Ok, you’ve decided you want to be your own boss and start a business. You’ve even narrowed it down to starting a party bus business, so now what?
Starting a party bus business is clearly not impossible as others are operating, albeit having the right information, and the right people surrounding you is key. In fact, a party bus company doesn’t have to be hard or overly time consuming to start, if you spend the time and energy to plan and map out the pre-game, your operating business plan, and your post opening operation.
It’s important to understand as a small business owner, you’re likely to find yourself wearing many hats requiring several skill sets executed (almost) perfectly to really thrive and become successful. This is especially true during your first couple of years in business, unless of course you have an unlimited budget and are able to hire the experienced professionals needed for each task. On an average day you can expect to start out in the morning acting as a salesperson, booking events and answering questions from prospects interested in learning more about your business, on a weekend or any given night, you’re a driver (and possibly a babysitter depending on how much liquid “fun” is consumed), and at the end of the day, you’re a bookkeeper/accountant trying to determine if the revenue generated is sufficient to grow your party bus business.
When you’re not answering phones, driving, or banging your head against all the bookkeeping entries and balancing of accounts, you’ll also be developing (or directing) your website so it’s effective at delivering the message and look you want. You’re also likely to be “clean up crew” to make the party bus ready for the next run, and maybe fix a few things that didn’t quite “make it through” the last run. And let’s not forget regulatory compliance officer to make sure you’re fully compliant with local, state and/or federal law and regulatory regulations that come with for-hire livery service.
Step one in the pre-game is understanding what laws you’re going to operate under. For this, it’s important to note that if you’re receiving advice and information from a distant party bus operator, say from a forum for example, the laws and regulations for them may be VERY different than what you will be faced with. For example, if you’re planning on being a Texas party bus business, you may easily never have to leave the state, which means you don’t need to have a federal operating authority (most of my Texas party busses don’t have a federal authority), while if you’re in Indiana or Wisconsin near Illinois, you’re likely going to cross a state line with your party bus to go to Chicago Illinois, and if you plan on crossing a state line you’re required to have a federal authority.
As a side note, I get asked often if a federal authority is required if a party bus crosses state lines only once in a while. The answer is a clear yes, and in fact, the fines are SO high for failure to have a federal authority if you cross state lines that you should never even consider violating the law, much less “taking a chance this one time.” (we’re not talking about a relatively small $500 or $1000 fine, we’re talking about serious money that won’t just ruin your day or week, it’s high enough to possibly ruin your entire year).
As part of the first step in determining if you will want to cross state lines (assuming it’s up for debate, as often the choice is clear based on the business location), is finding out the insurance requirements for both. State and federal rules regarding insurance are often different (especially so for smaller busses) and for example, if the bus insurance requirements for a state authority have a $1,500,000 requirement of auto liability as a minimum and the same party bus has a $5,000,000 minimum requirement for a federal authority, you can anticipate the federal authority costing quite a bit more than if you don’t cross a state line and only (assuming it’s the appropriate level all else being equal) require a state operating authority.
The takeaway is if you’re not sure if you will cross state lines, and for many it’s an open question without a clear cut answer, you’ll want to first find out if the insurance requirements are the same or not. Once you know the insurance requirements, you’ll be able to determine the insurance cost, and that will help you determine if it’s viable to cross or not. For many entering this industry, it’s not fully apparent why it’s important to know the insurance cost above all else, and the simple reason is insurance is such a high cost component to operations, that it’s often the deciding factor for many decisions, including how fast to grow and radius of operation.
While it may seem like the actual party bus used in the business is the next most important part of starting, I proffer that the person driving the bus is the next (or maybe even the top) consideration. Generally speaking, you’re going to want a driver over the age of 25 and under 65-ish, no tickets in the last three years (including things like a seatbelt violation, as that’s considered a big deal because of the safety aspect of it), and no at-fault accidents, especially one that caused an insurance payment over $1000. Also, and comes as a surprise for many is an insurance claim paid for a non at-fault event (ie deer strike that caused vehicle damage) over $1000 in insurance payments may increase your insurance cost.
So, in other words, having the right, or at least avoiding the wrong driver can greatly influence your insurance cost. Again, because party bus insurance starts out as such a high cost component, anything that increases it, especially things that greatly increase the cost can mean the difference of making lots of profit or maybe making zero profit.
Beyond the insurance cost factor with drivers, the ability to drive a party bus in such a way as to balance the keeping the passengers safe with keeping the passengers happy is a skillset that most simply can’t deliver. A party bus driver is one with a combination of a highly tolerant with thick skin bartender that people enjoy going to see with the maturity and awareness of a top performing safety officer appropriate for holding the lives of many people in their hands and decision making. Any departure from BOTH skill sets means the party bus business is going to lose out, and it’s just a matter of how much and when.
