Do you want to start a limo rental service? If YES, here is a complete guide to starting a limo service business with NO money and no experience.
Okay, so we have provided you an in-depth sample limo service business plan template. We also took it further by analyzing and drafting a sample limo rental service marketing plan backed up by actionable guerrilla marketing ideas for limo service businesses. In this article, we will be considering all the requirements for starting a limo service business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Limo Service Business?
If you are a people person and love to work varied hours, then starting the limousine business might just be the right business for you. There are various things you would need to get right with this business such as knowing how to repair the limousine in the event of a breakdown whilst transporting customers, as well as the ability to handle your customers no matter their rank.
Also, it is important that you are not only punctual but that you apply professionalism as any mistake from you could cause a dent in your reputation. Asides from all these, this is a very interesting and lucrative business for the entrepreneur with the right mind.
According to statistics, the limousine business in the United States has grown so well over the last fifteen years at an average rate of more than 2.5 percent and has brought in revenue of over $12 billion. This shows that the industry is one that is very lucrative for any enterprising and innovative entrepreneur; therefore, if you are looking to start this business, it is best that you conduct a thorough market survey so that you would know how to correctly vary your business and what strategies to try out to enable your limousine rental business become successful.
After conducting your market research, it is necessary that you write out a comprehensive business plan. There are certain essential elements that your business plan is supposed to contain and they are; your business concept, marketing plans and analysis, operational plans, and financial projections.
Once you have purchased the vehicles you would need to run your business, you might need to purchase a navigation system as you will be picking up clients who live in places you might not have heard of. Next is to advertise your limousine rental business as this will lead to you having more inquiries, with some of them converting into contracts and then generating the needed revenue for your business.
Starting a Limo Service Business – A Complete Guide
- Industry Overview
According to IBISWorld, the limousine service industry is lumped with that of taxi services and both have a combined revenue of $19 billion and a 6 percent growth annually between the periods of 2011 to 2016. Even though there are no companies with a dominant market share, there are more than 340,000 limousine and taxi service businesses in the United States of America employing more than 400,000 people.
This shows that there are more businesses with just one or two employees and very few employing more than three employees. It is however expected that the industry will perform better in the next five years (2016 to 2021).
The past five years (2011 to 2016) has been beneficial to the industry especially as the economy has bounced back, allowing more businesses to grow their expense accounts and individual consumers willing to spend to get small luxuries like a limousine service. Even though the industry has recovered, it is expected to recover more in the next five years (2016 to 2021) as there will be an increased demand from private households, celebrities, corporate travelers and tourists.
In IBISWorld report concerning the limousine and town car service industry, it states that even though the industry has no companies with a dominant share in the market, the industry still generates $11 billion annually and had more than 4 percent increase between the periods of 2011 to 2016.
There are more than 196,500 limousine and town car services employing more than 239,000 people. This means that even though there are many limousine and town car service businesses, it is majorly run by one or two people, with only few employing more than one or two employees.
Having suffered the worst recession in nearly a century, the economy of the United States has begun to recover and has seen consumer confidence increase which has also led to an increase in disposable income and the need to spend on discretionary and luxury items such as limousines and other luxury car services than alternatives like taxis.
The limousine and town car service industry comprises of only a small number of fleet owners but a large amount of independent operators. This fact is not however intended to slow down the revenue that would be generated by this industry in the near future.
The limousine and town car service industry according to IBISWorld, has a low level of market share concentration. This is because in 2016, there were only about four major players in the industry accounting for less than 6 percent of the total industry’s revenue. For those that have large fleets, they earn more than 47 percent of the industry’s revenue, with the largest companies being franchises.
According to Herald Tribune, limousine drivers make an average of about 105 trips every week, with limousine rental companies having to battle with rising fuel costs. More than 80 percent of limousine companies have a website that enables customers to make online reservations.
Limousine companies usually rake in high revenue during the weekends especially for weddings, parties, and proms which account for 40 percent of the total limousine service. More than half of limousine services during the week are for business and corporate customers. Limousines are the top choice for business and leisure clients and its use are expected to increase even as fuel costs continue to increase.
Starting a Limo Service Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of a limousine rental business are not only restricted to couples who are wedding, or students going to proms or graduating, as there are a whole lot of people that use limousines. This is so because the limousine is no longer seen as a ride for only wealthy elites and stars but one that can be used to serve other purposes as well.
Therefore, if you are looking to define the demographic for your limousine rental business, ensure that you make it all encompassing to include those that have funerals and other special events. It should also include corporate executives and celebrities.
List of Niche ideas Within the Limo Service Business That You Can Specialize in
The limousine rental business is one where customers are provided with transportation to an event or destination of their choice. The limousine services are usually rented or hired with a driver and there are a growing number of people who have adopted this means of transportation to various events especially celebrities, corporate executives, mourners and high school students.
