Why the Hippie Limo Went Out of Business (A Subjective Retrospective) – 3/12/2014
Near the end of last year I announced that the Hippie Limo was going out of business. Even though we had a good start, strong marketing efforts, great reception by the media, top reviews on WeddingWire, amazing client photos, competitive market pricing, and a good example set by the demand for vintage VW Limos elsewhere in the world, lack of business forced us to close up shop. Since that sad day many people wanting to start similar businesses have contacted me asking if there were other reasons prompting our closure. There were actually many reasons behind the decision and below are some of the most important business-related ones (other than failure to turn a profit, of course). Keep in mind that if I had been bringing in revenue well in excess of the costs, time and other issues I describe below then I would have remained in business:
Accelerated Deterioration & Damages
- Taking our Samba out in rain and other weather that I would otherwise have avoided and driving it more miles than I would have liked caused light surface rust to develop in areas as well as added unnecessary stress to the drivetrain. Given the value of this classic car and the depreciation resulting from weather and regular driving, I was actually loosing value every time I took it on the road.
- Drunken wedding parties, their guests, and other customers with less than careful habits inflicted quite a bit of damage on our Samba over 3 years. One broken door lock, two upholstery tears, three trim damages, a paint scratch, two paint chips, and one large bondo crack – all from different wedding parties – were top on the list. The limo industry projects some level of damage for 1 out of every 8 “higher risk” bookings with damage requiring repair in 1 out of every 20. Bachelorette/Bachelor parties, Guys Nights Out, and Proms represent some of the “higher risk” bookings for damages. In my experience, bookings that follow a Wedding Reception are very high risk since the atmosphere is charged with intense celebration, high emotion, increased adrenaline, and copious amounts of alcohol. This heady combination seems to produce a potent set of damage-inducing endorphins – especially in a couple’s entourage and guests under 30 years of age! The interiors of modern limos are designed to be durable and relatively cost-effective to maintain and repair in the face of these risks. A comparatively less bullet-proof vintage interior which requires considerable effort and investment to keep clean and repair or replace is not up to the challenge. Regarding paint and exteriors; paint matching, touchup, and dent repair cost far more on a vintage car than they do on a modern limo. A staggering amount of my budget every year went to basic damages. Sadly, I have yet to be able to afford to repair the body damages since I made less than one cent an hour over 3 years in the most optimistic calculations.
- Insurance was a huge part of my overhead. Commercial insurance, if you can get someone to insure such an oddball business, will run about $3600 for six months. There are a couple of reasons for this cost. Insurance Underwriters are far less willing to take a risk on a company with a single vehicle because if that vehicle goes out of service there will be no revenue until it is repaired. This represents a risk to the Underwriter in terms of getting paid. Furthermore, a classic vehicle doesn’t easily fit into the “checkboxes” on the applications, therefore your form gets automatically kicked into the high risk category.
- Vehicle cleanup and polishing was an unexpected drain on time and money. You can’t just hose off the finish on our Samba like you can on a modern limo. The high quality paint and shine requires a great deal of special care using high-end products to clean and maintain. At a minimum, cleanup after a ride would take 1 hour (road dust and grime alone is very noticeable on a high shine, never mind the dirt from customers getting in and out at different locations as well as for photos). After rain or other weather conditions I could spend up to 3 hours cleaning inside and out. That is a lot of unpaid time during which money is also lost using expensive products.
- Marketing through print publications, events, social media, and other routes was very costly – nearly half my budget. And that is just cost in raw dollars and doesn’t count the many, many hours I spent creating materials, doing web cross posting, writing my blog posts, and carrying out direct marketing to get and keep a high ranking in search engine results (and 70% of my business came from web searches).
- Oh, and let’s not forget the repair costs mentioned above.
Market Interest & Intent to Pay
- Despite marketing to a very broad range of customers, nearly 80% of my business was from people with VWs in their past or in their family histories. As I have often mentioned, vintage V-dubs play a huge part in the histories of families in the UK and even Europe where air-keweled VWs (and limo services using them) have been crazy popular for the last 20+ years. In the US there is a very small percentage of the population with a fond and personal attachment to these cars, and it is a number that is aging and/or declining rather than growing (at least outside of California, anyway). Overall that means there are relatively few potential customers with this trait – a trait which apparently is very important to my business.
