How to Set Up and Grow Your Driving BusinessWritten by Bernard on August 17, 2016
The driving and chauffeur business is a potentially huge market if you play your cards right.
According to Payscale, if you’re a Chauffeur or Private Driver, you can earn anywhere from $24,000 to $75,000 per year in the US—and that’s only working individually. If you’re working solely for one person (especially in places like Hollywood), you can make anywhere from $50,000 to $150,000 per year.
If you can expand and add a few more drivers to your new business, you could double or triple that.
Another important thing to remember is the increase in the sharing economy, especially with such services at Uber and Lyft. While it may be bad news for regular taxi cab services, it doesn’t have to be for those getting into the private driver or chauffeur services.
Part of the new sharing economy is the normalization of having a driver. What this also means is that those with greater financial capabilities will want to separate themselves from the ride-sharing crowd and ensure a certain level of quality.
Not just regular Uber cars with normal-looking drivers, but more beautiful, elegant cars with professional, well-kept drivers.
Instead of causing disruption in the industry, the new riding economy places more value on licensed, skilled, and professional drivers.
In fact, the amount of personal drivers requested by those with business expense accounts and regular consumers has been on the rise, with revenue reaching $16 billion in the US.
And that’s where you come in.
If you have the right skills and passions for driving and delivering quality in your driving, why not make a career out of it?
In today’s guide, we’ll look at how to not only start your driving business, but also how to succeed. More specifically, we’ll answer the following questions:
- What are the advantages and disadvantages of the driving business?
- What are the basics that I need to get started, including licenses, equipment, and knowledge?
- Once I have my basics, how do I grow my businesses?
We’ll work to answer all those questions and more today, so let’s start at the beginning.
There are many positive sides to starting your own driving business.
First of all, you’ll be able to enjoy those same wonderful advantages that all self-employed, freelancers, and small business owners do.
You’ll be able to be your own boss and set your own schedule. You can work where you want, when you want, and with whom you want. Although there are certain limits to this—especially if you want to have any sort of stable income—it’s still all up to you.
You are your own boss now.
Secondly, the amount of potential income is quite large, especially if you factor in expanding with other drivers. Steve Mariotti talks about a woman he met who made $90,000 by herself, even without having a strong business plan.
You can then set up your own driving business with other drivers and more cars and triple or quadruple that amount. It is really only limited by how much energy and time you want to dedicate to growing the business.
Lastly, seeing as for a private driver/chauffeur business it is easier to maintain a customer than to get a new one, you’ll be able to establish a relationship with your clients.
Although many clients prefer silence when they’re on their trip, or they’re busy on their phones, there are also many others who enjoy conversations. You may end up getting to know them quite well, and the social benefits of that means it’s less of a job and more of enjoyable work.
Of course, as Poison once sang, every rose has its thorn. And with the driving business, there are a few important thorns to consider.
First of all, as with all self-employed, freelancers and small business owners, you’ll have a lot of responsibility for the well-being of your (and your team’s) financial stability. This means that all those responsibilities you never had to bear at your regular job (sales, marketing, calls, emails, reservations, etc.) will be on your shoulders.
If you don’t do anything—or you don’t do it well enough—your business could be in danger.
That’s why, even though it’s an advantage that you’ll be free to choose when, where, and with whom to work, you’ll still need to consider the fact that it’s a business, and it’s all your responsibility.
Another disadvantage is the high up-front costs.
Bill Goerl, in discussing the limousine business, estimates that you’ll probably need about $50,000 to $100,000 to start a business. This includes your car(s), licenses, business cards, website, and other marketing needs.
If you don’t have these kinds of funds, it will be difficult to make it.
Lastly, the business of being self-employed can be quite tricky and unstable in the first few months.
This is largely due to the fact that you’re starting out new in this industry, and you don’t yet have the customer base and knowledge to get you to a firm, stable income level.
