When Is It Time For the Owner To Stop Driving?

Posted on December 1, 2005 by LCT Staff - Also by this author

The limousine industry is dominated by small, home-based operators who often act as their company’s primary chauffeur. Initially, almost all of these entrepreneurs drive as much as possible in order to earn any compensation from their new business.

But an owner who is constantly on the road can become a problem. A new business needs to establish relationships, and the owner needs to be available to meet with potential clients on short notice.

The biggest item is the telephone. A small limousine company owner is often forced to deal with clients from a cellular phone. It is difficult for the owner and hardly a comfortable fit for the client.
The savings of a chauffeur’s salary are significant, but the bigger issue is how can a company grow if the owner is always on the road?

Steve Giuliano is a native New Yorker who opened a small limousine company in 1992 in Orlando, FL. He began as the primary chauffeur for his new company, Advantage Limousine. “For my first two or three years in business, I drove almost every trip,” Giuliano says. “I was in a new business. The limousine business in our area can be very seasonal, and I was always afraid that I could not afford to pass up a trip because the phone could stop ringing. Also, I had no large accounts lined up so I felt the best thing to do was get in the car and drive as many trips as possible. I took next to nothing in salary because I wanted to pay my bills on time and establish business credit.”

Giuliano believed it was important to answer his business telephone so he frequently forwarded his business phone to his cell phone. “It was not an ideal way to do business and I tried to turn the phone off when I had clients in the car, but I felt that it would have killed my business if customers kept getting voice mail or an answering service when they called Advantage Limousine,” he says.

As the company became more established, Giuliano made a conscious decision to drive less. He thinks it was a key decision that helped his company grow. He was able to hire two regular chauffeurs and three part-timers. “I still try to drive important clients because it keeps me close to my customers,” Giuliano says. “When we have a convention or a special event in town, it is important for me to be able to jump into a car at the last minute, so I purposely do not schedule myself to drive.”

Giuliano networked extensively with other Orlando operators and along with Greg Palie, owner of GNS Limousine, established the Greater Orlando Livery Association. GOLA is one of the industry’s most well-respected local limousine associations. The association and the friends he has made in the business have helped his company grow to the point where he cannot be the company’s primary chauffeur.
“I feel that if I drive every trip possible, the opportunities for Advantage Limousine will be limited,” Giuliano says.

He attends the LCT Show and has developed a network of industry friends who refer work from around the country. “For a small company, it’s amazing how many networks use us in Orlando,” Giuliano says. “If I didn’t hire chauffeurs, I would not be able to have the time to sell my company. But also, the big item is paperwork. A limousine network wants a completed bill the day of the trip. I am still doing all of the back-office credit card processing and client billing myself. I have a problem getting it done now. If I were driving more, I cannot see a way it would get done in a timely manner, and I know this would cost me network business.”

Larry White, president of American Livery Systems in suburban Boston, has 20 years of experience in the limousine industry. He is also the president of the New England Livery Association, the nation’s largest local limousine association. White commands a 23-vehicle fleet that relies heavily on backup support from a network of small one- and two-car operators. His take on the amount of driving a new operator should do differs from the opinions of Giuliano and many other larger operators.

White believes the best long-term strategy for a new operator is a limit of one vehicle for the first two years of operation. “Get one new sedan and drive every trip you can, every single day for the first two years,” he advises. “You will learn the business and trust me, you will make money.”

White believes a new operator often acquires a second or third vehicle prematurely. “They get so concerned that they always have a vehicle available that the second or third car sits most of the time,” he says. “The owner ends up driving the first vehicle constantly to meet his expenses on all of the vehicles. It becomes very discouraging. We have good people who fail in the business because they make this mistake.”

Saying no occasionally to customers is not going to kill a new business, says White. “Don’t focus on the trips you can’t do. Focus every day on doing a good job and delivering good service. The money will follow.”

American Livery averages over 100 trips per day, yet White still fills in to drive a few trips per week. “I look to drive key customers and contacts that I have not talked to in a while,” he says. “It gives me a chance to connect with them and reinforce our relationship. The other thing is that by taking a trip off the board and driving myself, I take some of the pressure off my dispatch department.”
Eric Kotomori is a partner in his family business, NJL Transportation in West Medford, MA. NJL, which opened in 1993, includes his mother, father and brother. Kotomori, who often works as a subcontractor for White, says there is no simple answer to the question of when a company owner should stop driving.

“Every owner has to ask a simple question: How am I most valuable to my company? In my case, I like driving and I think it is most effective for me to be on the road working as a chauffeur,” Kotomori says. “I am good with our customers, but I am even better making contacts with other limousine companies. I feel very fortunate to have that family support because I don’t think our business could grow if I was on the road and we had an answering machine on our phone.”

Kotomori believes a small operator needs to bring on a full-time driver as soon as possible. “If you don’t have a person to help you with the phone, put a driver on the road and work the phone every single day,” he says. “You probably need to work for free for a while until you get the business going because one vehicle will not support you and a full-time driver.”

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