What it Takes to Succeed 5: Operations Management

Posted on July 11, 2008 by LCT Magazine

By Jon LeSage

Running a chauffeured transportation company is not easy - just ask an operator. Nearly everyone I've ever met who've been in the industry for a few years work a lot of hours, sometimes more than they can handle. As companies grow and more chauffeurs and office staff are added, things get better, but not necessarily much easier. There's a lifestyle in this business that certainly doesn't work for everyone, but veterans usually love being here, and do what is necessary to stay in business and grow.

A lot of time is spent making decisions on vehicles, software, insurance, maintenance, hiring, and plenty of other chores. Experienced operators devote a chunk of their time staying informed on industry trends and products through attending events, association meetings, and software user groups, reading magazines, the Fact Book, viewing websites, etc. It can be a good use of your time to read and analyze choices, and get out and network with operators who are going through the same process and can offer you sound advice. Here are the main operations management topics that operators usually discuss with each other:

Fleet purchases and financing: This is the biggest expense category for operators, and making the wrong decisions can drive people out of business sometimes. It's important to slowly and gradually grow fleets and make the best decisions for what your customers want to ride in, and what complies with any of the federal and state regulations that affect you. This is especially true with buses and vans, so ask around at your association meetings and read up on the subject. Finding out about maintenance costs and reliability of the vehicle is also important. A big trend this year is buying hybrids and alternative-fuel vehicles. LCT Magazine has a lot of coverage on this subject, especially in the upcoming August issue. And it's another important subject to ask around with other operators and anyone you know in the auto industry.

Insurance: Many times I've been told by operators that they get more scrutiny and questioning from insurance companies than other industries get. They generally have to submit reports and completed forms that impress insurance agents and get their coverage in place. Whether or not this is really fair or makes sense, it's important to accept this reality and find the best insurance providers for your fleet. Ask around and see what options are available. The insurance situation many times changes year to year, going up and down in price, and sometimes requiring more documents than you thought you might have to provide. Just stay with it

Maintenance and repair: If you can, it's a very good idea to set up vehicle maintenance operations in your facility. This can save you money instead of going to garages in your town and paying whatever they charge. It's also a way to stay on top of routine maintenance and making necessary repairs as problems come up, and not after they become crises, and you have to get rid of the car and lose money. If setting up your own service garage doesn't make sense, then find out what options you have locally - who is the best service provider and the most fair? Who will offer you a discounted program with the volume of business you bring them?

Staff hiring and training: This is not an easy time for operators to find new employees. They run classified ads and put announcements online, and do other networking to find good staff members, but it ain't easy. So staying on top of this and getting the word out in your market regularly is an important practice. And so is building up your staff training programs, another process that needs to happen on a regular basis. Some companies offer new hire training and nothing else, while several successful companies are creating ongoing training classes and sometimes bring in outside experts to help build these programs.

Management team: Many operators run everything themselves, every single day. This can work for a long time, but can become overwhelming after awhile. It's important to build an effective management team so that everything else is well covered - sales and marketing, staff management, fleet management, etc. Where do these managers come from? Sometimes from other operators, especially large ones. Sometimes they come from other industries such as technology, marketing, and hotels. Hiring people with good experience helps, and good reputations and relationships with companies you might want to bring in as new clients.

Billing and payment: Setting up automated, well structured billing and payment systems matters more and more these days. It's good to ask around in the industry and checking out your options online and at trade shows. Doing this all on paper is going away, and knowing your options and what works well for operators is becoming more important.

Technology: Operators are buying a lot more tech gadgets now than they did even five years ago. This includes Nextel and cell phones, DriveCam, flight tracking, office computers and printers, software for reservations and fleet management, and other good stuff. This is another reason to get involved and active, going to trade shows, association meetings, surfing the web, and reading industry magazines.

Real estate rental/leasing and purchases: This is a very important purchase decision for operators. As they grow, moving to better locations becomes important. Setting up affordable rental/leasing or land purchases becomes their next big step. Having good relationships with real estate agents and asking around in the local business community is very helpful. So, the next time you attend a chamber of commerce meeting, or a business networking breakfast in your town, get the word out - find out what your options are. You may become a real estate owner and add this to your investment list, which can help you financially and in your long-term growth.

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