How can I tell if a limo business is actually profitable?

A limo business can look profitable on paper and still leave a new owner with little. The statements show what the owner chose to record, and the owner’s own work, vehicle choices and habits are folded into them. Your task is to see how the business earns its money and what it would cost you to run it the same way. Ask for records that let you test each point below.

Where the revenue comes from

Ask for revenue split by type of booking: corporate accounts, airport runs, weddings, proms and other events. Each behaves differently. Corporate work can repeat, while events depend on the calendar. Find out how many customers account for most of the work and whether any of them is tied to the owner personally. A business that leans on a single account is more exposed if that customer leaves.

Seasons and vehicle use

Month-by-month revenue shows how seasonal the work is and whether the business carries costs through the quiet months. Then ask how much each vehicle works. A sedan that is booked most days is a different asset from a large vehicle used a few weekends a year. Compare each vehicle’s income with its upkeep, insurance and fuel, and ask which ones the owner would not buy again.

People and the fleet

Check whether the owner drives trips and whether that labour is paid for in the accounts. If you would need to hire someone to cover those hours, the profit may be overstated. Look at how chauffeurs are paid and how long they stay. Then look at the age of the fleet. Replacing vehicles is a real cost, even when it falls outside the years being reviewed.

Putting it together

• Ask your accountant to restate profit with a fair wage for the owner’s work.
• Compare bank deposits with reported revenue.
• Ask for booking records, not only summaries.
• Ask what the seller expects to change after the sale.