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March 22nd, 2002, 04:45 PM
what are the major causes or reasons new limousine companies do not make it???

The reaseon I ask you is simple I am starting a limousine buisness and would like not to tread the same paths that have caused the demise of other people starting out. Your input is greatly appreciated.

Mike(denver) http://limos.infopop.cc/groupee_common/emoticons/icon_smile.gif

March 22nd, 2002, 08:13 PM
Considering that you qualified the reasons for new limousine operator’s not succeeding, here are a few reasons that I believe may have been partly responsible:

Inadequate Capitalization. Saving for a down payment on a car and springing for a handful of business cards simply isn’t going to make it. Make no mistake…you need money. Preferably, your own. If not yours, someone else’s then. But you need money to operate in the interim until you generate from the black.

Inadequate Research and Preparation. No business planning, no goal setting, no budgeting. No market analysis or marketing strategy. Some truly believe that it all falls into place by osmosis. If you buy a car, the phone will ring incessantly.

No Experience in the Industry. Actually, this problem is common in other industries that have an allure of glamour to them. About a decade ago it was travel agencies. Everyone wanted to open a travel agency when they retired and jet the world over, staying at the Four Seasons for $23.79 a night.

No Experience in Business at all. And even worse than that, they have no intention to obtain any. It’s admirable that folks at one time or another would like to attempt running their own business. They may be of a modest education or a generation removed from the schoolhouse, but it’s never too late to learn. It always amazed me that such a person who wanted to run a business of their own wouldn’t even take a single semester of basic accounting at their local community college or adult school. Not in an attempt to ace the CPA exam, but at least know what a financial report is and be able to recognize cash flow (or lack of it).

Poor Management and Administrative Abilities. Lot’s of things are included here. Like the inability to say no. Taking on work and debts you can’t afford to carry. Wasting time on things that should be delegated to others. Over promising while under delivering. Failure to establish and maintain a close relation with the banker. Or they just simply are not resourceful. Or not taking a proactive position in their industry by participating in associations and making use of educational opportunities.

Now on the other hand, there can always be circumstances that go beyond the realm of things you could have done differently. A good example is health. There’s never a convenient time to be sick or suffer serious illness. Certainly not when you are trying to start a new business or even a regular job. It sounds cruel to say it, but family concerns can also be a detriment to the best of efforts. It’s important to be surrounded with a positive and supportive environment. I can easily liken the beginning years in our industry to the early years of a young doctor going through their residency. Lastly, one must be positive and supportive of them selves as well. Many failed operators have actually been their own worst enemy.

Karl Jones

March 22nd, 2002, 11:13 PM
Karl.

James H. Joseph
Pegasus Chauffeured Motor Cars
Pittsburgh, Pennsylvania
jhj@pegasus-pittsburgh.com

March 25th, 2002, 02:32 AM
Karl,

Would you say it's safe to have at least 6 months worth of capital? I will be supplementing my full time income for any capital I require for my business when I initially start out. I'm just not sure when the business will not require any additional income from my full time job. Considering all marketing is done properly, etc.

Thanks.

March 25th, 2002, 07:20 AM
Number 1 - NOT ANSWERING THE PHONE!!

Number 2 - Paying too much for equipment.

Number 3 - Not having a business plan.

Matt Harrison
AAA Guaranteed On-Time Limouisne, Clinton NJ

March 25th, 2002, 03:17 PM
My top 4

(1) Don't answer your phone during business hours. If a customer can't get you, forget it. They call the next company in line.

(2) Don't answer your email everyday. People are sick and tired of the black-hole, email void. Ever send an email and get a response 5 days later? Practice answering every day and you will get more business.

(3) Run your service like a cab business. I remember working in Chicago seeing dirty limos, drivers dressed in jeans, no door opening, etc -- these companies aren't limo companies; just glorified cab companies.

(4) Reliability. Be on time, everytime. This translates into training and hiring good chauffeurs and operating a dependable fleet. Obviously, this is the biggest challenge and will impact your service level the most. Yes, easier said than done!

Good luck and let us know how you proceed!!

Michael http://limos.infopop.cc/groupee_common/emoticons/icon_razz.gif

http://www.limousinesonline.com/proudmember.gif

March 25th, 2002, 03:20 PM
You may also want to talk to Rob at Limos4You (Limos4You@aol.com) -- he started his company as a part-time venture similiar to what you describe. He probably has some good tips in this area.

He frequents the forum so stay tuned, maybe he can lend advice.

Michael

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March 25th, 2002, 06:08 PM
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Vic:
Karl,

Would you say it's safe to have at least 6 months worth of capital? I will be supplementing my full time income for any capital I require for my business when I initially start out. I'm just not sure when the business will not require any additional income from my full time job. Considering all marketing is done properly, etc.

Thanks.<HR></BLOCKQUOTE>

Vic,

It’s difficult to pinpoint since there can be a wide range in the types of market you’ll participate in. A lot will depend on the scope of your operation. This is why an accurate and honest forecast of costs needs to be calculated beforehand.

On a very basic level though, I would like to believe that six months should allow a determined operator a fair start, but I would be worried with any less than three months. But no one’s ever gone bankrupt behind having too much money in the bank, unless it isn’t put to good use. Once you determine the adequate amount needed to carry the company finances for X period, you might consider placing the excess funds as a separate cash reserve. If you can reduce your insurance premium by opting for a higher deductible, you’ll be able to take advantage of it. You might not get it so good right off, but that’s the theory behind the thought.

A greater liquid asset will take the strain off of an increasing positive cash flow. This is what you want because in the long term, cash flow is a prime indicator of your company’s financial health.

Karl Jones

March 26th, 2002, 01:47 AM
When I started my company 2 months ago, I didn't even have enough money by the time I was done with car payments, insurance, etc. to even make the mininmun deposit in my new business bank account. I had to use spare change for the last $2.00 on my business cards which was my last purchase.(Thank god the car came with a full tank of gas)Bottem line is, I took myself and those business cards and hit the streets. I contacted every limo company in the surrounding area willing to take all the jobs that they felt less desirable. I answer my phone at all costs and never turn down a job even if I have to shop it out and break even. If I have a morning run, I make sure the bar has orange juice, some muffins and a paper. If it's a family to the airport, TOY STORY is in my VCR for the kids...and if I have already charged the 20% grautuity, I don't take a cent for a tip as tempting as it is, without letting them know it was already included. Thats somthing they think about later and realize you double dipped on them. That 20 bucks will turn to 200 when they tell their friends about your honest and friendly company. Don't get me wrong, I am no where near ahead of the game but well on my way. So, yes having money in reserve is wonderful and very smart, but your professionalism and drive will be like having a million bucks. Good Luck