Sam Mallikarjunan of HubSpot can help you prepare your business for inevitable future shake ups.
Gene Pierpoint believes that his experience in the United States Army helped to set the course tor his eventual founding of what is now the oldest limousine company in Arizona.
"I was taken away from the armored division I was in," Pierpoint remembers, "and assigned to be the driver for the base commander."
Pierpoint credits that nine month assignment with teaching him the qualities needed to be a successful chauffeur.
"The vehicle in which I picked up the commander on a daily basis had to be immaculate," he says, "And there was never a second chance. The demands of the commander's driver was a 100 percent job well done every day."
Pierpoint was in the army in 1974 and 1975. After his discharge, he returned to his hometown of Pitts burgh, PA. The economic condition of Pittsburgh at the time was not encouraging to an ambitious young man, so Pierpoint headed west to Phoenix, AZ, where he enrolled in business school.
Following graduation, he moved even farther west and found himself in Newport Beach, CA.
"It was really a nine month vacation," he says. "I supported myself by driving part-time for a two-car operation called California Limousine and the amount of money I was able to make just by driving two or three days a week, was almost startling to me."
In the summer of 1979, a friend of Pierpoint's approached him with the idea of starting up a limousine service in Phoenix, AZ.
With his business degree and driving background, as well as his knowledge of Phoenix and customer service experience in the hotels of Phoenix garnered during his school years, Pierpoint found the opportunity of getting in on the ground floor of a business appealing.
"I borrowed $3,000 from my father, Larry borrowed $5,000 from his, and we drove up to Las Vegas, NV, and bought ourselves a couple of cars and bingo. In November of 1979, we were in business."
They started operating their business out of a condominium, and later bought a house. They operated from the house until, Pierpoint says, the neighbors complained.
"The zoning board sent us a letter saying they were certain we were in noncompliance with zoning ordinances," he says. "So we moved from there into our own offices in about 1982."
Although Pierpoint says the company was welcomed with open arms by the entertainment and corporate industries, he adds that the first couple of summers were disastrous for Arizona Limousines. Arizona summers are brutal, with temperatures consistently in the hundreds. What market there was for limousines in winter and spring literally dried up in the summer.
"Things were very tight in the summer of 1980, and again in the summer of 1981," Pierpoint remembers. "After that second summer, Larry got discouraged." So, when Larry returned to Southern California, Pier point assumed full responsibility for Arizona Limousine.
How did he keep from getting discouraged? "I was only 25 or 26 years old," Pierpoint says. "I was able to take the lumps and live with them. Besides, December through April are powerful months. This is a resort community, with six five-star hotels, a dozen or so four-star hotels, and a whole slew of overflow support hotels. So conventions and out of state visitors come to Phoenix in force in the winter and spring. I think the key was to figure out a way to ac cumulate enough cash reserves to bridge the summer months. That's still a problem today."
To bridge the slow summer sea son, Pierpoint invests some of his winter and spring profits in high interest savings accounts such as certificate of deposit accounts and time deposits.
Another problem caused by the drastic seasonal change in business is that of keeping employees. Pier point points out that a chauffeur's in come may drop by as much as 40 or 50 percent in the summer months.
Rather than laying his employees off, Pierpoint advises them to set up savings accounts and deposit at least 10 percent of every paycheck as insurance against the slow months. Also, he schedules employees' vacations for that time of year, to lower the number of people competing for what little business there is.
Pierpoint finds this strategy far preferable to having to hire new chauffeurs at the end of every summer. "Seasoned, veteran chauffeurs are important to any limousine company," he says. "They lend the impression of a much more depend able, consistent service."
When Pierpoint does have to hire new chauffeurs, he tries to get people with guest service experience. He employs a seven-hour video training program, as well as a period of driving with a senior chauffeur. Head Chauffeur, Roy Lawrence, holds monthly workshops where all the chauffeurs exchange ideas and techniques.
Pierpoint's nine full-time chauffeurs are each assigned a vehicle. They take the vehicles home with them and take full responsibility for keeping them clean and well maintained, although the company pays for maintenance. The chauffeur assigned to a certain car is the only one who drives that car, except on his days off.
"They develop a real feeling for the car this way," Pierpoint says. "It is their car, the piece of equipment that produces their income. The cars are immaculately maintained."
Still, now that the company is larger, Pierpoint thinks he will have to plan on garage facilities or a parking lot for the fleet in the near future.
Evidently, Pierpoint has the right idea because, in an area inundated with limousine companies, where he estimates 40 to 50 companies fail each year, Arizona Limousines has continued to grow. The company boasts a fleet of six stretches, two sedans, and two vans. Pierpoint employs three full-time office staff members and several part-time drivers, as well as his nine full-time chauffeurs.
"The part-time chauffeurs are sort of freelance," he explains. "They drive for other companies too." Still, the part-timers are full-fledged employees of Arizona Limousines, rather than private contractors, which entitles them to company benefits.