In order to stand out in this industry, operators in this industry have had to focus on one or two niche areas. Therefore, some of the niche areas that a limousine rental business can focus on are;
- Air Brook Limousine
- Stretch Limousine Services
- Hearse Rentals and Other Funeral Services
- Luxury and Corporate Sedan Services
- SUV, Large Van and Other Services
The Level of Competition in the Limo Rental Business Industry
The level of competition in the limousine services industry is one that depends on location since this is a business where you would need to physically pick your clients in order to offer services to them.
Revenue in the limousine rental business industry is highly dependent on how many people travel for business and leisure. For companies to generate revenue, break even and make good profit depends on how well they are able to market their services and what channels they use in marketing. The industry has few economies of scale which allows small sized companies to compete effectively against mid and large sized companies.
Most of the competitions in this industry are from other forms of services such as ride-sharing which clients access through their mobile apps to connect with independent drivers who make use of their own vehicles. Therefore, if you are looking to start your limousine rental business in the United States of America, you should be prepared to meet stiff competition from operators in your region.
List of Well – Known Brands in the Limo Service Industry
Every industry, no matter how new it is, has brands that have stood out from the others and the limousine rental service industry is no different. There are various factors that make some brands stand out from others and this may include the quality of their service, their rates, how many locations they are in as well as the relationship they have with their customers.
There are several brands that have stood out in the limousine rental business industry in the United States of America and they are;
- CA Limousine Rental
- US Limousine Service
- Top Class Limousine
- First Class Limousine Services
- Long Island Limo Service
- A Touch of Class Limousine
The limousine rental business is one that provides passengers with transport and do not follow regular routes or schedules. Limousine companies usually pick up customers via requests and usually lease by the hour or operate For-Hire Vehicles (FHV) where flat rates are charged for specific trips.
The industry is a highly fragmented one as there are no major companies that dominate the market. Globally, the situation is the same as practices and service levels only vary on some levels in some countries. The activity and revenue in this industry are usually concentrated in major cities around the world.
Affluent counties like the United States, the United Kingdom and Japan strictly regulate their markets and have high fares for their passengers. The United States taxi and limousine services industry has about 8,000 establishments which include single location companies and companies that have multiple locations and in combination generate more than $7 billion annually for the industry.
The revenue in the limousine industry is based on leisure and business travels. The industry in the United States is highly fragmented as the top 50 companies in the industry account for 30 percent of the industry’s revenue.
Starting Your Limo Rental Business from Scratch vs Buying a Franchise
Starting your business from scratch or buying a franchise is totally the prerogative of the entrepreneur as each option has its own pros and cons and must therefore be thoroughly studied by the entrepreneur before choosing one that will align with the goals and objectives of the business.
Starting a business from scratch is one sure way of understanding the business because you will be in charge of making the key decisions that will either cause the business to grow or fail. Entrepreneurs who start from the scratch usually start out on a small scale so that they can learn the ropes and correct their mistakes from there before expanding their business to the scale they want later.
Buying a franchise is for entrepreneurs who do not want to make mistakes when starting their business and who would rather focus on building a clientele in a convenient way. If you intend buying a franchise, you need to have carefully research on all the franchises that you would like and see if what they are offering are in line with your goals and objectives.
This is so that you do not waste valuable resources buying a franchise that would not work for your business in the end. You should note that most of the major decisions that will be taken in the business especially in the early stages would be taken by the franchisor.
Possible Threats and Challenges You Will Face When Starting a Limo Rental Business
Every business that has been established to generate revenue and start making money will at one time or the other face certain challenges and threats. Any entrepreneur looking to start a business knows this and must therefore be prepared by having proactive plans in place. However, every entrepreneur should know that because they have already laid down plans to combat any threats and challenges does not mean that it will work all the time.
Therefore some of the challenges and threats that you are likely to face when starting your limousine rental business are; economic downturn that will cause fewer patronage by clients, intense competition from already existing limo rental businesses, competition from new entrants into the market as well as government regulations.
Starting a Limo Service Business – Legal Matters
- Best legal entity to use for this type of business
There are several factors that come with setting up a business structure which you need to be aware of and they are; taxation, flexibility, liability, ease of set up and control. If you are therefore confused about the type of legal entity that you would need to have in place when starting your limousine rental business, then you might need to seek the services of a lawyer with experience in your industry to help pick what is best for your business.
Over and above there are five types of legal structures available to any entrepreneur looking to start their business in the United States of America and they are; sole proprietorship, partnership, Limited Liability Company (LLC), Corporation and S Corporation. The sole proprietorship kind of business is one that is solely owned and run by an individual.
A partnership kind of legal entity is one where two or more people not passing a certain number come together and agree to run a business. An LLC is a more formalized type of legal entity. Here the business is regarded as a separate entity from the owners which means that should the business run into any sort of trouble or faces a law suit; the assets of the owner are protected from being touched as only that of the business can be affected.
