How reliable are a limousine company’s wedding and prom bookings as future income?
Wedding and prom bookings are usually made well ahead, which helps with planning, but they are seasonal and mostly one-time. Their reliability depends on the deposits, cancellation terms and how the company wins the next batch. Look at past years, not the calendar alone, to see how much was lost between booking and the day.
Start with the booking calendar for the coming season and compare it with the same point in earlier years. Is the company ahead or behind? Then check the income statement to see how much of the revenue came from these events, and how much came from other work that fills the quieter days. A business that leans on a few weekends is more exposed to weather, school changes and a single poor review or one bad forecast.
Next, look at deposits and cancellations. Ask how deposits are handled, what happens when an event is cancelled or postponed, and how many bookings dropped out in the past. Make sure the deposits for future events are accounted for in the sale, since a buyer will be expected to provide the service that has already been paid for. Your lawyer and accountant can help with that.
Finally, think about where the next wave comes from. These customers rarely return, so the company depends on reviews, planners, venues and word of mouth. Ask which of those channels the owner has built, and which depend on one person. A future of repeat work is stronger than one of single events.
Key takeaways
- Compare this season’s advance bookings with the same point in earlier years.
- Check how deposits and cancellations are handled and recorded.
- Treat prepaid events as obligations that must be handled in the sale.
- Ask how the next group of customers will find the company.
Related reading
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat is an income statement?
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Business Development Bank of CanadaGovernmentWhat are financial statements?
- 04Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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