LCT Magazine, as part of its 20th anniversary celebration, has assembled a list of valuable tips to help make sure you stay around to keep reading our magazine during the next 20 years.
We tapped into some of the finest minds in our industry and covered a number of different areas of your business – from general operations to marketing to technology. Our goal is to offer a wide spectrum of tips to help both small and large companies. Let us know what you think and share any tips you believe we might have missed for a follow up article in a future issue.
Finance Issues: Dollars & Sense
Create a Budget
A surprising number of operators do not build an annual budget with goals and limits. This is not easy to do during unpredictable times, but when the economy is in trouble it’s even more important to keep your costs in line with your revenues.
Add up your expenses and examine every area of the business, from insurance, payroll and fuel down to paperclips and memo pads. Figure out how much you will need to earn to survive, set sales goals and work hard to stay within your budget.
You need to have a framework for operating in the months, even years, ahead. Examine your findings weekly to keep your budget and goals in mind at all times.
Dealing With Spiking Costs
When you get hit with a new insurance bill that’s double what it was last year and you’re paying nearly twice what you were for gas, something has to give. Your already-atrophied profit margin can’t keep withering away until you are losing money. Consider adding an administration fee or fuel surcharge. Make sure you tell your clients ahead of time, explain why you are doing it and remind them the charge will be removed when fuel prices drop again.
Learn to See the Big Picture
Look at the world around you – don’t just stay in the little shell that is your business. Keep an eye on national, regional and local economic trends and listen to what experts have to say about everything from investment choices to the stock market.
Examine what other companies both within and outside of the limousine industry are doing and try to apply their innovative ideas to your company. Just because you provide chauffeured services doesn’t mean you can’t learn from a business that sells other products or services. You can start by looking at other high-end service-oriented companies, but good information might come from a number of other sources.
Merging As an Alternative
With every known expense on the rise, operators are finding it increasingly difficult to make a profit. Raising prices when demand is low is not a reality for most operators. Lowering prices to attract business further cuts into profit margins and could cause you to operate at a loss, and operating at a loss is just a slower, more painful form of death. While some operators are quietly accepting a buyout offer (this can sometimes be your best option) others are investigating merging.
Merging can enable you to cut fat and bring more quality people to the mix. Unfortunately, some employees may have to go, but your revenue stream should immediately go up. Just make sure you hire a knowledgeable lawyer or employ the services of an industry expert who has been through the experience.
Sales & Marketing: Get the Word Out
First, Develop a Strategy
Before you get started, decide on the “who, what, why, where and when” in order to keep your marketing efforts focused. However, a consistent theme – whether it’s exemplary customer service, guaranteed prompt transportation or an ability to meet “all your transportation needs” – should be reiterated, even as you promote other aspects of your company, such as a specialty vehicle or a new type of service.
You Must Follow Up
You need to spend time following up by phone, particularly if you have a limited budget and want to get the best possible results from a direct mail piece. Unless you are blitzing your area with a campaign so huge and consistent that follow-up calls may not be necessary (or even possible), you need to pick up the phone and ask:
• “Did you receive the mailer I sent out?”
• “Do you have any questions?”
• “Would you like me to send more information?”
• “Is there anything we can do for you?”
• “What would it take to win your business?”
Stay aggressive, and always polite, until you get either the answer you want or a definitive “no.”
When you purchase a mailing list for a direct mail campaign, make sure you get phone numbers so you can follow up.
Don’t expect miracles from a single postcard mailing with no follow up calls. It’s far more effective to send out two or three marketing pieces to a smaller group than to hit a larger group with one piece.
Make phone calls, send multiple pieces, try out a variety of concepts but don’t get discouraged if work doesn’t immediatelly pour in. Marketing needs to be a part of your annual budget and it generally takes time before you see results.
Tap into Current Clients
Use your database – it should have all the information you need to launch a sound marketing campaign. It’s easier to sell services to current clients who have already experienced how well you perform your job than to total strangers. If you haven’t been keeping a comprehensive database with detailed contact info – including e-mail addresses and fax numbers – start today. You will need to follow up with current clients, but don’t “hound” them like you would a new prospect.
Personnel: Finding & Keeping Good Help
Don’t just put an ad in the newspaper. Check the Internet and job banks. Headhunt from other service industries, like your favorite restaurant. A good server with a little driver training and a chauffeur’s license could turn out to be a real gem.
Ask for Referrals
Try rewarding current employees for bringing you someone who turns out to be a great employee. When the new chauffeur has worked for you for at least six months, give the referring person a bonus.
Fine Tune the Job Description
Interview your current staff to find out what people like about their jobs and what drew them to your company. Use your findings to shape the job description.
Clearly define your expectations of new employees and have measurable benchmarks. Employees should read your company policies and receive an employee manual.
Don’t Doubt Every Decision
When you find good employees, figure out what they do best and enjoy doing most, and let them do it. Don’t hold them back, don’t always second guess every decision they make. Let them excel and reward them for their accomplishments.
Service: The Customer Is King
Service, Service, Service
As busy as you might be, never forget, this a service industry. Service is the basis of everything you do and the reason for whatever success you enjoy – never lose sight of this fact.
Pick two clients a day and call them to see how things are going. Even large operators should take a moment out of their day, particularly at a time when new clients are hard to come by, to personally pick up the phone and make sure everything is as it should be. If you handle it subtly, you can even use the call to introduce new programs, describe new additions to your fleet, etc.