A corporation is a legal entity that is deemed separate from the owners who are regarded as shareholders. A corporation is more difficult to set up than the above mentioned legal entities and usually requires an attorney to set up. Tax-wise, owners are taxed separately from the corporation which sometimes leads to double taxation.
The S corporation is another form of legal entity that is like the corporation as the owners who are shareholders are regarded as a separate entity from the business. Unlike the corporation however, in the S corporation, the owners are taxed on their personal tax returns just like the LLC and the partnership form of legal entity.
Catchy Business Name Ideas Suitable for a Limo Rental Business
Choosing a suitable business name for your limousine rental business is very important as not only should the name you choose be unique, creative and memorable; it must also reflect the industry which your business is in. When considering a business name for your limousine rental business, it is always important that you have several names in place so that you can easily have a back-up plan, should the name you have chosen be already taken by someone else.
Below are sample names for you to consider when considering what to call your limousine rental business;
- Ride Right Limo Service
- Luxury Ride Limo Services
- Bob’s Limo Services
- Top Ride Limousine
- Top Notch Limo Rentals
- Audrey Limo Services
Getting the right insurance policies for your business is very important as every business in the United States of America have insurance policies that are peculiar to their kind of business. Having insurance helps protect you from personally having to pay for any incidents that might crop up whilst running your business.
If you aren’t sure of what insurance policies to get for your limousine rental business, then you might need to seek the advice of an insurance agent or broker to help you know which insurance policies are best for your business. Therefore some of the basic insurance policies that you should consider purchasing to start your limousine rental business in the United States of America are;
- General Liability Insurance
- Business contracts
- Liquor Liabilities
- Workers’ Compensation Insurance
- Business Interruptions
- Livery Insurance
- Health Insurance
- Payment Protection Insurance
- Business Owner’s Policy Group Insurance
Intellectual Property Protection/Trademark
The limousine rental business is a service oriented business and therefore has no need to seek for an intellectual property protection. Most of the services offered in this industry are regular services and not something particularly unique.
Entrepreneurs who wish to protect their company names, logos and domain names might have to get in touch with an attorney who has experience with helping businesses in this industry trademark or protect their intellectual property. However, it should be noted that this is not considered compulsory.
Is Professional Certification Needed to Run a Limo Service Business?
This is a service oriented business which involves picking and dropping off passengers and as such the most that is needed by clients is that they get picked up on time and are dropped at the right destination within the destined time period. There are other services that might be required by clients from the limousine rental businesses but having professional certification is not one of them.
Entrepreneurs who are looking for ways to stand out might ensure that their drivers possess certain extra skills that might be useful in the event of an incident, but these skills are varied and not a standard in the industry.
List of Legal Documents You Need to Run a Limo Rental Business
When running a business of whatever nature in the United States of America, it is expected that you have all the necessary documentations in place. Not having all the proper documentations or any documentation at all is a sure way of getting in trouble with the authorities because not only might you be financially penalized, but you might also be banned from running the same business anywhere in the United States of America.
Therefore, if you aren’t sure of what documents to get for your business, it is best you engage the services of a lawyer to help you out. Below therefore are some of the basic legal documents that you are expected to have in place if you intend to run your own limousine rental business in the United States of America;
- Certificate of Incorporation
- Operating Agreement
- Business License
- Business Permit
- Business Plan
- Insurance Policies
- Driver’s License
- Contract Documents
- Employment Agreement
- Employer Identification number (EIN)
- Federal Tax Identification Number
- Liquor Permit
Financing Your Limo Rental Business
Every entrepreneur who is serious about starting a business knows that without having the right amount of funds, the business idea will remain just that without ever coming to reality. Therefore, it is imperative that you source for funds with which to start and run your business. Sourcing for funds is not easy for any entrepreneur which is why it is usually vital that you have a well written business plan as this helps convince investors faster about committing their funds to your business.
Below are some of the options that you can explore when sourcing for start-up capital for your limo rental business;
- Raising part of your capital from personal savings and sale of properties
- Sourcing for soft loans from family members and friends
- Applying for loan from the bank
- Sourcing for capital from private investors and business partners
Choosing a Suitable Location for your Limo Service Business
Choosing a suitable location for your limousine rental service is very important as you must ensure that your business is close to your target market. If you are going to be running your business from home, you do not want to be so far from your target market that it takes you a very long time to get to them. Clients are usually on the lookout for punctuality and not being able to offer this is likely to make you lose customers.
If you are operating your business from home, then you should be ready to get a working and interactive website where your clients can get in touch with you or find out about your services.
The decision to operate your business from home should be dependent on what scale of business you are running and how many cars you have. If you own just one car, you can run your business from home and wait till your business has grown to a considerable rate before you lease or rent a facility.
