By Jon LeSage
Like everything else in life, this is a day-to-day business. Sometimes it becomes moment-by-moment. An operator might get a stunning phone call: a large corporate client is ending the contract because it's downsizing and laying off employees. Ouch! So this operator spends the next week on the phone landing a new account. There's all sorts of stress and craziness for operators to live through, especially as the economy slouches through recession.
Strategic growth planning becomes even more important during tough times than it does during a booming economy. Some operators are up in revenue this year, and it comes from their strategic management: expanding into new market segments, adding certain vehicles to the fleet and marketing these vehicles to the right clients, opening new offices in other cities, buying a competitor, going international, and wisely investing profits.
It's very good to have mentors. If you talk to successful operators, all of them have, or had, good mentors who've taught them invaluable lessons. These can be competitors, family members, business people in other industries, or maybe even through reading a book about a highly successful person they've never met. Whatever works, do it. Having mentors, and being a mentor, will help you in your business success and to feel better about your life.
Growing Revenue: Fleet and market expansion are the primary methods used by successful operators to grow their fleets (and if done properly, their profits as well). You may be doing very well in corporate business in your market including airport runs and staff commutes. But if you do lose a couple of corporate clients, making up for this loss of revenue can be a big deal. Perhaps this means looking into other corporate sectors and industries. Mainly you've done auto manufacturers but need to look at hospitals and HMOs, government agencies in your state, hotels, restaurants and night clubs, real estate agencies, and accounting firms. Maybe it's about non-business travel segments such as college kids who want party buses at night and weekends for concerts and football games. You name it, there's got to be market segments where you can expand if you get creative and well informed. Intimately tied to market segment expansion is having the right fleet to serve these new clients. Maybe you need a motorcoach to deliver college athletes to games across the state. Or a few vans to commute a client's employees to and from work. Some operators buy new vehicles and then go get new clients to ride in them, and some do it the other way around. There is a risk that you could spend a bunch of money on new cars or marketing to new clients and it all falls through. Be careful and spend wisely - maybe it's just one new vehicle and a bunch of time spent on the phone keeping it out on runs - and then growing and investing more later on.
Opening New Offices: Many companies in this industry are based in just one major metro area (or in a mid-size market). After a few years, many of them decide to expand into other cities. This might mean you go from Houston over to Austin, open up a small satellite office, and rent some space nearby to park a few fleet vehicles. Maybe you have to hire new employees to work this new site, or get a manager to move there and get things going. It's important to do some good research before opening in another market. Ask a lot of questions: What are the regulations affecting operators and what about driver/vehicle certification? What market segments should be focused on to grow business in this market? Do you have any current clients that will give you business in this new market? What vehicles would work best there, and where will you buy these vehicles? What do locals say about this city - are there any strange stories you need to hear? Anything you shouldn't do, or have to do?
Mergers and Acquisitions: Right now, when you talk to successful operators, they'll tell you they're taking a few growth steps. They might be going to another market and adding to their fleet. They may also be looking at merger and acquisition deals where they buy out a competitor in their market, or merge operations together and take on some of the executives as new team members. Just like opening new offices, you have to do your homework here. You might need to bring in a consultant who knows how to set up corporate merger and acquisition deals to comply with laws and regulations, taxes, and making smart moves. (Bill Goerl of Clique USA in Oakdale, N.Y., works on a lot of these deals.) If I were going to buy a chauffeured transportation company, I would want to find out as much information as possible. Maybe the owner will only give me a portion of that knowledge, and I have to dig around to find out the pluses and minuses of buying this business. I would go to local operators and association members, state/city licensing agencies, clients of the company, previous employees, newspaper articles, court case documents, and local business associations. Detailed information is essential for making a wise investment.
International Networking: As mentioned in the article recently on affiliate networks and farm-outs, going global is very important in the industry these days. Operators are trying to figure out how they can grow revenue through expansion in Asia, Europe, Latin America, Russia, and other parts of the world. Just as getting up-to-date on Internet marketing and dealing with alternative-fuel vehicles, global growth is another important topic for operators to explore. And many companies are devoting more resources to this expansion. Look at Tristar Worldwide Chauffeur Services, which is based in the UK. Michael Fogarty is the CEO of the U.S. division of the company, and does a lot of networking with operators in the states. Just go to an industry conference and you'll see him chatting and shaking hands. He has to stay on top of Tristar's networking and U.S. operations. These efforts will become more common in the years ahead for all the major companies.
Investing Profits: Making profits is a very good goal for several reasons. The owner should live well and give to his/her family in ways that make all the time spent worthwhile. But it's not a wise move to spend every dime of profit on goodies. Investing profits into the company or ancillary ventures is extremely important. If you want to retire with peace of mind and leave your business for family or staff members to do well in the future, you've got to do some planning and research now. As you talk to successful operators who've been around for awhile, often times you'll find out they own other businesses. It's common to hear about them being land owners, which can be very profitable. They might own the building where the company is based and rent/lease offices and space in the building, or other nearby locations. Other ventures that you hear about include auto service and maintenance garages, restaurants, parking lots, professional services (such as technology services or accounting), and destination management companies.
Whatever you decide to do, go for it full blast. We want to see all of you succeed, grow, and tell great stories about it. (Don't forget to leave feedback on the subject, when you get a chance.)
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