- Though EVERYONE (numbering in the 1000s over 3 years) told me they loved the idea of my service and my Samba, very few committed themselves to actually paying for it. The assumption apparently was that a Hippie Limo should have hippie pricing. Though I was priced about the same as most modern non-stretch luxury SUV limos (in the UK clients pay more for vintage VWs than modern stretch limos, by the way), the majority of people inquiring about my service did not seem to think it was worth the cost as compared to even a small limo with neon, bar, and other luxuries. I discovered that limo customers come in two varieties with no middle ground: the kind who dream of a classic car and the kind who fantasize about the stretch Hummer (if price were no object on either). In the Denver market the only classic car services besides mine were of the vintage Rolls Royce Silver Cloud and Bently BlueGray variety, which charged about $160-$180 an hour (taxes, fees, and gratuity included). These beautiful classic and classy cars received only occasional use according to their owners – who were also large Limo companies with stretch Hummers.
- On the subject of rates, I tinkered with them over the years in an effort to see if it affected either my revenue or my clientele. My initial rate was $125 an hour with a standard 3 hour minimum. That year I had very few clients hire me . . . 3 weddings in the season to be exact. The bookings were for higher-end weddings and each was for 3 hours. Two lessons came from this experience: 1) I had priced myself out of the middle-class market, which eventually ended up being most of my business 2) I had put myself square into what some limo driver’s call the ‘no tip/high damage’ zone – privileged children who do not feel they need to address or reward “the help” and do not feel the need to respect other’s property. I took my first damages and received no tip during all 3 bookings. I was too innocent to think of collecting a damage deposit and thus just ended up eating the losses since the clients never returned my repeated calls to address the damages issue. On the bright side I did get great reviews.
The next year I cut my rates to a flat $289 for a 3 hour minimum with $89 for each additional hour (still not as low as my final year’s rates). Now I was getting much more business from the middle class market. As the limo drivers I talked to had predicted, I now began receiving tips and having fewer wedding-related damages (the damages were still almost exclusively confined to higher-end weddings). However, I was now getting more push-back on rates as the impression was, as I have already mentioned, that ‘a hippie limo should have hippie pricing.’ Obviously that doesn’t hold, especially when my Samba is just as valuable as the Rolls Royces I was “competing” against. A key difference is that a Rolls Royce appears more valuable and has the elegant, classic, high-society association that many brides, grooms, and their parties want to either reflect or project in their wedding photos. Because of the image it carries and impression it makes, the Rolls Royce commands a higher price than a car associated with the masses like my bus (remember Volkswagen = People’s Car). The fact that my Samba is just about as valuable as the Rolls is irrelevant. What is relevant, of course, is what customers want and whether or not they are willing to pay the price. Since my rates were reasonable (or at least attainable), I was left to the conclusion that perhaps my service was not worth the extra $75 – $100 I would charge over that of a cut-rate regular limo (rather than a standard priced limo), and I was not haute couture enough for those who could easily afford it. Giving into the pressure for lower rates a bit, I dropped my prices again for my last year: $276 for 3 hours and $79 for each additional hour. With my 3 year market presence, amassed press and search engine results, spreading reputation, and industry opinion that the wedding market had recovered with a bang, I felt sure that 2013 was going to be my year. Indeed, I received just short of 3x as many inquiries as the previous year for all aspects of my service (proms, tours, etc.), for which I made diligent follow-ups via email and phone. Sadly, I received exactly the same number of rides as the previous year, despite having worked almost exponentially harder to get the new business. When I asked why the potential clients had not chosen to hire me, it was in most cases because they had “found another company that would do it cheaper” or “it was too much for our budget.” Since there were no other mid-priced classic car companies around and my only competition as far as amazing photo-op vehicles go were the more expensive Rolls and Bently, I knew the clients who did hire a limo were opting for modern limos. When I asked what sort of car they had chosen to book instead of mine, it was usually a stretch generic towncar, a stretch Porsche Cayenne, or a stretch BMW X6. Final conclusion (which I have already stated): My service was usually only worth my price to people with vintage VWs in their histories – people who consistently booked me in the first call.