I’ve known people who state you can train someone to be safe, and you can train someone to be client centric, albeit you want to make sure that not only is the driver trainable, but also that you have the skills to actually train the driver (or yourself if you’re the driver). I have found that (and as a rule you can fill in any company type here) ___________ business has a greater chance of success if the price isn’t rock bottom and the customer service is at or above the best in the respective market. In other words, great customer service and delivering a fantastic experience will serve you much better and give the best chance of success over trying to be the “low cost choice” in this industry. Sure, there are some industries that price is really the only factor, albeit the party bus business is not one of them. People who are looking to impress their friends and have the time of their lives (ie marriage, company parties) view the cost as a secondary consideration over the more important point of having a great experience and enjoyable time. This is why reputation is so important and why you will want to make sure your reputation develops into the top service provider in your market. A great reputation will mean a higher demand, which will mean a higher amount you can charge, which means it’s easier to keep the best reputation because you can afford to spend more on service, training, and party busses. It’s a self fulfilling feedback loop that can propel you to riches, or crush you into losing your investment, so manage your reputation and customer experience with careful deliberate care.
The next consideration is the size and type of bus. Generally speaking, a party bus that holds no more than 15 people will cost much less to insure than a larger bus because the minimum insurance requirements may be vastly different. Plus larger busses require the driver to have a CDL, while smaller busses do not.
And capacity may vary from state to state. For example, one state may use the original capacity when the bus was built, while others may use the amount of seating now, and even with states that use the amount of seating now, they vary in how much space is allocated per person. In other words, a 16 passenger bus may be only a 15 person bus in another state. The difference can be HUGE in terms of requirements. I’ve had clients that bought a bus in one state, drove it to their home state to operate in, only to find the bus they thought was a 15 person bus was actually a 16 person bus in their state and required a CDL to operate (which they didn’t have) and a LOT more insurance because it wasn’t a mini-bus.
The best rule of thumb, is to buy a bus operating in your state at the size you want to operate in. That’s your best chance to get the “correct” bus if you’re brand new to the industry. Otherwise, be sure to do your homework and have a high level of confidence you’re willing to live with in case you’re wrong if you buy a bus from another state. One possible way to help mitigate any issues buying a bus from out of state is buying it from an ongoing party bus operator with the stipulation that the bus will pass a DOT inspection in your state and have a capacity rating desired. That of course may be easier said than done, but it’s an idea that may help in the right situation.
There’s no hard and fast rule for what size bus you should start with. The general rule is starting small and working your way up. However, your given situation and market demand may make starting with a larger bus more appealing. For example, if you (and/or your driver) already holds an acceptable CDL with passenger endorsement (and/or air breaks) and the demand for a larger bus is relatively higher, buying a larger bus can make economic sense. Sometimes, the decision is based on bus availability, however, unless a larger bus that’s available is so far below market value that you think you could “flip” the bus for a profit, it’s probably not enough of a discount to warrant buying it absent all the other pieces of the puzzle coming together first.
Website. In today’s age, websites generally fall into two camps, with a lot of gray area between. The first is a website that generates revenue for the company, and the second simply is a cost of doing business and doesn’t actually generate income. The website you’re reading right now falls into the first group as you likely imagine if asked. At the time of writing, I haven’t spent money on advertising 1 Reason Insurance for party bus or any other kind of business insurance since 2017. That is subject to change if I add more insurance agents, albeit right now, I’m so busy that without adding agents, I have zero incentive to spend money advertising.
You’re experiencing why this website works for me too. By providing useful information, people spend time reading and searching any given website to gain the information they seek. Even when someone isn’t interested in obtaining insurance from me (for example, they’re located in a state I don’t serve) the eyeballs and time spent on this site informs the search engines that this is a place for people looking for party bus information. Concurrently, when someone is looking specifically for party bus insurance, this site will rank high.
Unfortunately for those that don’t spend the time, energy, and effort to inform their potential clients the value they add, their website is likely to be nothing more than an expense they pay each month, with little more than a few pictures, the name of the party bus or other type of business, and maybe a contact form and/or phone number. Having a website that drives traffic and people interested in your product is one of the most effective and in the long-term, lowest cost forms of marketing. Plus, it’s a great source of pride and positions your business as the leader in the space. It’s no wonder that I get people calling me for insurance almost every day from every part of the county. It’s important to note that if you’re a local service provider like almost every party bus operation, and not nationwide, the same rules apply and it’s even easier to become the leader in your market with the proper amount of website content. Most search engines give a priority to location, especially the businesses that location matters (ie there’s not a lot of point to have a search result for places to give a haircut 100 or miles away, and the search engines are well aware, so if your site is the top in your location, you can expect to be ranked highly, and easier than say this website that has to compete against every other insurance agency in the country). Bottom line, you may not have the budget to do it right away, albeit you should plan on making and maintaining a top performing website, or in the alternative, maybe don’t have one at all because if your site doesn’t make your phone ring, it’s a waste of money.
Accounting software is a big deal. Waveapps.com is free and works well for the average one bus operation. We offer Quickbooks at a discount, but the truth is, for most small businesses, Waveapps is the way to go (we make a few nickels on offering QuickBooks, albeit we make nothing on Waveapps).
Lastly, scheduling software. At the time of writing, we’re working on an online scheduling solution for our clients that they can use with a client-facing scheduling and booking service. We’re likely at least six months or more away from offering it, so the next best thing is to use one of the many online booking offerings out there. Some clients use nothing more than Microsoft or Google calendaring, and that may work well for you if you’re small enough. Once you get many drivers and vehicles, that won’t be a viable solution unless you have someone really on top of everything all the time.
If you would like to discuss your plans for a party bus business, or how you can improve your current one, feel free to reach out. Of course, I’m happy to talk about insurance, albeit you’re welcome to call regardless of why and you don’t have to buy something to pick my brain.