proprietorship and since there is no difference between the business and you, the owner, the income from the business will be reported as your income. You pay self-employment tax. Since you are personally liable for your company, this form is not recommended.

Partnership - A company in which two or more people have an interest. In order to incorporate one, you must choose a name and register your company in your state. You must also register with the IRS and obtain a tax ID. Profits are passed on to the shareholders, who pay tax on them in their individual tax returns. This includes self-employment tax. Affiliates are responsible for their own actions and those of their affiliates.

Limited Liability Company (LLC) – In order to form an LLC, you must at a minimum choose a name and file deeds of incorporation with your state, often for a fee. LLC owners pay taxes on profits through their individual income tax returns and must pay self-employed tax, but are protected from personal liability for the decisions and actions of the corporation.

Corporation - An independent legal entity owned by shareholders. In order to register your company, you must choose a company name and file the articles of incorporation in your state. You must also register with the IRS and obtain a tax ID. Corporations collect taxes separately from their owners. This can prove advantageous as owners can take advantage of the corporate tax rate, but it can also lead to double taxation. You should speak to your attorney or accountant to see if this form of business is beneficial for you.

S Corporation - An independent legal entity owned by shareholders, like a typical corporation, except that to avoid double taxation, gains and losses are reported on the personal tax returns of the owner rather than the corporation that pays taxes.

Choose your company name and register it with your state government. A DBA (Doing Business As) is required whenever you are doing business under a name other than your own. If you're working as an independent contractor under your own name, you don't need one. However, if your limousine company has a name other than your own, you must register that name as a DBA.

Determine if you need a tax identification number for your business. Corporations that are required to file tax returns must file a tax return, as do partnerships that do not file taxes but are required to file business information with the IRS on an annual basis. Even if you have employees, you need a tax ID. Drivers are typically hired as self-employed contractors who pay their own payroll taxes, but for a dispatcher or other employee, your company must pay half of their payroll taxes and therefore must have a tax ID that they can use to pay them .

Sign up to pay taxes in your state and understand local tax laws. Most states and some localities have a business or corporate tax. If you are a sole proprietorship, you pay this tax as part of your personal income statement, while LLCs and corporations are taxed separately from their individual owners. If you have employees, you also have to pay federal workers' compensation and unemployment insurance taxes. Further information on tax law for companies in your federal state can be found here.

Obtain the required licenses and permits. Depending on the laws in your area, you must obtain permits for your business, your vehicle, yourself, or all three to operate a sedan or black car, and sometimes another permit to pick up passengers at the airport. Depending on location and market competition, these permits cost anywhere from $100 to several thousand dollars.

• How to start a limousine business

Get insurance. Private car insurance usually has a paintwork exclusion, which means your passengers and your car are not covered if you are using it for rental purposes. Start looking early for a business car policy that covers transfer service as they can take 4 to 6 weeks to take effect.

Create a website. Most customers find their limousines online, so a website is essential. Unless you are an experienced website designer, you probably want to hire a professional to create a polished website.

Web designers create your website and take care of registering your domain name and choosing a web host. The more you pay, the more input you have in creating a one-of-a-kind website.

Web design costs vary depending on whether you are using a US-based individual developer ($25-$100/hour), an offshore web company ($10-$40/hour), or an established US agency ($60-$100/hour). $60/hour). $200/hour).

Offshore companies can design websites starting at around $500, while a US company typically costs between $5,000 and $10,000, with solo developers falling somewhere in between.

Get a toll-free number and print business cards. Most of the time, you will be billed for your toll-free numbers by the minute. Call for best rates. Once you have the number, you can use it to print business cards and your website. These cards are an important way to grow your business. They give them to customers and leave them in clubs and hotels.

Buy your vehicle or enter into contracts with other companies. When you set up a virtual call center, you must negotiate contracts with existing limousine companies that detail the commission you will receive. Otherwise you have to buy a vehicle.

A black Town Car is a good entry point for airport transfers and corporate clients. It's cheaper than a stretch limousine.

A stretch limousine is necessary for most of the most lucrative services - weddings, funerals, proms and graduations - so consider adding a stretch limousine to your fleet as soon as possible. Start with a white limousine as these are most popular for weddings, proms, graduations and other special occasions.

Whenever possible, purchase both a black sedan and sedan so you can cover the full spectrum of services – airport and corporate business on weekdays and special events on the weekends.

Choose a payment system. You can put a meter in your car, but limousine drivers are increasingly turning to online services that schedule appointments, tell drivers where to pick up customers, and process payment.

Buy a navigation system. Even if you know your city like the back of your hand, there are addresses you've never heard of. A navigation system not only ensures that you don't get lost, it can also help you avoid traffic jams, which greatly improves your customers' experience.

Promote your service. Advertising is the key to success in the limousine business. The more inquiries you receive and the more of those inquiries you convert into sales, the more money you can make. A polished website and business cards are an important starting point. Also consider:

Pay Per Click Advertising - Buying internet traffic is the fastest way to get people to your website. However, make sure you are targeting the right audience. Clicks cost you money, and when many visitors leave your website without purchasing your services or products, you can lose money. The two largest advertisers are GoogleAds and Facebook.

Craigslist, the Yellow Pages and Radio Spots - Make sure you have a professional advert in both the Yellow Pages and Craigslist for those searching there. Radio spots can be effective but are more expensive than internet advertising.

Hotels and Nightclubs - Talk to the manager and hand in your card. Consider giving hotel promoters and club staff 5% commission. When someone needs a limousine, you want to be the person they recommend.

• How to performance of service

Carry out airport transfers for a stable business. Profit margins are low for airport customers, but business is stable year-round. It thus provides a good income base for your business between weekend wedding rentals and prom/graduation season.

Look for specialized employees to get bigger profits. Airport transfers and corporate rentals will help you stay in the black, but the real money you can make is at special events that require a limousine.

Weddings - Weddings are a good reason to get a stretch limousine. They charge a higher level of service—a driver in a tuxedo, champagne drink, coordination with the bride—but they also pay very well.

Funeral Services – This is also a specialized service that usually takes place on weekends. You need a pressed black suit and an unpretentious black sedan.

Proms and Graduations – Although the season only lasts two months for them, these events offer the biggest win for limousine companies. Consider increased advertising before and during the season.

Prepare contracts for special events. For events that are booked in advance, you want clients to sign a contract that includes a 20% non-refundable deposit to protect you if they back out for any reason. This is not uncommon, especially with degrees.

Buy more cars and hire more chauffeurs as you grow your business. The best way to hire chauffeurs is to go to airports and look for well-dressed chauffeurs in the baggage area. Offer them your card and ask them to call you if they aren't happy working where they are. Let your lawyer write contracts and decide how to collect money from your drivers: as a monthly fee for leasing your vehicle or as a percentage of their fares.

Cultivate repeat business. This is the key to success in the limousine business. Your website should collect customer information. Use it to create email and physical mail lists. Send emails to thank customers and encourage them to use your service again. Also, always make sure to give passengers your business card. Above all, provide a professional, courteous service that will keep customers coming back.