A limo service business can be very rewarding financial-wise. Your job duties include scheduling your vehicles to pick up and drive clients to various locations. In fact, 40% of the revenue generated by the limousine industry involves either parties, high school events, or weddings. Here is everything you need to know about running a limo service:
Create a Business Plan
Most entrepreneurs are familiar with creating business plans. The outline offers a path to success. Your first move is to name your limo service business. Brainstorm possible name ideas with trusted colleagues before registering the choice with the local government agencies. Getting legal documentation on your business name will help secure the domain name for your website.
Obtaining Permits and Licenses
The failure of the business and its employees not having the required permits and licenses will subject your business to fines and possible loss of operation in town. Depending on the state your business resides, all limo businesses must apply for a permit for Limousine Services and the Affect of Authority license. Along with each application, you must include a verified form that each limo has passed inspection to drive on the road. According to Driver Knowledge, there are about six million car accidents in the U.S. each year, so it's important to keep your passengers safety in mind.
The Ongoing Expenses of a Limo Service
Running a limo service means navigating through ongoing expenses that need to be paid monthly. It requires keen business sense and skills more than renting limos each night.
Clients love being driven in a glamorous limousine to their destination. But having the latest models available for rent can be expensive. Car engines have an average of 100 to 200 horsepower, but a limo engine is typically different. Due to this, limos cost between $50,000-to-100,000, as the number depends on the make and model of the vehicle. Most limo service businesses will lease a fleet of limousines to lower the maintenance cost.
The savings gained from the lease agreement will help pay for each limo's insurance. The dollar amount will vary for each make and model type. Also, the city your business resides in will have an effect on the final total. The city's and state taxes will make the insurance cost for each vehicle to be approximately $600-$1,200 on a quarterly basis.
Finally, the last expense for the business is renting garage space to store the vehicles. It is a necessary expense as no limo service owner has enough space at home to park a fleet of limousines each night. And it is too dangerous to park the limos on the street. Instead, try looking for a parking garage near the office space. The cost should be approximately $100 per limo each month.
Advertising and Marketing Your Brand
Another major expense that will be continuous is advertising and marketing your brand to a target audience. Both are crucial for a new business to keep its doors open after the first year. You may want to meet with an experienced marketing firm and get their opinion on how to get your business's name out to the public.
Granted, traditional marketing and advertising campaigns are still effective, but introducing your business to social media will gain better results. You will need to set up an online account with each social media site. It is wise to hire a graphic designer to design a professional-looking website. Hopefully, it will gain traction with your target audience. Often, word-of-mouth between users in chat rooms will increase limo rental sales.
Pricing Rates For Renting a Limo
A limo service business makes money by charging its clients to rent their vehicles for the night. Typically, you will charge by the hour, but that dollar amount varies from company to company. The more established limo service businesses will require their clients to rent a vehicle for a minimum number of hours. And the standard pricing rate is between $30-$100 per hour. Some businesses will offer their clients a special VIP package to attend major events without delay.
Running a limo service business is the perfect venture for individuals looking for something new. You will come into contact with a variety of different clientele who come from different walks of life. All they want is to ride in style!