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How To Start a Limousine Company
Over the last 15 years, the limousine business has grown at an average annual rate of 2.5% and has brought in over $12 billion in the US alone.There is money to be made in the right market with more and more competition.If you are a person who does not mind long hours, starting a limousine business may be for you, but you will want to plan carefully, market effectively, and vary your types of service to ensure your business is a success.
Step 1: Know what you are getting into.
The limousine business is not for everyone.Customer service and availability are what it is based on.If you are not a people person, look elsewhere.Think twice if you want a 9-5 job.People rent limos at all hours of the day, and the most lucrative jobs take place on the weekends.It is important that you are comfortable with long, erratic hours before you start working in the business.
Step 2: Consider how much it will cost to start a company.
If you want to start with your own car, insurance, and website, you're looking at between $50-100,000.Depending on how much you invest in your website, you can start a virtual call center for between $500 and 5,000.
Step 3: Determine the type of company you want to start.
If you want to start a limousine company, you don't need a limo.Depending on how much you want to invest, you can start by building a customer base, buying a vehicle or launching an entire fleet.All you need is a business card, website, and toll-free number.You will take up to a 20% commission on calls or internet requests for limo services.This is an inexpensive way to build a customer base.If you want to drive a vehicle, you need to start with a black sedan or limousine, both of which will require a significant investment.You can increase your revenue by driving your own vehicle.Launching a fleet is the riskiest way to start your business as it requires a large outlay of capital to purchase multiple sedans and limousines.Dispatchers and chauffeurs will typically charge a flat fee to use lease your vehicles or give you a percentage of their fares.If business is slow, more cars on the road can mean bigger losses.
Step 4: A business plan is needed.
Whatever type of limousine service you decide to launch, your business will benefit from a strategic plan that will guide you in achieving your goals.You can find more information about how to write a plan here, but you should also include your business concept, your strengths and weaknesses, long term goals, and performance indicators, beyond the bottom line, which will let you know you are succeeding or failing.The number of repeat customers and inquiries you convert into sales might be included in the last.Market research is about the nature of the industry, who are your customers (business men, airport traffic, weddings, etc) and what prices are charged.The goal is to make money.The cheap limousine company is not a good business model.A marketing plan will help you communicate with your customers.Identifying the individual projects that will lead to completing your larger goals is part of an operations plan.To begin with, these might include hiring a designer, finding a webhost, buying a car, and choosing a billing option, all to prepare your vehicle for service.Financial projections include a list of assets before you start the business, as well as start-up costs such as building a website, getting insurance, obtaining permits, and purchasing a vehicle.You need to know how long you can perform at a loss and how much business you have to do in order to make a profit.There is a sample business plan for a limousine service.
Step 5: A consultant is a good idea.
Consultants specialize in the limousine business.They can help you find lucrative markets, set rates and advertise effectively.If you are new to the business, a consultant can make you money in the long run.
Step 6: Hire a business lawyer who knows the industry.
A lawyer can help you decide on the best legal structure for your business, walk you through tax procedures, and give you licenses and permits in your area.
Step 7: Determine the legal structure of your business
This will affect 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 have the least paperwork.If you are considering another legal structure, you may want to consult a lawyer who can help you pick the best one.An unincorporated business is run by an individual.Since there is no distinction between the business and the owner, the income from it is reported as your income.You pay taxes.This form is not recommended because you will be personally liable for your business.A partnership is a business where two or more people are involved.You must register your business with your state to form one.You need to register with the IRS and get a tax ID.The partners pay taxes on their individual tax return when the profits are passed on to them.This also includes self employment tax.The partners are responsible for their own actions.To start a limited liability company, you must choose a name and file articles of organization in your state for a fee.Income tax and self employment tax are paid by the owners of the company, but they are protected from personal liability for their actions.A corporation is a legal entity owned by shareholders.To register your corporation, you have to choose a company name and file articles in your state.You need to register with the IRS and get a tax ID.Corporations file taxes on their own.It may be beneficial for owners to take advantage of the corporate tax rate, but it may also lead to double taxation.If this form of business will benefit you, you should speak with your lawyer or accountant.Profits and losses are passed on to the owners of the company in order to avoid double taxation.
Step 8: You can register your business with your state government.
If you are doing business under a name other than your own, you need a DBA.If you are working as an independent contractor under your own name, you don't need a name change.If your limousine business has a different name than your own, you need to register it as a DBA.
