Funding to Start a Party Bus Business
The party bus industry is growing because consumers love the idea of being able to move around town and still enjoy the fun in the safety of a designated bus. Starting a party bus business requires a good understanding of the laws regulating bus operations and alcohol consumption. Funding the operation varies depending on how big you initially choose to go.
Before You Can Fund the Business
Financing options for any business often include a mix of personal resources, family loans, investors and small business loans. With a party bus, you can finance the bus itself but may need funding for other operating costs. Write a comprehensive business plan that describes your experience in running a business or involvement in the party bus or limo industry.
Develop a budget for startup costs and a five-year projection of operating costs, which include the bus purchase, amenities, bus maintenance, cleaning, marketing and ongoing permit requirements. Detail your marketing plan and advertising strategy.
Registration and Permits
Register your business with the secretary of state. Obtain a tax identification number and check with your state’s DMV to see if additional permits are required for operating a party bus. You may need special permits for alcohol consumption. Obtain all required permits.
Price Bus Options and Financing
Most companies that sell buses also offer financing just like car dealerships. When you purchase a bus, ask about financing options. If you are purchasing one bus, getting financing is easier than purchasing a fleet. Buying a fleet requires qualifying for several financing loans rather than one large loan.
Inquire with the bus financing department about its options for purchases of more than one vehicle at the same time.
Small Business Administration Loans
Go to the local SBA office and consult with small business counselors. This is a free service that reviews your business plan and strategically partners you with local SBA lending partners where you are a good fit. The most common SBA loan program is the 7(a) loan program that caps loans at $5 million. Fees vary depending on whether the loan exceeds $150,000.
Loan officers review the business plan, your individual creditworthiness and other assets before backing the loan. Terms are defined by the lender, but the SBA guarantees up to 75 percent of the loan, giving lenders protection against borrower default. As a result, lenders can be more flexible in lending terms, but they still seek solid credit history from their applicants.
Things To Consider Before Starting A Party Bus Business
Even though the party bus business has the potential to be profitable, the business itself isn’t just a huge party. You need to operate your party bus business just like you would any other business if you want it to succeed. So, before you purchase a used bus to transform into your next business venture, consider these things.
Before buying a used bus, you need to check with the secretary of state office and the department of motor vehicles in your state to determine what type of license and permits you need to own and operate a party bus business in your state. All states have different laws and regulations, so before you do anything else for your business, you need to know what you need to do to register your business, register a commercial vehicle that will be transporting passengers, what type of license requirements are needed to drive the bus, and whether any special permits are needed for the people you transport to consume alcoholic beverages while on board. Additionally, you should talk to the city’s government office in each city that you plan to operate your business in to see if you will need to complete regular vehicle inspections or obtain special parking permits to operate within the city limits.
Buying or Leasing a Bus
Your bus is your business, so when it comes to acquiring a bus, you need to weigh your options carefully. Leasing a party bus is a good option for anyone who insists on having all of the latest features on board at all times, because with a lease, you typically have the option of trading the vehicle in every few years. However, if you’re starting your business on a budget or you want to keep your overhead costs low, you might want to purchase a used bus that you can transform into a party bus. Sure, you could purchase a new bus, but purchasing a used commercial bus has several benefits. By purchasing a used commercial bus that is only a few years old, you’ll save a lot of money on the ticket price. This means that you may be able to purchase a more luxurious bus that’s within your budget or even more than one bus. Also, by purchasing a used bus and converting it, you can install the features that are most important to you.
Operating a party bus business means that you need to carry liability business insurance, as well as insurance on the buses that you own. Additionally, you need to make sure that your bus drivers are adequately insured. This way, if an accident does occur, your bus, all of your passengers, and anyone else involved in the accident are completely covered.
How to Start a Party Bus Service
Running a party bus service is like running a limo service, but with larger vehicles: The startup phase centers around finding financing, and meeting the necessary regulatory requirements. Once you’re up and running, you’ll have the opportunity to capitalize on special events such as football games, bachelor parties or concerts.
Individual tickets can be sold to the general public for a ride on a party bus to and from an event. A business might even consider renting a party bus as a means of transportation to a conference or other event.
Take a Road Test
Contact your state’s department of motor vehicles and find out what the requirements are for owning and operating a bus. If you intend to be the driver, you will need a commercial driver’s license with a passenger endorsement. Attend a training class and take the written and road test for driving a bus in your state.
Apply for Permits
Find out what permits you may need for your bus. If you intend to operate mostly within one or two city’s limits, you may need special parking permits or inspections in order to park and operate legally.
Get a Business License
Apply for a business license through your secretary of state. Your secretary of state’s office can also tell you if you need any special licenses in your state to operate a commercial bus service. Apply for an Employer Identification Number (EIN) if you intend to have employees, or a Tax Identification Number (TIN) if you don’t, through the Internal Revenue Service (IRS) website. Apply for a business tax account through your state’s tax department if you must charge taxes in your state.
Purchase or Lease your Bus
Buses can be purchased used or leased through other party bus companies. Customize your bus to suit your needs. If you are not familiar with party buses, take a tour of several different types to find out what features you would like to offer your customers. Leasing a bus is a good way to reduce your initial investment.
Purchase the Proper Insurance
Obtain the proper insurance for your bus and business. You will need liability insurance for both the bus and the passengers in addition to comprehensive, collision and accident insurance. If you are hiring drivers, they will need to be insured as well.
Develop a Pricing Package
Develop your pricing packages and services. Some party buses offer a host or hostess to help customers during their trip. Make sure that you account for all of your overhead before developing your price structure. Work with local businesses that may want to use your services, such as local pubs and restaurants, in order to cut the overhead costs.
After determining your overhead, you will need to determine how you need to charge and still be an attractive option to your customers.