Thinking of the Limo Business?
Photo Courtesy Action Limousine, Garwood NJ
Despite Uber and Lift, there is still money to be made in the limo business if you are a good operator. You just can’t make money at it today by only doing airport work. You also can’t call a taxi business a limo business and make it work. That said, how do you make money in the limo business?
First, you need the ability to attract and keep corporate accounts. These are companies that will use your services on a regular basis and that will pay competitive but decent prices. The blunt truth is that most corporate executives do not like blue collar people, and this is who starts many limo businesses. So if you are not a member of the “dees, dems and dos” crowd and can blend well into a corporate setting, you will have a significant advantage over your competitors in this market.
Second, you do not have to operate new cars. Let someone else take the beating on depreciation. Your equipment does have to be well maintained, reliable, safe and clean.
Third, since you are not running a taxi service, your drivers should be well dressed and should be able to speak in complete and coherent English sentences. Do not hire blue collar people as drivers. Generally speaking, they do not know how to relate appropriately to the kind of customers you are trying to attract. Remember, you are not a taxi service. You may want to consider hiring college students or retired business people who want to supplement their retirement incomes.
In addition to corporate accounts, another key money maker in the firm are time jobs; i.e., jobs where you take a customer to say, a restaurant, wait several hours, and then bring him back to his departure point. The beauty of this type of work is that you are not burning gas or putting miles on the odometer, but you are getting paid an hourly rate to wait. In the spring, high school proms are an attractive type of time job since mom and dad will pay premium prices for you to chauffeur their angels to ensure that they do not drive trashed.
So, a quality operator can still make money in the limo business. If you are considering purchasing a limo service, the going rate is about 1.5X seller discretionary earnings plus the fair market value of the equipment.
Written by Brad Palmer
Edited and Optimized by Geoff Caplan