NOV. LCT: What operators can learn about building a steady client base from a leading fleet vehicle seller.
That seems to be the curse of life in general as well, but it can be somewhat eased if experienced industry hands share the wisdom of the years — and the newcomers listen and take it to heart.
LCT recently either interviewed or corresponded with limousine operators who’ve worked in the industry since at least the 1980s, and can shed some light on what they learned over the course of three decades of LCT. We took some literary license and loosely borrowed the theme of the “Letters To” concept, which has seen success in recent years on book bestseller lists. No one hesitates to read a letter, since its contents are being told straight to you.
Industry titans George Jacobs and H.A. Thompson, along with former operator and current entrepreneur and consultant Rich Cooley tell it like it is and what they wish they’d known. Miami operator Neil Goodman shares his thoughts in a special Q&A interview.
LCT will feature this series throughout 2013 issues, with other leading veteran operators offering a real-life continuing industry education.
CEO/founder Windy City Limousine, Chicago, former NLA President, and current NLA board director
Dear Young Operator,
My career in the limousine business has taught me many things I’d like to share with you. This is a tough industry at the best of times, so it’s important to stay focused and confident and believe in yourself, because you will be tested and it won’t always be easy.
I started a limo business from scratch twice, my second time just a few years ago, so I still remember the challenges of building a company. When you’re just starting out, you might think you need to compete on price. Don’t.
Focus on delivering better service with added value — that’s what clients really care about. Build a better mousetrap and find creative ways to capture the market.
As a small operator, convince clients that you can do things better than bigger companies, such as offering personalized, hands-on service on every order, and following through on everything you promise. Take the time to get to know your clients and their needs so you can be different things to different people.
Look at what’s unserved or underserved, and see if you can fill the niche. When I started with one limousine back in 1978, I went after hotels. Everybody else thought it was an impossible market because of the transient nature of hotel guests. I didn’t get the contracts right away, but I kept at it and kept at it, and eventually I convinced the hotel managers to let me take care of their guests.
Know what you want, believe you can get it, and be persistent until it happens.
Build your network by attending trade shows and joining local and national associations. These associations are key to forming your career — they keep you informed of regulations and do the heavy lifting to battle them. You’ll meet and connect with new operators like yourself and experienced operators who are where you want to be in the future.
When it comes to advertising, find ways to get your name out there through trade and barter. I like to go to radio stations and offer to work with them on their promotions. They often have contests where they give away tickets to a concert or are bringing in music stars as guests. You can work out a deal where you provide your service for the contest winners or for the celebrity coming to town in exchange for the radio station mentioning your name. It only costs you the price of the trip and chauffeur.
When you’re ready to grow, make sure you delegate so you can focus on the bigger picture. It might be a little uncomfortable, but that’s how you know you’re growing. If you’re comfortable, you’re not growing.
This industry changed a lot in my career and I know you will see many changes also. Keep up with them by adopting the attitude of a life-long learner. Read the industry magazines, attend the Shows and networking events, keep your eyes and ears open for new insights and opportunities. Try to learn something new from everyone you meet and everywhere you go so that you can evolve your company.
When adversity comes knocking at your door, stay calm and be confident that you can and will make things work. Always lead by example. Believe in what you’re doing and others will follow.
It’s a tough industry, but if you have fire in your belly, you’ll succeed. Good luck.
Rich Cooley started in the limousine business in 1987 when he acquired Executive Chauffeuring School, which he ran until 1995. During his industry career, Cooley worked for Integrated Transportation Services in Los Angeles from 1989-91; Carey International in Washington, D.C. from 1998-2000, and at Empire International in New Jersey from 2002-2005. His managerial roles spanned operations, training and development, and mergers and acquisitions. Cooley is now the President and CEO of Eco Solar Technologies of Scottsdale, Ariz., and still consults for chauffeured transportation companies. He served as an officer in the U.S. Army Reserve from 1980 until retiring as a Captain in 2002.
Dear Young Operator,
There are five main things I would advise you to do, before you even get behind the wheel of your first vehicle. How closely you follow these principles will directly determine your success, and make it all worthwhile.
No. 1: Identify what market you are going after. Where are you going? What are your intentions? That doesn’t mean you are going on that path forever, but limousine companies often try to be everything to everyone, and not all companies serve the same markets.
