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RICHMOND, Va. — After spending 23 years in the technology industry, and watching manufacturing and information technology jobs steadily migrate offshore to the Far East, I felt my long-term career prospects were in jeopardy.
By 2006, I knew the time had come to make a career change — one in which I could chart my destiny. After leaving my job as vice president of engineering and customer service for a software company, I began chauffeuring for a limousine company as I looked for new career opportunities. Little did I know that this temporary job at James Limousine would lead to entrepreneurship and new careers for me and my wife Lynn in the limousine industry.
Buying James Limousine
When the owners of Richmond, Va.-based James Limousine offered to sell the company and its 14 vehicles to its employees, I thought this could be the opportunity I had been looking for. I began a careful analysis which ultimately led to the purchase of the company. The decision to purchase along with another chauffeur with an accounting background only came after researching and carefully considering the following:
· Two years of financial statements (cash flow, balance sheets, profit/loss statements) and tax returns. We solicited the help of a CPA in analyzing the numbers and assessing the reliability of the information coming from un-audited statements of a private company.
· Value of the company as determined either by the value of the assets or the profits the assets were generating. In our case, the company was underperforming and the real value was in the assets, primarily the existing fleet of vehicles, the knowledge and skills of the employees, and the goodwill the company had built over 15 years of operation.
· State of the local economy and limousine industry. Richmond historically has a healthy and diverse economy that is stronger and less volatile than the overall U.S. economy, and the limousine industry had fully recovered from the 9/11 downturn.
· Competition. There was strong competition in the local ground transportation market, but no one was dominating, and our assessment was that the market was underdeveloped and had room for growth.
With the help of a good attorney, we drafted a detailed purchase contract that included a non-compete clause from the sellers, a must in my opinion. On Jan. 2, 2007, we assumed ownership of James Limousine. To minimize any carry-over liabilities from the previous owners, we formed a separate corporation and purchased only the assets and rights to the company name and Internet domain name.
The First 12 Months Are the Most Critical
Knowing that most new businesses fail due to cash flow problems, that almost all of our capital had been put into price, and that we were starting with zero cash receivables (not included in the sale), we developed separate short term and long-term marketing plans, along with a detailed monthly budget.
The long-term plan focused on rebuilding the company brand as the preeminent executive and luxury limousine transportation company in central Virginia. This would include designing a new company logo, developing new marketing and advertising materials, and rebuilding the company website.
For the short term, we focused on capturing the low-hanging fruit, i.e., the fastest opportunities to exploit and turn into sales, and low-cost ways to increase our market share. With stretch limousines comprising half of the existing fleet and realizing the long lead time in attracting new corporate accounts, our short-term plan emphasized the retail market, especially weddings.
Brides-to-be represented an ongoing stream of new clients that we could target and book trips for immediately. We participated in as many wedding shows as possible, cultivating relationships within the wedding industry, and revised our “product” to more closely match what brides wanted. Changing company policies to allow for more point-to-point wedding trips aligned our service to what most brides wanted, and allowed us to convert more phone calls into booked business.
To help build trust with brides and establish the quality of the service we were providing, we also added a bridal emergency kit to our vehicles, and a one hour extended time guarantee. Additionally, we organized day trips in our stretch limousines, taking bridal consultants to regional wedding locations they had not previously seen, thereby cultivating important relationships with the consultants and the owners of the wedding sites. We designated a wedding planning specialist within our reservation staff who brings a positive, friendly attitude to each wedding call. The overall result of these actions was an increase in wedding business by 33% in 2007, and we are on pace to increase another 50% in 2008. Applying the same techniques in other market segments has led to similar increases in overall revenues for the company.
Marketing and Public Relations Are Key
In the first few months of managing the business, it was apparent that the area where we needed outside help was in choosing the most effective ways to market the company. With radio, television, print, phone book, and Internet media representatives hammering away at us every day, we quickly became overwhelmed with the many ways to spend our marketing budget.
Hiring an outside marketing and public relations firm was one of our most important decisions in the first year. Our marketing agency acted as a buffer to keep away some of the distractions from running our business, used their business contacts to help us find new opportunities, and developed relationships with the media that brought us valuable local exposure in newspapers and business publications, often for free.