Investing Into The Limousine Rental Industry: Your Options

January 6, 2008

Investing hard-earned cash into businesses, such as a limousine rental service, is considered a good investment option these days. The growing economy is an indicator of how businesses thrive, and grow these days.

Although the current housing market serves as a dark cloud hanging over our heads, the housing crunch has not been much of a negative factor in the survival of the livery industry. While poor management is most often cited as the reason why businesses fail, inadequate or poorly-timed financing runs as a close second. Whether you’re planning to start a limousine business or expanding one, sufficient and on-hand capital is essential.

Finding The Adequate Financing Mode Is Vital

The field of financing is a quite tricky one. Generally, there are two types of financing: equity and debt financing. When you’re out searching funding or financing, you need to consider your company’s debt-to-equity ratio — which is the relation between dollars you’ve borrowed and dollars you’ve invested in your business. The more money owners pour into their investments, the easier it would be to attract adequate financing.

Equity financing is third-party investment into your company, and this usually comes from non-professional sources such as friends, relatives, employees, customers, or industry colleagues. These investors will only see a return on their investment if you are successful. Currently, there are a lot of sources for debt financing, and these are banks, savings and loans, commercial finance companies.

The government, particularly the U.S. Small Business Administration (SBA) are common sources of funding. However, these loans would need to be repaid regardless of your success. More importantly, limousine rental startups need funding to purchase their vehicles. While leasing a vehicle continues to offer certain tax advantages, getting low and attractive interest rates can make financing a relatively easier one.

How’s The Limousine Industry These Days?

In the United States and Canada, there are an estimated 12,400 limousine companies, which operate some 126,000 vehicles. It is expected that around 11% of these operations have fleets of more than 20 vehicles.

Limousine rental firms generally provide employment for 275,000 people and transport 400 million passengers annually for a wide array of purposes ranging from airport transfers, business and corporate travel, weddings, proms and other social outings. It would be nice to note that The term ‘Limousine’ is actually somewhat of a misnomer because the industry encompasses a diversified vehicle fleet, ranging from sedans, stretch limousines, stretch SUV’s and limo buses.

How To Be A Good Limo Operator

There are a lot of ways that entrepreneurs could employ to be a good business owner. To succeed in the limousine industry, you need to establish effective links with reputable industry analysts, experienced operators, and competent regulators.

The good news is that as an owner operator you will have plenty of time driving, between jobs, and waiting outside in the limo to give yourself time to take up a Masters Degree in Limousine Management. Turn your limousine into a university on wheels with a collection of books, audio programs and trade magazines. A good venue to effectively establish links with the industry’s top honchos is to try surfing the National Limousine Association’s web site.

Try checking out the Resources for Operating a Limousine Company section for everything from “How to Start a Limousine Company” by Tom Mazza to books on tax strategies and investment methods. Joining industry trade shows also helps an operator learn better strategies and find out newer customer enticement techniques. Also, keep yourself updated by subscribing to limousine industry magazines and other trade publications.

Vanessa Arellano Doctor


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