Limited Diversification & Scalability
- Originally I tried to focus across all of the usual sections of the limo market (proms, concerts, tours, bachelor/bachelorette parties, weddings, etc.) but I quickly discovered that in my market the only customers truly interested in my concept and also willing to pay the price were couples about to be married. The couples that ultimately hired me were drawn to me by the photo opportunity and the special quality my vehicle offered for their once-in-a-lifetime (well, mostly) event. I focused on this segment of the market for this reason, as well as the ones below.
- Proms didn’t work because with one vehicle and with nearly all proms occurring within 2-3 weekends I simply could not service enough of them to make the time and cost of marketing to high schools pay for itself. On a related note, there were very few kids actually interested in my service beyond being a novelty because for them there was much more cache in a stretch modern limo. Also, most prom parties consisted of 8 or more passengers, which I could not accommodate with my maximum seating capacity of 6.
- Concerts were also out because the predominate expectation is that the vehicle stay on site for the entire concert (6-7 hours counting transportation time) and serve as a tailgating vehicle. I could not charge hourly for this service and could not match the cut rates provided by traditional limo companies ($350) given that it would hardly be worth my time commitment. Also, tailgating often results in some level of damage to a more delicate classic vehicle given the intoxicated state of most concert goers.
- Tours are not usually a source of bread and butter in the Denver market. People come to this state to go to the mountains not to the city (which is relatively small as cities go), so there are fewer opportunities to make a city tour business work. And even with powerful upgrades these classic buses are not great for mountain touring. Not that they can’t do it (they did climb the Alps regularly in Europe), but rather that they climb slower than any contemporary car and with far less comfort than modern customers expect. Beer tours definitely have a potential market here since this area is known as the Napa Valley of Microbrews, but to date all but one business trying to turn a profit with beer tours has folded. The notable exception for making both city and beer tours work is Banjo Billy Bus Tours, a company that transports its clientele on fun and idiosyncratic tours using school buses remodeled to resemble hillbilly shacks on the outside and exploded rummage sales on the inside. (Click the link, trust me, you’ll like it.) However, even they offer beer tours only once a week. When I did have inquiries about beer, wine, and spirits tours (24 calls in 3 years; only from local residents) the expectation in each case was that I pick up the clients at their respective homes (usually multiple homes around 20+ miles away from Boulder) and then return them to their respective homes at the end of the tour . . . all as part of my $69/person price. The industry-norm of having a regular, single pickup and drop off point central to the tour (or at a hotel) did not seem to be acceptable for people calling about my service.
- As for Bachelor/Bachelorette parties . . . well, the potential for damages there speak for themselves, not to mention the near certainty of cleanup. (Oh yes, the cleanup . . . horrible . . . and I am not talking about foot traffic here).
- Having room for a maximum of 6 passengers also worked against me for most types of bookings as many parties seeking limo transport (particularly wedding and bachelor/bachelorette parties) are larger than this. Though overall I think this did not impact me significantly given my classic-car niche, it still played a part in my loss in overall revenue.
Where Did My Business Come From?
Though I marketed through many other routes, 70% of my business came from individual brides, grooms, or family members doing web searches for classic, vintage, and unusual wedding vehicles in my area. As mentioned above, 80% of all clients who hired me for any occasion did so because vintage VWs were somehow part of their histories. Though I did have good press, I only received the occasional bump in business from it, and even that was exhausted in just a few months. The residual effect from that press in search engine rankings, however, was extremely important. Similarly, online advertising via WeddingWire helped my search engine rankings, but only 2% of my business was directly from WeddingWire. The bulk of my remaining business was from being seen either driving in trendy shopping/eating districts or parked at festivals and general high foot traffic areas on nice days. Here is the breakdown of all of my revenue sources – rounded to the nearest whole percentage (when possible). Note that the marketing routes that cost the most actually had the least return. This is especially true of Wedding Shows where over 3 years I paid $2100 in discounted fees, was seen by an overall estimated 2900 registered attendees, and hired by 1 bride:
- Internet Searches: 70%
- Driving Around/Visible to Foot Traffic: 12%
- Online Advertisements: 6%
- Local Press 5%
- Wedding Planner Referrals 5%
- Bride Referrals: 1%
- Wedding Shows, Car Shows, Parades: <1%
- Print Advertisements: 0%
Now you have my business reasons for closing up shop. Next I will give my personal ones. I spent around 1100 hours a year among book keeping, scheduling, communications, logistics, marketing, cleaning, and maintenance, not to mention my driving adventures themselves — that is 1100 hours that I was not with or focusing on my family. The entire reason I started this business was to earn income in a flexible environment that would allow me to be a full-time, at home father to my two young children while hopefully making up some of the income-to-expenses gap resulting from having just one working parent. In the end I paid a great cost in both family time and in savings. Depending on how I work the numbers I estimate that in the worst case I lost $3300 over three years, and in the best case I made $200. Whatever the case, I lost a great deal of time. Obviously this is not a wining situation.