Are Customers Always Right?
Maybe not, but you have to make them think they are – particularly if they are steady clients.
If a service “issue” arises with a major account, even if it was something that the client caused, accept the blame and make him/her forget what he/she was mad at you for. Whatever the issue is, it’s probably not worth losing the account over.
The Personal Touch
A person should always answer your phone. If you’re a small operator and can’t afford to hire 24-hour phone support, have calls forwarded to your home at night, or put an emergency system in place where a caller can reach your cell phone automatically by just pressing a button. Clients want to be able to ask questions “now” and shoppers want a price immediately.
Be Polite and Patient
When someone calls, be patient. The telephone is your front door; it’s where new business enters. People sometimes call you because they don’t always know what they really want and need expert advice.
Help them solve their transportation requirements, offer professional advice and guidance, and assist them in making the right decision, to book with your company. You will develop trust and improve your chances of getting the job, even if your competitor is $5 an hour cheaper.
Technology Is Only a Tool
Avoid Gadget Envy
Just because your local competition uses the latest GPS-based dispatching system and has equipped all of his chauffeurs with Internet-capable PDAs doesn’t mean you have to do the same.
Before making a significant purchase, examine costs versus benefits. If your efficiency will improve by buying technology and it is worth the money, take the step. If not, wait until the price drops – it always does.
Don’t Fear Technology
By the same token, don’t be afraid to automate and don’t get left behind because of unreasonable fears.
If you can pick up a low-end computer system and an inexpensive reservation/dispatching/billing program for about $2,500, yet you’re still attaching notes to a cork board with thumbtacks, it’s time to reassess your feelings about the importance of technology.
If you bought a computer a year ago, but never learned to send e-mail (let alone attach a file), you may want to consider taking an inexpensive computer course or paying someone to help you learn. It’s easier than you think and the benefits are many.
If you have access to the Internet, you should be using one of the free airline flight tracking services. Check out FlightView.com, the Web sites of individual airlines or your local airport’s Web site; many offer free up-to-the-minute flight tracking updates.
Look to the Future
All who want to serve large corporations will soon need to be able to offer their clients, if they are not already, Internet-based reservations and the ability to manage accounts online.
It’s time to get up to speed. If you are buying a business software program, make sure it can be upgraded easily to accommodate that technology. Eventually, GPS technology that allows one to track the location of ones drivers, help them avoid traffic and keep them from getting lost will be affordable to everyone. Start learning about the products, even if one is not in your budget at the moment.
Do Your Homework
When you are planning to make a significant technology purchase, read as much as you can about it first and check message boards on the Internet to see if anyone has anything to say about it.
Ask a minimum of three fellow operators who currently are using the technology about how it is working for them. Was it worth the money? Are the savings significant? Was it easy for employees to adapt to using the new technology?
Reservations & Dispatch: Details
Garbage In, Garbage Out
Your reservationist must gather accurately all the necessary information, or your dispatcher could get stuck with a job that has a wrong flight number or city of origin. This could also affect billing. You must have a contact person with a phone number in case something goes wrong.
Get It in Writing
Always confirm important details – including the date, pick up and drop off location, flight number and number of passengers – either via fax or e-mail.
Better to Be Safe
Operators have a tendency to bite off more than they can chew. You’re better off farming out a job than risking a serious problem which could turn into a lost customer. Always leave yourself some wiggle room.
Use Your Resources
If you have a computer system, you shouldn’t be writing changes on little pieces of paper. If you are away from your desk and have to take a note, enter it into the computer the first chance you get. If you don’t, particularly if you’re a busy company, you run a terrible risk of losing important information.
Thinking About Tomorrow
Don’t Be Short Sighted
For every aspect of your business, think in the long term. Just because you can finance for 60 months doesn’t mean it’s the best way to go. Everyone makes mistakes, so take responsibility and do the right thing by your clients or you will not see their repeat business.
If you want to do business with a network or a local competitor, treat them and their clients like you would your own clients. If you currently have five vehicles, but your long-term plan is to expand to a fleet of 10, first build an infrastructure – including your technology – that will accommodate 10 vehicles.
Your Fleet: Limos ‘R’ Us
There is no reason to ever have loyalty to a vehicle. Do a thorough analysis of the cars in your fleet and determine how much they earn versus how much they cost – keeping repairs, fuel bills and monthly payments in mind. It’s important to only keep cars in your fleet that hold their own. Iron should lose to gold every time in this instance.
Unproductive Fuel Consumption
Particularly if your employees live a good distance from your base of operation, you should consider limiting or stopping employees from taking your cars home at night. If you often dispatch your drivers from home to pick up short-notice jobs, and would tend to lose that business, this might not work for you.
It’s Worth a Try
There are some potential dangers in this, so don’t just jump right into it, but you might try leasing out cars in your fleet during slow seasons to companies that can use them.
Some leasing companies have “step up” and “step down” programs, allowing you to pay more during your busy months and less during slower times. If you’re having trouble budgeting, that can help.
Hire a Mechanic
Once there is a certain number of vehicles in your fleet, it’s time to do a cost analysis and determine if it makes sense to hire an in-house mechanic. Retail pricing on mechanical work, for parts and labor, can be a killer. Start by seeing if you can find a part-time mechanic and move up as needed. It’s something you should definitely start examining if you have at least 10 vehicles. If the mechanic can’t do everything at your location, have him do what he can on-site and develop a relationship with a local shop that is willing to finish jobs.