No. 2: I’ve seen too many smaller start-ups use older equipment, such as Lincoln Town Cars that are five years or older. Remember, whenever you build a business, you want to have your best foot forward. Don’t be like every other new operator with five- to seven-year-old equipment. Don’t think you’ll just work your way up from old used cars to new ones. You will have more success and client satisfaction with vehicles less than five years old, and preferably new ones. You also should consider that the high maintenance costs on a five-year-old vehicle with 250,000 miles will offset any savings. You’re better off with a newer vehicle under a warranty that is reliable.
No. 3: Make sure that your operation is truly 24/7, from reservations to dispatch to available chauffeurs. That’s just the nature of the business. Don’t use an overnight answering service, and definitely don’t put calls into voice mails. You want to be able to be reached 24/7. You want to be accessible. And you’ll find that if you manage to get hotel transportation accounts, you’ll need to be doing that anyway.
No. 4: You are what you wear. In this business, don’t cut corners on your chauffeurs’ suits. Use quality black suits with white shirts and a type of tie that defines your company. You need consistency and uniformity. We’re also in a service world now that relies on nametags. Don’t discount the power of nametags. It’s a way to project professionalism.
No. 5: Understand your fleet mix based on your target market. Most limousine operations have models that include a sedan, SUV, van, minibus, and stretch. You may use some or all of those, but it depends on what you are going after. Understand the mix for your target market, your demographic and your region. If you go after hotel accounts and corporates, you’re looking at [sedans] and SUVs. If you do shuttle and people moving, then vans, SUVs, and/or mini-buses should be in the mix. Ask a lot of questions: What types of RFPs are corporations putting out, and what do current contracts look like? What kind of runs are companies subcontracting out? What vehicle requests are other operators farming out? What do hotels provide? What do they ask for? Do they want vehicles staged on site or on call? By understanding what market you are targeting, you can research the application of vehicles in those markets.H.A. Thompson, who founded Rose Chauffeured Transportation in Charlotte, N.C., in 1985, started out doing mostly weddings and retail runs. Today, the company has a fleet of 47 vehicles, which includes 14 thriving motorcoaches. Rose sold its last stretch limousine in 2012 as the market has dried up and the company expands its chauffeur-style motorcoach niche.
Dear Young Operator,
First of all, why are you getting in the transportation business? To make money or a living is not a good answer. To drive around in a fancy car? To skim the cash is a worse answer. You want your own business. Good. Then you have to do some strategic planning. Set some goals and share them: Revenue, profit, number of vehicles. Do you have good credit? Commercial vehicles depreciate very rapidly. Commercial vehicle insurance can cost a fortune if you don’t have a good track record.
If you’re going to build a good small business, you must have a good financial “head.” Get a good CPA on day one. Keep impeccable records. The IRS will visit one day, so be ready. Do a financial statement every month so the banks and the insurance companies know you’re serious. Immediately develop an exit strategy. How long do you want to take this butt whippin’?
Keep records of vehicle performance. Total revenue and profit every month and year. Keep maintenance reports on each vehicle. Figure out what you need to gross per car per month in order to cover overhead and make a profit. If you don’t, know that you are going to have problems.
One of the first traps new operators get into is too many vehicles. Don’t buy specialty vehicles just because a small number of customers want one.
Build cash surplus in your checking account for the slow months. It’s panic time not to have enough $$ to cover payroll. Underpay yourself, and if there’s extra money on Dec. 31, then grab it. Don’t run lifestyle items such as boats and motorcycles through your business. You must have personal discipline. If you don’t, your employees won’t.
When you’re starting out, don’t low ball price to get business. Deliver value. Decide what your product is, and deliver the best service on the planet. Can you be a “servant?” Can you kiss butt and make it sincere? Are you a good actor? Can you smile? That’s who we are. I don’t like the term “good service.” Everybody says that and most of it isn’t. We provide great “hospitality” and that’s defined as “the thrill you get out of making the customer very happy.”
Chauffeurs need to learn when to talk or not to the passenger. Never forget we are professionals at this job. We take ordinary people and deliver extraordinary service. Pick a big operator in town and work with them. They’ll give you some of their overflow.
Never forget this: How you treat your employees is how they treat the customer! You better have a good relationship with every employee. Now comes the toughest element in the business: How to find good employees. Just because a candidate has been driving for 20 years doesn’t make them qualified to drive. Hire ATTITUDE not experience. Are they pleasant, polite, considerate? Avoid people looking for a paycheck. You want somebody who enjoys serving people and fits your culture. To find that out, we use Global Behavior, which provides us a percent match to our chauffeur model. It shows us if they have dominance, extroversion, patience, conformity and energy. This reduces employee turnover.