This will all change, of course, the further you go ahead in the business, but it’s important to remember these disadvantages in the nascent stages of your career.
Cover your basics
OK, now that we’ve covered the usual goods and bads about the business, let’s look at the basics you’ll need to cover before you even get your first customers.
Any good business will require an equally good business plan. You can get some great (and free!) business plan templates here if you don’t already have one.
Your business plan has to cover quite a few things, but the most important are to understand who your competition is, how they operate, what their strategy is (if you can find it out), and how much they charge.
The best way to do this is to perhaps use their service yourself—although this may be expensive. Nonetheless, you may try to call (and have your friends and family also call) them and see if you can get the prices and other features that they offer.
Secondly, you’ll also need to know what your market is.
Not every neighborhood or area will be equally lucrative. Generally, business and suburban areas are greatest for their usually upper-class populace.
You’ll also have to know what the trends of the market is—for limo services, high school prom is a lucrative event, but it’s only for two months of the year max. In order to have a good business plan—and necessary goals for your new business—you’ll need to get your research done.
Licenses and Insurance
In the UK, you’ll probably need to get a private hire vehicle operator’s license, or even a public sector vehicle license if your limo can seat more than 9 passengers.
Beyond that, you’ll need to get the appropriate insurance. This is not just the basic car insurance, for which you’ll get a wide variety of options and plans.
For-hire livery insurance (in the US) can go from $5,000 – $10,000 a year, usually for those new to the business. The woman, Angela Tebon, that Mariotti met had an annual insurance cost of $4000, and she’s been in the business for many years.
It’s also important to find out what insurance you can get before you decide on the car to purchase, as the car can affect the insurance price.
Equipment – necessary features
Now, to the most important part of your business—your car. The car that you get will be important, and it really depends on what kind of driving business you’ll want to start.
But for those going for the more elite customers with bank expense accounts and certain image requirements, you’ll probably want to get a Town Car or stretch Limousine—or even something much fancier.
It doesn’t really have to be new, but it should look good—after all, people hiring drivers don’t want to be driven in something embarrassing. You can do a Ford or Vauxhall, but even better would be a Mercedes, BMW or Audi.
Beyond that, you’ll need to have the necessary features in your car. This includes things for yourself, such as GPS and climate control, but also such new (and innovative) features, such as USB ports, free wifi and even a tablet to watch news, view the route or browse the internet.
The innovative options are unlimited, but they would add immensely to your customer’s overall experience.
As with everything else, you’ll need to have the appropriate knowledge in order to really succeed.
For personal drivers, you’ll need to have a very good mental map of the area you’re driving in, especially in times of traffic. It’s good to know when traffic is worse and which roads to use or avoid.
Every good driver gets this knowledge with time, but for someone in your profession, you’ll need to have this information accessible.
Beyond that, you’ll need to have or learn the interpersonal skills (patience, persistence, temperament—not road rage!) to be really good at the job. Usually, chauffeurs and personal drivers have some experience working with limo or personal driver companies.
If possible, start with those sorts of companies to get both experience and contacts for potential clients.
As we mentioned above, you’ll have all the responsibilities for taking care of all the aspects of your new business, and one of those is accounting and invoicing.
You could hire an outside accountant—and you definitely should if your business is growing rapidly with many cars and drivers—but if you’re just beginning, you can use online invoicing software such as InvoiceBerry’s.
The software lets you auto-fill in your regular invoices, keep track of and manage all your expenses, and is wonderfully easy and simple to use for its power-rich features.
It is important to remember to always appear professional.
Just as the car you’ll purchase is important, so is your invoice. The software allows you to customize your invoices and even include your own logo, making you look that much more professional.
Now that you’ve got your basics covered, let’s move onto seeing how you can grow your business.
There are a few options in how you can get your first customers.
As we mentioned above, one way is to build up both your knowledge and list of potential clients by working (full- or part-time) with another personal driver company.
Here you’ll have the advantage of having some income while you’re building up your knowledge and customer base.
