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How to Become a Limo Broker
You can start as a limousine broker on a modest budget working from home. Your business will provide a valuable service to customers by matching them with limo providers that meet their needs for time, place and budget. Many larger limo company owners started as brokers and later invested in vehicles after developing a customer base and establishing a business credit history.
Create a Business Plan
The first step in your journey will be to write a business plan that explores what you want to do and how you will get there. You will explore how you will find and serve customers, what it will cost to get started and how you will earn money to meet your expenses and be profitable. You will need this if you will be applying for financing for your business.
Determine Your Legal Structure
Talk to a lawyer or business consultant to determine if you should form a corporation or limited liability company. This will protect you as an individual from legal and financial liability if a customer is injured and sues both the limo provider and the broker. There may also be a small business advisory center in your area that can assist you in the planning stages.
Obtain an Employer Identification Number
Apply online with the IRS for an employer identification number. You may not hire employees, but you will need an EIN to open a bank account and to file corporate income tax returns.
Obtain Business License
Obtain a business license from your county or city, if it requires this for a home-based business. Research the other regulations that apply to your business and ensure that you file everything needed to operate legally.
Seek Help Preparing Contracts
Draft two contracts with the help of an attorney, one for your agency agreement with limo providers and the other for customer reservations. Both should limit your liability.
Open a Bank Account
Open a business checking account in your company name. Your bank may require documentation, such as articles of incorporation and the IRS letter assigning an EIN number.
Set up a Credit Card Merchant Account
Set up a credit card merchant account through either your bank or a third-party processor. Acquire a credit card terminal or software that permits card processing through your personal computer.
Purchase Business Liability Insurance
Purchase a business liability insurance policy with coverage of at least $1 million. You won’t need commercial automobile insurance, but you’ll need liability insurance in case you’re sued.
Contact Limousine Providers
Call limousine providers in your area, including those with specialties such as airport transport or party buses. Encourage them to form a brokerage relationship with you by stressing the importance of multiple marketing channels. Commission rates are negotiable, but brokers typically earn about 20 percent. You will need to have a good plan to entice them.
Join a Limousine Association
Join the limousine association in your area in order to network with owners and develop additional business opportunities. In some places, this will be a joint limo/taxi organization.
Set Up a Business Telephone
Order business telephone service, which can be done through a voice-over-Internet-protocol, or VOIP, carrier to economize. Consider getting a toll-free number if you plan to market your services in a large geographic area.
Build a Website
Register a Web domain name, sign up for Web hosting and create a professional-appearing website. Use a website designer unless you have strong creative and technical skills. Most customers search for limo services on the Internet, so you don’t want to skimp on this critical marketing tool.
Use Search Engine Optimization
Begin experimenting with search engine optimization, or SEO, techniques to drive more customers to your website. Make a small purchase of a paid search service. You can refine this approach and adjust the budget after reviewing initial results.
Advertise in Key Channels
Place advertising in local yellow pages directories, if it fits within your budget. Start with inexpensive ads in multiple directories and monitor the results through customer inquiry. You’ll be able to improve the cost effectiveness of your ad placements the following year. Find out where customers look when they need a limousine and make sure you are listed there.
Build a Facebook page and set up accounts with other social media platforms like Twitter and Instagram. Prepare content often and keep your pages updated.
You don’t want to wait on your 20 percent commission. You’re in a stronger position if you deposit the customer’s funds in your account and forward 80 percent to the provider. Establish a long-term relationship with customers. If they want to book another trip, make sure they call you, not the limo provider. Your services should include alternative vehicle types, such as airport cars, shuttle buses and party buses.
A minority of states and cities regulate limo brokers, so check to see if yours is among them. For example, New York City requires a $500 broker’s license and a $50,000 surety bond.
- “Wheels of Gold: A Complete How-To Guide for Starting a Million Dollar Limousine Business”; William J. Goerl; 2006
- New York City Taxi & Limousine Commission: Licensing: Agents / Brokers
- New York: Get a license to drive a taxi or livery vehicle
Eric Petty owns a small firm that represents buyers and sellers of businesses. He began writing professionally in 2011. He is a Florida-licensed Certified Public Accountant and Real Estate Broker, and a Certified Merger and Acquisition Adviser. Petty earned his Master of Business Administration in finance from the Wharton School at University of Pennsylvania.