New Limo Business/OWNER IS THE DRIVER/Need Advise

[Vintage Limos]

Partnerships: the only ships that don't sail.

[O5EXECL]

Partnerships: the only ships that don't sail.

right on the money with that one !! =)

[Geoff Levine]

We recently partnered with a friend to start a limo business. He's had a limo business before but when the economy crashed back in 2008 the business went into a major slump. Now he wants to start it back up but with a new company name and of course with us in it. I'm assuming he needs the capital to help start up the business.

I have so many questions....

Our partner IS the driver. He is the only one. He mentioned that he would add up his hours of driving so that he can get paid at a later date. How does that work? I'm use to the owners getting a percentage AFTER all bills/expenses are paid as a distribution and transferred into their personal accounts. I'm not understanding how this works.

Can someone help explain this to me? Thank you in advance!

Mel from Texas....

I think I spoke to your husband and advised him of howuseful/helpful this forum is. If so, I'm glad to see you made it here to pick our brains. I'm just an owner/operator of a small company(1 limo, 1 sedan), but there are some very knowledgeable guys/gals here who are generous enough to share their experience.

I strongly agree that the driver(chauffeur, you'll learn the difference) should be paid a standard pay per job that is separate from any kind of partnership agreement. Someone has to drive the limo. You have to pay him/her. It doesn't matter if it's you , your partner, or some guy that answers a craigslist ad. I have found that an owner/operator will treat the limo much easier and also have more pride in good customer service, so it sounds like you're off to a good start with him driving. Good luck!

[Cedar Mill Limousine]

You are confusing splitting up stockholder profits and position salaries. To keep the arguements down, I would make sure all positions have a set pay before the business is started. Then whenever a raise in salary is requested, it would have to be voted on by the stockholders. If a stockholder wishes to not cash the checks in order to help the company, that is his/her choice - but that's a pretty big risk. This is the problem of partnerships - "I am doing more work than you"! The best way to solve it is to pay everyone for their time. If a stockholder feels that someone is getting paid too much for their position then it is time for a stockholder meeting. Gets these things figured out before you start the company. Every thing should be written down and signed.

[Cedar Mill Limousine]

You are confusing splitting up stockholder profits and position salaries. To keep the arguements down, I would make sure all positions have a set pay before the business is started. Then whenever a raise in salary is requested, it would have to be voted on by the stockholders. If a stockholder wishes to not cash the checks in order to help the company, that is his/her choice - but that's a pretty big risk. This is the problem of partnerships - "I am doing more work than you"! The best way to solve it is to pay everyone for their time. If a stockholder feels that someone is getting paid too much for their position then it is time for a stockholder meeting. Gets these things figured out before you start the company. Every thing should be written down and signed.

Everything a "stockholder" does "for the company" can be hired out and therefore has a value. If you are unsure of that value then start getting quotes to have it sub'd out.

[excaliberlimo]

You are doing the bookings? Tell him you want 20% per booking. Better yet, don't do a partnership, in 16 years I have never seen one work.

[Limo Insurance King]

It would save a lot of time if they do as Mike suggested and determine if this plan is going to generate enough revenue to keep three people with their hands out happy. Keep in mind that it is going to be north of three years before anything is put into those open hands more likely than not.

[Limo Wire]

Seems to me the former owner is looking for financial help and wants to drive and get paid for it. Besides driving what else does he bring to the table? If you are the money I would say no partnership, if he wants to drive, you will gladly pay him, maybe you give him a 10% interest in the company, but it just seems to me he is looking for a bank. I think I would run from this deal.

[Bigdan]

Im thinking if everyone is pulling payroll then it may take up all of the "profits" to pay it out. It seems it would be hard to show the company is profitable if you go to get a loan for additional cars or other resources and this is important to the few companies who will finance limos. Just my thoughts although I am not the most experienced at this. Im sure someone can straiten out what I'm trying to say.

[Cedar Mill Limousine]

Im thinking if everyone is pulling payroll then it may take up all of the "profits" to pay it out. It seems it would be hard to show the company is profitable if you go to get a loan for additional cars or other resources and this is important to the few companies who will finance limos. Just my thoughts although I am not the most experienced at this. Im sure someone can straiten out what I'm trying to say.

I completely agree...but if they are already having issues about money...

[Bigdan]

It just seems like a bad idea all around, dont think they will be convinced either because they truly believe in themselves and too excited or they are affraid to call it off.

[Vintage Limos]

We recently partnered with a friend to start a limo business.

I'd put money on it that in less than a year you will not be friends anymore.

[Cedar Mill Limousine]

I'd put money on it that in less than a year you will not be friends anymore.

I realize their situation is a little different (so I am not arguing your point), but my brother and I partnered together in 2008. I bought him out in 2010. We had our arguments. We are on very good terms - but there has to be communication before the company starts rolling. You can do it without anyone pulling a check. But I would make a list of all the jobs that all of you will be doing along with what the pay would be for them. You can decide whether or not to pay each other for those jobs or put it back in the company. Honestly, depending on your business plan, it will probably be very tough to keep the company soluble if you are paying out on all the positions. But this will be what kills your business (and friendship) if it is not clear from the beginning. Maybe put a cap on not-payed hours per week or month. Keep track of all positions and then when someone puts in the overtime they get payed. There are a million ways to do it - you just have to have it clear and written down from the start. My brother and I did not take a single penny from the company in 2 years. Without that - the company would have never survived (I still do not pay myself for anything).

[Elegant Limousines of Palm Coast]

This is why a husband and wife team like ourselves works great. My wife runs the office, I fix the cars and we both do the driving and we have one chauffeur. After 6 years my wife will start taking a pay check. That is this year. To get into this business a lot of sacrifices have to be made. Like a lot of hard work and long nights with no compensation. But some day it will all pay off.

It sounds to me like you and your husband should own the biz and just hire him as a driver as that seems to be all he is bringing to the table. Good luck.

[PTLimoNC]

Either everyone should be getting a salary, or no one should be getting a salary. Not one of these jobs is more important than the other. It takes everyone working together to make it work. Trust me, if one is getting paid, and the others are not, then there will be hard feelings in the end. Honestly, I think you and your husband should own the business, and just hire him to drive for you. If he doesn't want to do that, and insists on being a partner, then all are equal. If this happens, and no salaries are paid for a while, just let him earn the tips that are given. I would not add them in the contract price, I would let the customer decide on what to give at time of service.