A look into how cryptocurrency might change the service industry.
ATLANTIC CITY, N.J. — Business owners everywhere want to know the answer to the question: How do I make more money?
Let’s face it, unless you run a charity, you’re in business to make money. So how do you make more money? Tim Rose, owner of Flyte Tyme Worldwide Transportation in Mahwah, N.J., and Chris Wolfington, owner of City Car Services, which owns TOC Chauffeured Transportation in Cherry Hill and Trenton, N.J., and Carey of Houston, helped operators at LCT Show East in Atlantic City navigate their way to a better bottom line.
Goal setting needs to be the starting point for operators. Create a mission and define the culture of your company. As part of that, business owners need to make profits an integral part.
“Profitability helps everyone,” Wolfington said. “It allows you the ability to give raises and buy equipment. Everyone wants to be profitable. It should be part of your corporate culture.”
Metrics For Profits
Rose recommends developing metrics to measure profitability. “If you don’t have metrics, you are not using your dispatching software to the fullest,” Rose said. “At an executive level, we know that it is important to spend the time looking at the reports and making a plan of action.”
He encouraged operators to work with their financial people to look at the spreadsheets and understand what is happening. “If you don’t have a CFO, there are companies out there that let you rent a CFO for the day. These folks are experts and can help you learn how to put together the metrics and the benchmarking for all of your costs.”
Wolfington encouraged the audience to understand their costs. “If you are not optimizing your fleet, this is a huge area where you can help your profitability. Do you have the right quantity of vehicles and the right mix?” he asked.
“On any given day, look at your assets,” Rose said. “Lincoln Town Cars could be purchased for $12,000; now they are $40,000 for a smaller vehicle. The cost of vehicles has gone up dramatically but our pricing hasn’t.”
Developing local farm out partners to assist during peak times was important to both owners. They encouraged good, healthy relationships with farm out partners. “If you build your fleet for your peak times, you are building a church for Easter Sunday,” Wolfington said.
“Your fleet must support your infrastructure,” Rose added. “Don’t delete your fleet metrics by farm outs.”
Rose suggests looking at your biggest costs first. “Look at payroll, for example. You need to understand what is involved in your payroll. In Los Angeles, for example, overtime costs can be significant. You may want to hire three shifts of drivers to alleviate the need for overtime. You may want to move your office to a more centralized location,” he added. “An L Series Town Car was $4,000 more to purchase. Do you really need it? Look at what your competition is doing. We added Chrysler 300s and had great success with them.”
Wolfington disagreed. “We make conscientious choices to incur costs that will make the customer experience better. It is a philosophical choice but this is how we can differentiate ourselves. We put Wi-Fi in our cars to do this also. We make an investment that is strategically motivated. You may not be able to prove it up front. Some choices are just not cut and dry.”
Both laughed when the word “drastically” was discussed. “There is no silver bullet,” Wolfington said. “You just need to make this a priority every day.”
On vehicles, Rose explained that his company is testing and trying many different vehicles. Both stressed that the life cycle of the vehicle plays into the costs. “The older the vehicle gets, the more it costs you in maintenance. You need to know and understand the cost of keeping older vehicles.”
On insurance, Rose said he hired an insurance consultant. “For years, I was with the same company. Now I take myself out of the mix. The consultant prepares an RFP and I get the best pricing. Shop around your top tier costs. On the other end of the phone is always a sales person who wants your business.”
You should understand your selling price. Both encouraged owners to make sure that what you are selling your service for covers all costs. “You need to know how many trips you need to do to cover your overhead,” Wolfington said. “Define what costs are direct expenses and what is general overhead.”
Rose added, “You should understand how much it costs you to take a reservation. Whether it is $5 or $6, there are ways that you can reduce this through automation. Encourage your clients to use your online booking tool.”
Customers are becoming more sophisticated, Rose said. “You need to have transparency in your pricing. Customers now can compare pricing online and book right from there. You need to know what your competitor is doing but you also don’t want to give away the house.”
Both told operators to understand cash management. “Cash is king,” Wolfington said. “When you are looking at you P&L and you are making money but you have no cash in your bank account, you are upside down. Make sure you have a cash flow statement as part of your financial statements.”
Rose told everyone that he signs every check for his operation. “Sign every check and you will always know where your money is going. Know what is being procured in your organization. Also manage your credit cards. Make sure that credit card purchases are handled and logged the same way that cash purchases are.”
Top Ways To Improve Your Bottom Line
1. Set goals and make profitability part of them
2. Develop metrics and benchmarks
3. Understand your costs
4. Make sure your prices cover your costs
5. Know what purchases are being made in your organization
A look into how cryptocurrency might change the service industry.
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