Don’t Let Me Stop You!
Now, many of you are probably thinking to yourselves: Wow! I guess I better not start a business with my bus!” Well, please keep in mind that Your Mileage May Vary and that your market (or even you) could be just what it takes to make this idea fly. Despite all of my efforts, neither my market nor I was the one to make it work. Hopefully you can learn from my marketing, blogging, press, media, and photo work . . . and perhaps you might even give me some credit in your press or business if my advice, example, and lessons help you succeed. Lastly, please let me know about your VW business if you have or are starting one. I would love to learn about you!, Since my website still receives between 40-80 or so unique views a day, I just might be able to send you some business!
Now, I do have four pieces of parting advice for you:
- Know Your Market: Really get out there to find out what people in your market are looking for . . . I mean seriously looking for and willing to pay for, not just considering or intrigued by. As several wedding planners and field specialist put it when I was trying to sort out why I wasn’t getting business: “It is a cute idea, but I would never actually do it. And I don’t know many brides that would, either. It is a niche within a niche.” Obviously this advice is complete bollocks in the UK, but in the US it seems to hold true in my area.
- Don’t Roll Without Commercial Insurance & Licensing: I suspect there are and have been more than a few transportation business running out there without either commercial insurance or licensing. I am sure there are even more people who are not businesses but who accept a few dollars for use of their classic car in a wedding. BEWARE! All personal insurance policies are VOID if money is exchanged in return for transportation. That means if there is an accident then a personal insurance policy WILL NOT PAY. Regarding licensing, some states and cities just don’t seem to care if you are licensed or not. Others will seek you out, turn out your clients on the spot, and impound your vehicle if you are caught operating without proper licensing and credentials in hand. Be sure you know where you live and follow the rules! ;-)
- Don’t Use a Vehicle with a Great Restoration: If you are considering making your bus into a tour or limo business, do not do so with a vehicle that has already undergone a quality vintage restoration. Rather, choose a bus that needs work and then use only modern, readily-available, durable, and cost-effective paints, fabrics, trims, etc. in your rebuild. Design for durability and replacability rather than authenticity. In my case market research showed that for a classic car to be a strong candidate for weddings, proms, and other photo-intensive events (my bread and butter . . . such as it was) its appearance had to be flawless and shiny. The appearance of my bus was indeed a major draw for my clientele and was often mentioned in my reviews. Sadly, it was also one of my biggest casualties. Create a great look for your bus, but do so with an eye towards cost to maintain rather than for period faithfulness. Also, given the value of split-window buses (1949-67) like our Samba, I encourage you to only consider using a bay-window bus (1968-79) in any business venture, both for affordability and maintenance of value.
- Make Friends in High Places (and Give Them Money): Networking is important (and I did as much of that as I could given my family responsibilities), but influence is better. In the event you do not have influence (or deep friendships with people in decision making positions), then money works almost as well. To make this sort of business work you need to have lots of friends in fairly influential places in hotels, event planning, beer/wine businesses, and many other areas that I can’t even think of. You also need to be able to send them money in return for their “charity” in sending business your way (even if their business benefits from yours). Below is a story of two identical exchanges I had with local high-end hotels and their associated event planning staff that illustrate this point (and my ignorance).
In the early days of my business I introduced myself to the event planning staff of two local very high-end hotels while exhibiting at bridal shows. After brides with weddings and/or receptions at each of these hotels had independently hired me to be their ride, I contacted the hotel staff asking if I could be on their wedding recommendations list. In each case I was told that I had to have at least two good reviews from brides before I would be considered. So, when I had two brides from each hotel independently hire me and give me rave reviews I again contacted each hotel’s staff. I was told in both cases that I must have misunderstood. It was the hotel event planning staff that would have to hire me in order to qualify, not the brides themselves. The lesson: You have to be “in” to get “in” unless you are already “in.” Influential friendships, business relationships with decision makers, and/or money get you “in,” not your good work. Sadly, good work was all I had. The good news is that I ended up with a total of 13 brides among the hotels hire me over the course of my business. The bad news? How much business did I miss out on? Now there were a few wedding and event planners that sent business my way either because the planners liked my business or because a bride or groom brought my idea to their planner’s attention. However, 70% of my business came from brides, grooms, or their families doing web searches on their own and booking me on their own.