Another option is to subcontract yourself out to other companies (but not working for them solely).
This means that you’ll get a reduced fee for your services, but that your workload will be full. This is similar to the other option I mentioned, and there are many drivers who work solely through subcontracting.
If you choose to not subcontract or work for another driving business, then you’ll have the responsibility of building up your own driving identity, through your website or through the use of social media.
Be warned, however, that this route can take quite a long time, as contacts are usually given through word-of-mouth or repeat business.
Another avenue is to get involved with driving networks where the drivers are willing to share job leads and help each other out in other ways.
One good way to get yourself visible is to use technology appropriately. Here we mean creating a website that will help answer the following questions:
- Where are you located?
- What area do you usually, or are you willing to, cover?
- What are your usual rates?
- How can I contact you?
A good website answers questions before the visitors ask them, so you should cover these basics.
Also, your website doesn’t need to be particularly fancy or with blogs or constant updates—just nice pictures, text, photos (including yourself and your car, of course).
Another important thing is to tactically use social media. Social media is a great (and generally free) marketing tool. Most people nowadays, especially the millennial generation, go immediately to Facebook to check on a company’s services, hoping to find some reviews online.
Again, your involvement doesn’t need to be particularly deep online, but the better you are at that, and the more innovative, the better your results will be.
Many small businesses forego a website in favor of a Facebook site.
You may also consider (especially when your business is expanding) creating a simple mobile app for new and current clients to easily find and book your services. This software could show your availability, area, rates, and much more.
Setting rates and what to watch out for
The rates for limo and personal driver services really depend on a lot of factors.
Many drivers charge by the hour, and they can go to something around $35/hour (such as this one in Irving, Texas) to $65/hour (in Los Angeles) for bigger businesses, or somewhere between $15/hr to $20/hr based on your location if you’re solo.
If you’ll be working for one family or individual exclusively, you can charge about $60,000 to $150,000 per year. However, you should remember that this will probably require other tasks and take about ten to twelve hours per day.
The rate really depends on the area and what the market value of your services will be. Nonetheless, you should add a minimum time (usually three hours) and other standards to your rates.
There are some other important things to watch for.
When you’re new, you may be eager to take any and every job. However, this can be your downfall. You should be careful of taking offers too quickly on the phone. Be wary of vague pickup/drop-off addresses and times, as they may be much further out than originally imagined.
If you aren’t careful, you may spend 3 hours in traffic, going from one part of the city to the other, for a three-hour job that may not have been worth it.
When taking phone reservations, be meticulous about the address, time, postal code, and especially the price, being careful to consider potential traffic conditions and event (pickups after a long night of drinking could offer a messy situation in your backseat). Charge accordingly.
To sum up:
There are many lucrative opportunities if you’re considering a career in the personal driving business. They include:
- the freedom of being your own boss and setting your own schedule
- large potential income, especially if you expand with more drivers
- creating strong relationships with repeat or sole customers
However, it’s also important to be aware of the disadvantages, which include:
- the immense responsibility of working for yourself
- the high up-front costs, which could go from $50K – $100K
- potentially unstable income and business, especially in the first few months
It’s important for you to cover your basics:
- create a good business plan that includes competition, costs, and market research
- get the licenses and insurance necessary for your location
- consider which car to purchase, and fit it out with convenient, interesting, and innovative features
- get the appropriate knowledge, usually through working part- or full-time for a driving company first
- use proper accounting practices, easiest with online invoicing software such as InvoiceBerry
In order to grow your business, you should:
- get your customers either by working at a driving business, subcontracting yourself out, or joining a personal driver network
- get a website or, even better, create a Facebook or other social media page for clients to find you easily
- set your rates based on your location, and watch out for the pitfalls that usually affect new personal drivers
With these comprehensive tips, you’ll surely have a successful and expanding personal driving business.
Any other tips or comments that we may have missed? Let us know in the comments below!