Step 9: Determine if you need a tax identification number for your business.
If you have employees, you will need a tax ID if you don't file taxes.Your company will be responsible for half their payroll taxes if you don't have a tax ID with which to pay them.
Step 10: Register to pay taxes in your state.
Business and corporate income taxes are levied by most states and localities.If you are a sole proprietor, you will have to pay this tax on your personal income return.State worker's compensation insurance and unemployment insurance taxes need to be paid if you have employees.Information on tax laws for businesses in your state can be found here.
Step 11: Obtain licenses and permits.
Depending on the laws in your area, you will need to obtain permits for your business, vehicle, yourself, or all three in order to operate a limousine or black car, and sometimes another permit to pick up passengers at the airport.The cost of these permits depends on the locality and how competitive the market is.
Step 12: You should get insurance.
Your passengers and car will not be covered by personal auto insurance if you use it for hire.It can take up to 6 weeks for a business auto policy to be put in place.
Step 13: A website can be created.
A website is important for most clients.Unless you are an experienced site designer, you will probably want to hire a professional.Register your domain name and choose a webhost with the help of web designers.You will have more input if you pay more.The cost of web design varies depending on whether you use a solo developer in the US, an offshore web company, or an established US agency.The cost of a US firm will usually range from $5,000-$10,000, with solo developers falling somewhere in-between.
Step 14: Print business cards with a toll-free number.
You will be charged by the minute for your toll-free numbers.Call for the best rates.You can use the number to print business cards.A key way to grow your business is with these cards.You will leave them at hotels and clubs.
Step 15: Purchase a vehicle or arrange contracts.
If you are establishing a virtual call center, you will need to negotiate contracts with existing limousine companies that will give you a commission.You will need to buy a vehicle.A black Town Car is a good starting point for airport transfers.It is less expensive than a limo.Most of the most lucrative services, such as weddings, funerals, proms and graduations, require a stretch limo so you will want to add one to your fleet as soon as possible.White limos are the most popular for weddings, proms, graduations and other special events.Purchase a black sedan and limousine so that you can provide airport and corporate business during the week and special events on the weekends.
Step 16: You can choose a payment system.
You can install a meter in your car, but limousine drivers are increasingly opting for online services that schedule appointments, notify drivers where to pick up customers, and handle payment.
Step 17: Purchase a navigation system.
If you don't know anything about your town, there will be addresses that you have never heard of.A navigation system will help you avoid traffic and ensure that you don't get lost.
Step 18: Your service should be advertised.
The limousine business depends on advertising to succeed.The more inquiries you receive, the more sales you can make.A polished website and business cards are important starting points.Pay-per-click advertising is the fastest way to get people to your website.Make sure you are targeting the right audience.If a lot of visitors leave without buying your product or service, you can lose money.There are two major advertisers.Make sure you have a professional ad in both the yellow pages and craigslist for those who search there.Radio spots are more expensive than internet advertising, but they can still be effective.Drop off your card at the hotels or night clubs.Give doormen and club staff a 5% commission.You want to be the person they recommend.
Step 19: Airport transfers are important for business.
Over the course of the year, the business tends to be steady despite the low profit margins on airport clientele.Between the prom and graduation season, it provides a good base of revenue for your company.
Step 20: Seek specialized hires to make more money.
Airport transfers and corporate hires will help keep you in the black, but the real money to be made is in special events, which require a limousine.There are many reasons to get a stretch limo.They need a tuxedo-ed driver, champagne beverage, and coordination with the bride, but also pay very well.This is a specialized service that takes place on the weekends.You will need a limo and a pressed black suit.The season for proms and graduations only lasts two months, but they provide the greatest profit for limousine companies.Consider increasing advertising during the season.
Step 21: Special event service contracts need to be prepared.
If you book an event in advance, you want the clients to sign a contract that protects you if they back out.This is common with graduations.
Step 22: As you grow your business, buy more cars and hire more chauffeurs.
Picking out well-dressed chauffeurs in the baggage area is the best way to hire chauffeurs.If they aren't happy working where they are, ask them to call you.If you want to collect money from your drivers, you need to have your lawyer write up contracts for you to sign.
Step 23: Referring business is a good way to cultivate repeat business.
It's the key to success in the limousine business.Client information should be collected on your website.Email and physical mail lists can be created with it.Encourage customers to use your service by sending mail.You should always give out your business card to passengers.Provide professional, courteous service that makes customers want to return.
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