Stephanie Carnes of The LMC Groups outlined how to excel with digital marketing during a recent GGTI webinar.
These tips are not really secrets. They certainly have not been kept from limousine business owners. They are readily available to any operator who desires them. In fact, this is not the total list of secrets of the highly successful; it is simply the seven most common we can share given the space limitation of this article.
Most medium-sized companies (local banks, a Ford dealership, the local utility company) perform annual audits for the same reasons, and also to ensure accuracy, compliance to standard accounting procedures, detect fraud, and ensure the company is performing to industry standards and company forecasts.
Successful small companies (less than $20 million in annual revenue, like local equipment rental companies, local furniture stores, and limousine companies) will have less formal and less expensive audits by accountants, industry specialists, and consultants.
The limousine business is just like any other business. It is very easy to get too involved in the day-to-day operations (selling, reservations, dispatching), and all the crises that require the owner's attention. It is easy to find yourself working in the business instead of on the business.
Another reason limousine businesses don't conduct annual audits is the misconception of the cost, and underestimating the business value of the audit. Yes, audits for large and medium-sized companies can cost tens of thousands of dollars. However, audits for limousine companies and other small businesses can cost as little as a few hundred dollars—usually $500 to $1,500.
In January of this year, while performing a financial audit and budget review for a New York-based client, it was discovered $72,000 could be saved on one line item. This operator runs a highly successful company, and does more than $5 million in annual sales.
Time, technology, tradition, customer demands, personnel changes, and being too close to the business all make a case for annual audits, and in turn create opportunities for limousine companies to improve profit performance.
Approximately 23 years ago, an operator promoted a great secretary to the position of manager of a limousine company. The company was doing a lot of marketing and advertising, and one of the goals for the new manager was to make outside sales calls to complement other sales and marketing efforts.
The manager was convinced her time would be better spent by first improving the company's ability to close the inquiry calls the sales and marketing efforts were already producing. She was absolutely correct.
This operator was so focused on growing the business by increasing sales and marketing, that he forgot one of the fundamental principles of sales: maximize closing the inquiries you currently have before spending money to get more.
It is far easier, and less expensive, to improve the skill level of your current sales staff and close a greater number of your current inquiries than to spend more money and effort getting more inquiries and only closing a smaller percentage.
Highly successful limousine companies provide the proper training and sales environment conducive to closing the highest percentage of inquiry calls received. Successful companies recognize how precious each sale opportunity is.
If you sell an inquiry, it is worth $150. If you do not close the inquiry, you lose $150. One hundred and fifty dollars each day for 365 days equals $54,750 in lost sales. Nine lost sales out of 10 inquiries each day totals $492,750 in lost sales in one year!
What should you do? Start by measuring your inquiries each day. Measure the number of sales your staff actually sells out of the total inquiries for the day. Set some expectations. Hire professional sales trainers if you do not have that expertise.
Sometimes it seems limousine operators believe they have to do things the hard way. It is almost as if they think it isn't fair if they use someone else's experience or expertise. There is this mentality that if they don't do it themselves, they can't really take credit for the success.
One of the most common conversations with limousine business owners involves the owner explaining how different, unique, and difficult his or her business is, and how only he or she can do things right.
Yes, each business has its own personality and nuances. It is sometimes rewarding to be able to say, "I did it my way." However, at the end of the day, the purpose of business is to make a profit. Business is, after all, business.
Most limousine business owners will never reach their full business potential because they will not seek experts, be accountable, nor will they measure their activities and results.
If you examine highly successful limousine businesses or any other highly successful business, the owners have probably committed to training their people, being trained themselves, being accountable to someone outside the business, hiring the best experts, and measuring results regularly.
Ron Sorci, president of Professional Consulting Resources Inc., discussed selling businesses in a presentation at a past LCT Show. At one point, Sorci said, "Business owners who don't use business brokers to sell their businesses usually sell for 20% to 40% less than those who do."
The successful sales transaction will be their single most significant accumulation of wealth obtained during the owner's lifetime, and the key to a content retirement or transition to another career.
How much are you collecting from the insurance company for each day your car is out of service? Zero? $100? $500? Many operators collect nothing. Highly successful operators use professionals to collect loss of use, minimize charge backs from third-party insurance companies, collect storage, collect towing, receive higher appraisals, and save time and money administering claims.
Are you collecting for diminution of value? Diminution of value is the difference in value of a vehicle before and after it is wrecked. If you are trying to sell two identical cars and one has been wrecked, you might get less money for the one that has been wrecked. Insurance companies should pay you for this loss.
Collecting loss of use and diminution of value is difficult. Insurance companies employ thousands of attorneys and other professionals to keep limousine operators from collecting fees. It is no wonder why it has been so difficult to collect. Subrogation companies study tort law relative to insurance claims and often are more versed than general-practice attorneys.
Don Petroski, owner of Air Brook Limousine in New Jersey, used an attorney for years to collect third-party insurance claims. He has found attorneys do not always achieve the best results. Petroski has been both surprised and pleased by the amount of money he has received using a subrogation service. Other industries, such as the rental car industry, have been using subrogation companies for years. Subrogation services can easily be found on the Internet.
In 1996, a client on the East Coast paid The Geneva Companies $35,000 to perform a valuation of their business. In the agreement, Geneva agreed to:
As it turns out, the best service provided by Geneva was getting the company owners to understand what the value of their business really was and to understand items that affected the value of a company. Today that company is worth $8 million instead of the $1 million it was then.
Valuations are available for $2,500 to $5,000 for most limousine companies. Highly successful companies will do valuations every two to three years, or when major events happen that could significantly affect the company's value. Owners within two to 10 years of retirement or exiting the business for any reason should have a valuation done.
Valuations should be secured before any sale, purchase, merger, partnership, and divorce or estate settlement. A valuation is an excellent tool to help obtain and keep personal wealth.
The automobile industry has used 20 Groups since 1947 to benchmark and study best practices. The Ford Motor Company did not have industry standards for dealerships. However, in 1947 a group of independent Ford new car dealers banded together to collect industry standards, benchmark, study, and exchange information with each other to improve their individual dealerships. The original members of the Ford 20 Group became the first highly successful Ford dealerships in the United States.
Benchmarking is the idea you can study another company's best practices and use those observations to improve your own business...if done right.
Related Topics: 20 Groups, audits, brokers, bus crash, business growth, business management, finance, fleet insurance, Limo Broker, limo crashes, mentorship, money, Sales & Marketing, selling your business
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