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A limousine rental business is a very versatile business. Between corporate events, high school dances, and cultural black tie affairs, the need for such a business extends year-round.
Who is this business right for?
This business is good for a “people person,” for it involves dealing with a wide variety of clients and a wide variety of drivers for the limousines themselves. Those who already have skills and experience with repairing automobiles will also be able to save a lot of money over time when it comes to limousine upkeep and repair.
What happens during a typical day at a limo business?
In no particular order, some of the day-to-day activities include taking reservations for future events, following up with clients on upcoming events, and coordinating with your drivers so everyone has access to relevant information. You may also network with similar or related businesses to plan for large upcoming events, work on marketing your businesses (especially around peak seasons), and either schedule necessary maintenance and repairs of limousines or conduct such activities yourself.
What is the target market?
The preferred clients for most limousine businesses would be corporate customers. Corporate customers know exactly what they want and exactly what it should cost, making your job much easier. Though the preferred clients includes corporate customers, your business make see peaks in rentals during specific times of the high school year, as many students like to rent limos for special events such as homecoming dances and prom. Though these younger, inexperienced customers may not be ideal, it is important that you keep your doors open to them as they can provide a jump in profits during these special occasions.
How does a limo business make money?
Limousine rental services make money by charging fees to chauffeur clients for a fixed amount of time. Typically, such businesses charge clients by the hour. If your business has access to multiple kinds of limousines, you may consider charging different hourly amounts for the use of different kinds of vehicles.
What is the growth potential for a limo business?
The growth potential for a limousine rental business has been steady in past years, but has been somewhat threatened by the rising prominence of app-based services such as Uber and Lyft. By embracing ideas such clients want (such as advertising via social media, allowing people to contact you via an app, etc.), you can mitigate the negative impact of competing services in your area.
What are some skills and experiences that will help you build a successful limo business?
As with most jobs, any kind of previous experience in the limousine rental industry is helpful. Prior experience or education as a mechanic can help you maintain and repair your limousines for far cheaper than you otherwise could. Experience with social media will help you develop advertising techniques that help you stay relevant to a younger demographic.
What are the costs involved in opening a limo business?
The main cost of starting a limousine business is acquiring the cars that you need. The glamour of a limousine is predicated on it being newer, shiny, and fancy, so a single limousine may easily run you between $50,000 to almost $100,000. The cost of insuring those vehicles will vary by vehicle type and region, but can easily be between $600 and $1200 dollars. You will also need to market the new business, which may cost between $1,000 and $5,000 depending on how much you emphasize traditional advertisement versus advertising on venues like social media. If you have the space to store the limousines at your own home, then there is no further cost to open the business; if not, you will need to pay approximately $100 a month per vehicle to store it.
What are the steps to start a limo business?
Once you're ready to start your limo business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your limo business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your limo business keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers. Save 15% when you create a business website with Weebly.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a limo business?
One way to start your business is to launch a social media blitzkrieg. Advertising via mediums such as Snapchat and Instagram and Facebook as well as developing a traditional webpage will really help you stand out to the younger market. Consider using limo software to help you with some of the administrative areas you may be weaker in. Finally, be sure to research the reviews customers of other businesses have left in order to figure out some things to do (and some things to avoid).
How to promote & market a limo business
Some of the best ways to promote and market a business have already been mentioned. For instance, creating an online presence via social media is absolutely crucial. It is still vital to create a professional-looking website, though, as it makes it easier for customers to research your pertinent information before reaching out to you. Finally, don't neglect traditional print, radio, and television advertisement, as your older, corporate customers are likelier to respond to that.
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How to keep customers coming back
Network with other businesses and create fun promotions. For instance, maybe you offer a discount to the first ten customers you get who also rented a tuxedo from another business for the upcoming Prom. Consider offering discounts on future services to anyone who refers your business to their friends. Be sure to honestly assess the feedback you get from customers so that you are always tailoring your business to the changing needs of your local clients.
How and when to build a team
Unless you only have one limo and want to do everything yourself, you may have to build a team from the very beginning; the limousines won't drive themselves! Beyond that, limousine rental services typically grow as you get more businesses and more limousines. Otherwise, keeping a relatively small crew—say, yourself and your drivers—helps ensure more profit at the end of the day.
State & Local Business Licensing Requirements
Permits for Limousine Services differ by state. Typically the business must complete an Application for Certificate of Authority. Part of this application includes a form which indicates that each limousine has successfully passed inspection. Additionally, there typically exist statewide regulations on limos, limiting the amount of passengers that can be seated in each limo as well as mandating the presence of certain safety precautions which may include fire extinguishers or stretchers. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
All drivers will need a chauffeur's endorsement on their licenses’ and limos will need commercial license plates. These can be obtained locally from the Secretary of State’s office. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
How much can you charge customers?
Your exact rates will vary by region and by car type, but you would typically charge between $30 to $100 per hour for a standard limousine. You may consider enforcing a “minimum number of hours” rule on certain days and/or times. You may also consider offering additional services such as special VIP wedding packages or Prom packages for an additional cost.
What are the ongoing expenses for a limo business?
Part of what is attractive about a limousine rental business is that the ongoing expenses are relatively low. If you are storing the vehicles in a unit you rent, you will be paying approximately $100 per month, per vehicle. You will probably be spending between $100 and $500 per month on traditional advertisements and advertising via social media. If you are not the driver as well, then you will be paying your drivers, though that should be an hourly amount, with an amount contingent on how many hours they actually drove that month. Finally, you will be paying for the maintenance and repair of any vehicles, though that is something that you do as the cars need it rather than every single month.
How much profit can a limo business make?
A limousine rental business is potentially very profitable, and the industry as a whole has reached eleven billion dollars in annual revenue in recent years. While your business may start slow, a good advertising push can ensure that you are the go-to business for weddings, graduations, proms, and corporate events. Ultimately, the ceiling of your profit is determined by how often you want to work!
How can you make your business more profitable?
To be more profitable in this business, be flexible in your scheduling. Some customers arriving by plane in the predawn hours may want a limo pick-up, and you need to be ready for them. Make sure that the inside of your cars always looks as good as the outside, as a limo business prides itself on looking sleek and luxurious. Finally, never stop learning how to improve: use every month to examine customer feedback and business performance and determine how to make the following month even more profitable.