Operations

Company Sizes: Is Bigger Always Better?

Posted on August 24, 2013 by

LAS VEGAS, Nev. — Businessmen of any type are concerned with growing their businesses. Operators appearing on a panel at the 2013 ILCT Show warned that growing too big, too fast can hurt service quality.

It’s better to carefully consider what kind of company you want to become and set a pace for growth. “We want to make sure you don’t grow out of control,” said the panel moderator, George Jacobs, founder of Windy City Limousine. “Think of it as a governor on your car.”

Panelists and the moderator suggested some key points to consider when growing a limo business:

Being Bigger Means Being Different

The panel generally agreed that operators should ask what type of operator they want to be and let the answer inform how they grow. Do you want to have a national, regional or global focus? Do you want to stick with corporate rides or get more into leisure or the funeral service?

Each market that operators expand into will have different clienteles, said Jorge Sanchez, co-founder of Hermes Worldwide Transportation in Denver, and may require different types of chauffeurs, vehicles and insurance coverages. As their businesses grow, operators should be prepared to delegate tasks to others to handle even if “early on, you’re married to it,” Sanchez said. A good staff and/or a partner can help make this happen.

Strains on personal life also can result from rapid growth, especially if you work with family, said Jeff Rose, president and CEO of Attitude New York. “Think about the obligations you put on your personal life. Business differences tend to come home with us and become personal differences. Remember, your business is there to serve your life, not the other way around.”

Prepare for the Cost of Growth

Rose also warned operators about the risks of taking on the costs associated with growth. Jumping from one plateau to the next takes a commitment, he said, and often means incurring costs well before the anticipated increase in revenue. “You should be willing to take risks. You must take risks at times or you’re going to become stagnant, but you also have to be prepared for certain things.”

For example, five years ago Rose decided that he had outgrown his garage. In moving his business, his rent went from $12,000 per month to $36,000 per month, plus he incurred $10,000 in construction costs. Rose said the timing of this proved inopportune: it was September 2007, right before the financial crisis hit. “We made a commitment to lay nobody off. We never missed a rent payment, never missed a paycheck, and we’re still here because we were ready for it. There are going to be those plateau stages.”

Your Reputation Is on the Line

Unwieldy growth also can threaten the good reputation an operator has earned, Sanchez said. “One thing that you have to be careful of is biting off too much. If you take it on and screw up badly, you’re not prepared for it operationally or service-wise. Your reputation is tarnished and it’s very difficult to recover from that.” Operators should understand exactly what a job requires in staff, vehicles and time.

“The danger that you might face when you take on a big piece of business, is that you’re not ready to handle it,” Rose said. “You’ll fare a lot better if you tell a potential client, ‘I’m not really ready for this right now,’ than if you take the business and do a lousy job.”

The internal reputation of a business is also on the line during rapid growth. Danny Bacher, CEO of Topper Worldwide in Atlanta, said operators should tell employees how growth will affect them and what the specific needs of new clients are. “Every client is different,” Bacher said. “You really need to sit down and communicate with your staff. That will go a long way. Don’t keep people in the dark.”  

Experienced operators  Jorge Sanchez, Jeff Rose, George Jacobs, and Danny Bacher spoke on a panel in February at the ILCT Show in Las Vegas about how limousine services can grow in ways that don’t overwhelm operations.
Experienced operators  Jorge Sanchez, Jeff Rose, George Jacobs, and Danny Bacher spoke on a panel in February at the ILCT Show in Las Vegas about how limousine services can grow in ways that don’t overwhelm operations.

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