The reason for the huge number of limousine companies and failing companies, Pierpoint says, is the deregulation of the industry. Until 1982, the Arizona Corporation Com mission (ACC), Arizona's equivalent to many states' Public Utilities Com mission, controlled ground transportation.
In the Phoenix area, the ACC is sued a practically exclusive operating permit to Tanner Greylines in the early 1960's which gave Tanner all bus, limousine, and airport shuttle rights. Pierpoint explains that the reason the ACC issued this permit was to get Tanner Greylines to connect their bus service to the desert com munities on the outskirts of Phoenix. These communities, which are about 15 to 20 miles outside of Phoenix, weren't profitable for the bus companies, so the ACC used the exclusive, 20-year contract as an enticement.
Because of this contract, Arizona Limousines actually started as a rental car agency. "We delivered our rent-a-cars (limousines) to you," Pier point explains, "And you signed a power of attorney to the chauffeur, giving him permission to drive your rent-a-car. It was enough to keep the Attorney General's office away from us, and it gave us a competitive edge."
When Tanner's exclusive contract expired in 1982, resulting in the deregulation of the industry, there were two or three limousine companies in the Phoenix area. What followed, Pierpoint says, was an explosion of operators.
"We had a city with virtually no ground transportation available at all, and in just two or three short years there were dozens and dozens of operators that were not having to qualify themselves in any way. It was literally open season for anybody who wanted to operate a ground transportation network."
The situation was particularly bad at Phoenix's airport. Pierpoint remembers individuals in station wagons, old Cadillacs, and other cars and vans, all operating as air port transportation systems.
"The airport received such a bad reputation that it resulted in national recognition of the problem," Pier point says. "If it weren't for the tight restraints now in effect at Sky Harbor Airport, it would still be like that."
There are no such restraints for operating in the rest of the city, however. "You are required no health certificates, you don't have to register with the state on any level, there's nobody checking insurance situations," Pierpoint says. "It's a buyer's market, so prices are being driven down, but service levels are very, very low."
Although Pierpoint doesn't want strict government control of the industry, he would like to see some limits set. To that end, he met with about 25 other owners a few months to discuss the formation of a local limousine association.
"We just couldn't get it organized," he says. "Maybe it's because it's so competitive, or maybe it's because there are only three operators here in town that have been in business over five or six years. I believe it is definitely going to be to the benefit of all operators to form some sort of association. I'm going to do every thing I can to see that it happens."
How does a company like Arizona Limousines, which Pierpoint says is dedicated to consistently high quality, expensive service, compete with companies that, by not carrying insurance and offering substandard service, are able to offer much lower rates?
"I believe that if you provide consistent, prompt, accurate service, the market will hold you up," Pierpoint says. "People come into Arizona Limousines and they realize that it's a company that truly cares, that we're able to identify specific needs, whether for a convention group, an entertainment group, or a sightseeing tour."
Versatility is another essential ingredient for success in the Phoenix market, Pierpoint believes. "I think I have a competitive edge over most operators in that I have several years experience in the field," he says.
"I can relate to the chauffeur's problems and I can relate to the specific needs and wants of clients on a variety of different levels. Whether it's the entertainers, motion picture studios, corporate work, conventions, city tours, or just a simple prom or wedding or night on the town, each client has his own expectations and needs from a limousine company. I can identify with many of those, not only because of my hands- on experience, but because I have made it my job to dissect the needs of different demographic areas of limousine users. And that diversity is really important here.
"We do as much entertainment business as we do convention business, as much work out of hotels as corporate business. Our local market, going out to dinner, proms, and weddings is very important. So we have to make our service available to a variety of different users. That can be difficult because you can have three or four different types of clients in one day.
Diversified service has also kept Arizona Limousines successful. Offering van and sedan, as well as stretch service, helps the company appeal to various markets.
"We belong to one of the most powerful, if not the most powerful, national limousine affiliations," Pierpoint adds. He is referring to the Dav-El National Reservation System. "We're able to compote on the local corporate market by providing out of slate limousine service to our local corporate executives and, at the same time, retrieve out of slate clients from all over the country."
Being the oldest limousine company in the city doesn't hurt either. "We had a two year jump on the other companies," Pierpoint ex plains. "We were able to pick up a lot of corporate accounts, which we've kept through the past seven or eight years."
Arizona Limousines solicits new customers, and keeps old ones, through an aggressive direct mail campaign, in which mailings are followed up with telephone calls and, when possible, personal appointments. In the past, Pierpoint has also used radio, television, and newspaper advertising.
"We believe that if you can consistently provide accurate, dependable, consistent service to that high echelon of the users, whether it's convention, corporate, or entertainment, the word of mouth advertisement will prevail."
Judging from Arizona Limousines' success so far, Pierpoint is on the right track.
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