In renting or leasing a facility with which to run your business, there are several factors you must take into consideration such as how much you have at hand, how close you are to your target market and how much you are going to be spending on overhead and running costs. Knowing these things is important especially as competition is stiff and you might not get to offer services every day.
Starting a Limo Service Business – Technical & Manpower Details
Starting a limousine rental business involves having a lot of cash at hand especially to buy a limousine that will meet the taste of your clients. This is why you should have a business plan to help you in sourcing for the capital that you would need for your limousine rental business. Sourcing for funds is not an easy thing for an entrepreneur but it is a task that must be done.
The necessary equipment and tools needed to start the business are not that expensive except for the car. Therefore, most entrepreneurs starting out in this field usually start by creating a virtual call center that would enable them link up clients to existing limousine services and getting their commission. This allows them to build up the client base needed and also save up to start their own business.
The equipment that you would need in order to run your limousine rental business successfully are; phones (landline and cell), printer, computer, navigation system, payment software and headset. The people that you need to hire to make your limousine rental business a success are; chief executive officer, admin and human resources manager, accountant, front desk officer, marketing executives, drivers and cleaners.
This means that you would require at least 8 key people to enable you run your limousine business successfully.
The Service Delivery Process of a Limo Rental Business
Depending on how you intend to run your limousine rental business, the service delivery process is pretty basic. Once a customer has decided that they would like a limousine service, they usually call the limousine company or go to their website to book a service.
Once the customer has chosen what plans they would prefer; by the hour or a basic charge for a time period, the company then proceeds to ensure that all is ready – limousine, driver, and any other service – for the client.
Starting a Limo Service Business – The Marketing Plan
- Marketing ideas and strategies
To be able to market your business successfully to your clients, they would need to know that you are capable of the services that you lay a claim to. Marketing serves a dual purpose for businesses because not only does it enable an entrepreneur to generate the needed revenue that would grow and sustain the business and allow it to compete favorably against competitors, but marketing also helps to generate awareness about a business and its products and or services.
To be able to draft the right marketing strategies that will be effective, it is important that entrepreneurs conduct a thorough market research first. A market research is necessary because it allows the entrepreneur understand the industry which he is operating from, the competitors to face, what services will best attract clients, what to expect from the target market and what the target market expects from him as well.
Most entrepreneurs are always overwhelmed by what marketing channels they would use that would be effective for them and also how much they would need to set aside as budget in order not to waste resources. If you feel overwhelmed as an entrepreneur, you could always hire a marketing consultant who has the necessary experience and knowledge about your business to help draft marketing strategies that would best suit your limousine rental business.
Asides from engaging the services of a marketing consultant, you can also hire marketing executives that understand your marketing goals and objectives to help in creating strategies that would be effective for your limousine rental business.
Below therefore are some of the platforms you can utilize to market your limousine rental business;
- Ensure that your limousine rental business is listed in yellow pages as well as online directories
- Advertise your limousine rental business in newspapers and magazines as well as on radio and television stations
- Have different packages for your different category of clients so that they can work within their budgets
- Use social media platforms such as Facebook, Twitter, Linkedin and Instagram to promote and market your limousine rental business
- Ensure that your marketing executives are empowered to directly market your limousine rental business
- Participate in local community events and use that opportunity to market your business
Strategies to Boost Your Limo Service Brand Awareness and Create Your Corporate Identity
To have a brand that is widely known and recognized needs a lot of work and you must therefore have strategies in place that will allow you boost the awareness of your brand as well as create a corporate identity for your limousine rental business.
The one thing about promoting a business is that it helps craft the image you would want your target customers to perceive about your business. One secret about promoting your business is that it allows you to not only increase awareness for your business but to also generate revenue for the business as well. It is no wonder already existing and well known businesses still go ahead to spend a fortune annually in order to boost the awareness of their brand and create a corporate identity for their business.
If you feel overwhelmed by having to promote your limousine rental business, then you might be better off engaging the services of a publicity consultant who has the necessary experience and knowledge about your kind of business to help craft the right strategies that would help put you in the eye of your target market.
There are several platforms that you can leverage on in promoting your limousine rental business and they include offline and online platforms. The internet as well as technology has made it very easy for entrepreneurs to promote their businesses to a wider target market in a cheaper and more effective way.
Below therefore are some of the platforms that you can leverage on to boost your brand as well as promote and advertise your business;
- Encourage your loyal customers to help spread the word about your limousine rental service
- Distribute handbills and business cards and also paste fliers in strategic locations in the area where you intend operating your business from
- Position billboards and banners in strategic locations all around the city where you intend operating from.
- Use social media platforms like Facebook, Twitter, Instagram and Linkedin to promote and advertise your business
- Participate in online discussions with your business handle and educate people about your services
- Place adverts about your limo rental business in newspapers and magazines as well as on radio and television stations