Industry leader and California operator Maurice Brewster contributes insights to a Wall Street Journal article.
When I entered the ground transportation business in the early 90s, our company launched as a limousine service.
We didn’t operate sedans, SUVs, vans, or buses. By 2010, buses had become big business and a staple of the industry. Providing contract shuttle service was guaranteed income, steady work for many drivers, and a financial security blanket for our company. Landing a shuttle contract could reignite your cash flow, but will likely have many strings attached.
You might be surprised at how many different types of contracted shuttle work are available, such as driving newborn babies home from a birthing center, transporting airline workers between a hotel and an airport, and delivering oilfield workers to the dusty drills and rigs for work each day.
We even had a contract with a professional “firing company” like the kind George Clooney worked for in the movie “Up in the Air.” For people assigned company cars, they arrive at work, get fired by a stranger, and are then given a chauffeured ride home. Someone has to do it, and it might as well be you.
What type of shuttle jobs you land will depend on the vehicles in your fleet. Or, what type of shuttle jobs you land might determine what type of vehicles you buy in the future. In this type of work, you can put the cart in front of the horse. It is important to match the equipment to the job and for the size to be proportionate to the average number of passengers served on a particular type of job.
For example, if you land a shuttle contract with a hotel to drive guests to and from the airport, it is likely you might have two to six passengers during any given trip. Running these types of trips in a 24-passenger shuttle bus with a cargo hold is probably overkill and not cost efficient to operate. A van with the rear seat removed would be ideal for this type of work.
More than one operator has shared with me a horror story of buying a bus and crossing their fingers they find work for it. This is not a plan nor controlled growth. This is operating willy-nilly, and it will likely cause your business to fail if you get in over your head. New motorcoaches can easily cost $500,000 and up. If you are simply crossing your fingers and hoping for charter bus business, you likely will not be able to make your bus payment, let alone pay for insurance, buy a tank of gas, or even pay for a $1,200 oil change when it’s time. Only consider buying or leasing a vehicle if you have signed a long-term contract that factors in the vehicle payments, insurance, and other operational costs of the vehicle.
Ideally, a long-term contract would be for a minimum of three years, but that isn’t always possible. Just make sure you have a contract before you acquire a new vehicle specifically for shuttle purposes.
You may wonder how you can possibly pitch a prospect for a long-term contract when you don’t have the vehicle needed to complete the job. There are a couple of ways you can handle this. To begin with, experts in the industry have always recommended farming out work until you reach a level where you are farming out enough business to sustain the acquisition of a new vehicle. For example, many sedan operators farm-out all their SUV work to others who own SUVs. Eventually they get to the point where they are farming out so many SUV jobs it makes sense to purchase one and feel confident the income will be there to support it.
This is exactly what I did to get into the charter bus business. I developed a relationship with a local charter bus company. I began advertising we were running charter buses although we didn’t actually own any. I was lucky the charter company I worked with ran buses with no logos. Unless you are in our industry, most people don’t look for the legal identification required by DOT regulations. When someone wanted to preview a bus before a charter, we would either have the charter bus company deliver the bus to the client for inspection or make an appointment at our office and have them bring a bus over to our yard. The charter bus company rented their bus for $95/hour but I was able to get $175/hour from our upscale clients. They knew by allowing the preview of their vehicle they would most likely get the job from us, so it was important they cooperated with previews.
In the worst case scenario, you can provide artwork in a proposal to represent the type of vehicle you intend to use. For instance, an energy company was looking for a company to provide employee shuttle service and put out a request for proposal (RFP) that clearly indicated they required a 15-passenger van for the work being requested. In my detailed proposal, I included some beautiful interior and exterior photos of a van taken from a Ford sell-sheet I picked up from my local dealership. I stated in the vehicle description on the proposal the van would be brand-new and bought specifically for them. I even superimposed their company logo on the side of the van for more visual impact. This made them feel an immediate sense of ownership when viewing my proposal.
A shuttle contract will spell out many requirements that may differ from your way of doing business. This can include everything from the driver’s attire to what is stocked in a First Aid kit to a fire extinguisher in a vehicle that doesn’t even legally require such equipment, such as a sedan or SUV. In the contract to shuttle newborn babies and their mothers home, drivers were required to take lunch breaks in the hospital cafeteria. This was a significant consideration, as technically the driver is not relieved of duty and is required to be in a certain place and thus is paid for their one-hour lunch break. During the course of any given day, this means two drivers getting a paid break at $12/hour. That totals more than $8,600 over the course of the year and must be factored into the contract rate.
Hotel shuttle drivers may be required to wear a hotel branded uniform and even drivers who took people to work in the oilfields each day were required to wear the uniform of a service company we worked for. If thoughts of this upset you, don’t bother responding to an RFP as these are non-negotiable requirements. If you don’t want to play ball, someone else will.
The level of detail of how you conduct shuttle service for a large company like Google, Chevron, or Schlumberger can be tough. Paulo Rhor with Schlumberger is tasked with contracting ground transportation companies to shuttle employees. Rhor says some of the things you can expect as a Schlumberger contractor are regular inspections of your vehicles including the contents of First Aid kits, inspection tags on fire extinguishers, crash documentation kits, inspection of DVRs (daily vehicle reports), and the presence of a hard hat if job appropriate.
You also can expect the tire tread depth to be checked, the functionality of emergency exits, and the presence of an insurance card and valid registration. It doesn’t stop there. You are required to hold monthly safety meetings and turn in all of your drug and alcohol testing results, including how many drivers were tested out of how many employees employed within your company and the results of all tests performed.
Anything not quite right can jeopardize your contract. Make sure every driver assigned to a contracted shuttle understands the importance of following every rule. Most large companies follow safety policies such as Engine On – Cell Phone OFF. This means the driver should never touch his phone while in the driver’s seat. There may be a requirement called “first move forward.” This means the driver can never park the vehicle where he has to back up to start his journey, or if he does have to back up, there must be a spotter present outside the vehicle.
Nothing is more essential than how you get paid. This often gets many new shuttle operators in trouble. Many large companies would like to be invoiced once a month. If you elect to accept these terms, you need to understand you will likely not be paid for two months. Let’s say you start a contract in January and invoice on Feb. 1 for the first month of January. Large companies will “age” the invoice and pay it on the first of the month following receipt of the invoice. The check will be cut on March 1 and mailed to you. By the time it actually gets to the bank, it will be about March 10.
Meanwhile, you must make the vehicle payments, monthly insurance premiums, fuel, and payroll, and wait for a check in March. It could sink your ship. A better way to do it is to write your contract so your client pays in advance for two weeks at a time. This is better cash flow for you and doesn’t stretch you out as thin between payments. Ask your client if they can deposit payments directly into your bank account to shorten turn-around time from invoice to payment.
Industry leader and California operator Maurice Brewster contributes insights to a Wall Street Journal article.
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