Other Vintage VW Based Businesses in the US
To my knowledge there are currenly 7 vintage VW based business in the US (compared to a reported 130 in the UK). Four are camper rental companies and three are tour companies. There were eleven at the beginning of 2013, but four closed shop, including us. Take a look at the bus businesses still rolling and send as much business as you can their way. How, you may ask, can you send them business if you don’t live near them or are not looking for a bit of retro transportation? Like them on Facebook, Tweet about them, talk about them, click on the links below to boost their traffic and search results, and in general just get their names out there. It was that kind of Karma that helped me a lot.
1. Vintage Safari Wagons – The Ultimate Camping Experience – Los Angeles, CA
Offers restored VW camper buses for rent/hire from a Los Angeles area location.
2. Winewagen Tours – Finger Lakes Wine Tours, Volkswagen Style – Geneva, NY
Tour the Finger Lakes Wine Region in a fully restored 1971 classic Volkswagen Bus.
3. Florida Oldscool Campers – Travel Florida the Oldscool Way – Tampa Bay Area, FL
Oldscool campers will help you plan the perfect Florida holiday.
4. Vintage Tours of Texas – Austin’s Fun Wine Tour – Austin, TX
An unpretentious wine tour in a VW Bus.
5. Happy Campers Hawaii – Experience Hawaii in a VW Camper – Hilo, HI
Cruise the Big Island in laid back Hawaiian style and comfort. (This is a family business with a fleet of 80′s Westy campers and a 1979 vintage model for those with more retro tastes).
6. The Bugster – Experience San Francisco in a Vintage VW Beetle – San Francisco, CA
Offering self-drive, self-guided tours of over 40 great destinations in the San Francisco area.
7. Vantigo – A Truly Unique San Francisco Adventure – San Francisco, CA
Beer, wine, oyster, sights, and lights tours in a vintage bay window bus.
Note: Vantigo managed to score a full on press blitz in their first few weeks of business, racking up articles in major news outlets and travel features and sending their business to the top of nearly any beer, wine, or oyster related tour search for San Francisco. If anyone is going to make it big, it will be them. Keep an eye out for Vantigo and book them when you are in San Fran!
And that, as they say, is the short and long of it. If you wish to comment on this post or contact us please do so using the Leave a Reply box at the bottom of this post or via our Facebook page. Thank you for your interest in our little venture. Best wishes to all of you, and especially to those who have established or are trying to start their own vintage VW business (which seems to be confined mostly to those in the UK). Keep the light on for the rest of us!
Richard Blake – Owner, Operator, Mechanic, Enthusiast (and full-time dad of two)
The classic VW Bus has been in constant production in Brazil since the 1950’s. Brand new VW Buses could be purchased off of a dealer floor as recently as last year, provided you referred to them as Kombis (their name in Brazil). That came to an end on December 31st of 2013 as the last factory ceased production . . . just shortly after the Hippie Limo closed its doors. See the story on CNN: Kombi’s Last Rites: Farewell to a Travel Icon
Our Past Adventures!
Curious about the fun couples and groups had with the Hippie Limo? We have stories and pictures galore:
- Look under Current Events & Musings in the right sidebar too see our final year’s rides, or click here to see our whole history on one page.
- Use the dropdown menu or search option under Past Events & Musings near the bottom of the right sidebar to read about the past rides and activities that have been immortalized in our blog
- Visit the Hippie Limo main page and click on the links under Our Service to explore what we offered for every sort of special occasion
- Go to Wedding Wire for reviews from couples and groups on the Hippie Limo’s services
- Peruse our Photo Gallery to see some of the best images that couples and groups have shared
- Be inspired by pictures from around the world that feature vintage VWs on Pinterest
- Hop over to In the Press to see what the media and blogosphere were saying about us
- See a bit of what a ride was like in the Hippie Limo at The Experience