Question & Answer: 30 Years? One Operator Marks 40 Years In the Industry
No one can stay in the limousine industry for long without hearing of Neil Goodman, the legendary Miami-based operator who still runs one of the leading limousine companies in the nation.
Goodman began his industry career in 1972 when he relocated to Miami from the New York City area trying to find a job in the insurance/mutual fund business. While searching for a job, he accepted a position at a private club called the Jockey Club, as a valet car runner and chauffeur. He told LCT he immediately took a liking to the freedom, the income, and the interaction of meeting so many influential people, along with the exercise of running so many miles a day for someone’s car.
In 1991, Goodman was asked to take over the transportation department of a private club called Turnberry Isle in Aventura, Fla. near Miami. They asked him if he had the resources to start up a brand new company, with no affiliation with any local companies in Miami. Knowing he had no resources, he immediately said, “Yes, of course.” He borrowed $50,000 from an existing client and friend, bought two American limousines, and negotiated a deal with a local car rental agency to rent six Lincoln Town Cars on a month-to-month basis. Over the next two decades, Goodman grew his operation into one of the largest chauffeured and charter bus transportation services in South Florida.
In looking at the period from 1983 to 2013, what have been some of the better/helpful industry trends related to running a company?
I have always tried to offer our clients a vast majority of different types of vehicles to choose from, and not being afraid to take a chance and to try out different ideas. For example, in 1998, when Lincoln came out with its first SUV, I believe we were the first company locally to purchase the brand new Lincoln Navigator and add this to our fleet. Needless to say, the idea of adding SUVs to a fleet “caught on,” and as they say, the rest is history.
What trends have made the industry/business more difficult/challenging?
Besides the obvious economic challenges that we all have faced through the years, we have been through stock market crashes, recessions, etc, the sensitive issues of employee vs. independent operators have been without a doubt the most difficult and challenging issues of our industry. Coming from the “old school” of paying chauffeurs (and being paid myself as an IO when I was a chauffeur) as IOs for the first 35 years of my career, then to see and experience that world doing a complete 360-degree reversal, has most definitely taken its toll on our company, both financially and personally.
Running an employee-based company today and paying chauffeurs as employees has its advantages, but the period of the last five years making that reversal has burdened us financially with litigation. The bottom line is almost the same; however, the overzealous and unscrupulous attorneys out there who persuade hard working chauffeurs that there is a “shortcut” for a big payday is very disheartening. In the end, of course, it’s the attorneys who only care about their billing hours and could not care less what their “chauffeur clients” get in the end. I only wish that somehow there was way to communicate these points to the many great chauffeurs in our industry who work so hard.
What time period within the last 30 years brought the most sales revenue/service growth for the industry, and what factors enabled that?
I think most would agree that the “Clinton” years were without a doubt the most fruitful years, at least for our company. People were financially successful with their investments (and their gambles), and those eight years were very successful for our company as well as our city. In the year 2000, the very first “five-star” hotel property opened, which was the Mandarin Oriental, and since then there have been three Ritz Carlton properties, a Four Seasons Hotel, a W Hotel, a St. Regis Hotel, and a complete new 1,500 room Fontainebleau Hotel, along with many great stylish “boutique” type properties that opened since 2000.
What would you tell a new operator starting a chauffeured business, knowing what you do now?
Insofar as running and managing your business, if your dream is to grow and own more than a few vehicles, my advice would be to hire a good attorney immediately, and ensure that your business plan will comply with all local, state and federal regulations and laws. Leave your ego at the door and try to hire people who are smarter than you!
Starting out soliciting clients, there are many avenues to explore. The main thing is to get your name “out there.” This could be by donating a car on local radio and TV stations that are giving away event tickets coupled with limousine service. Subscribing to your local financial news publication, reading it, and scanning over new businesses, people being promoted and transferred, and weddings and funerals are all great sources of revenue.
I used to bring lunch (hot meals) to different agencies and businesses, and then stay and eat with office staffs during their lunch hours. Don’t get over confident and always remember, you’re only as good as your last airport transfer! Always follow up with some communication after your service, whether it was good or especially if something went wrong. Try not to undervalue your company by undercutting the competition. . . “stay the course” and be proud of what you are building and don’t be afraid to get the rate you need to survive. We would all be the busiest company in town if your sign at your office said, “Free Transportation.” But that is NOT the way to go!
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