Operations

How To React To Change

Lexi Tucker
Posted on January 10, 2019

Doug Schwartz and Steve Qua

Doug Schwartz and Steve Qua

ATLANTIC CITY, N.J. — Change is happening faster than ever in a world where everyone can get anything they want with the tap of a smartphone screen.

Depending on the size of the business you run and the kind of person you are, properly planning for your company’s future will be the key to surviving the “TNC-pocalypse.”

Operators Steve Qua of Company Car & Limousine in Cleveland, Ohio and Doug Schwartz of Executive Ground Transportation in Bellmore, N.Y. led a roundtable session at LCT East on Nov. 5 called “Mapping Out Your Business Plan To Maximize Future Success” that focused on how operators can prepare for coming technological and financial interruptions.

Matching Methods To Managers

While Qua and Schwartz run businesses similar in size, they differ in how they operate. Qua has 29 vehicles and 49 employees, while Schwartz has 27 vehicles and 52 employees.

“I operate my business the way I operate my life — I fly by the seat of my pants,” Schwartz said. “Steve plans, forecasts, draws charts, and has projections. He may be able to tell you something about the future, but then again, he may not. At the end of the day, I think both businesses get to the same place, just in a different way. I think this session is more about being prepared about things we can do to help ourselves be ready when change happens.”

Qua said he likes details he can identify and creates a business plan at the start of every year. “We tie those forecasts to revenue items, vehicle purchases, etc. so when big change lands on our doorstep, we’ll know what happens to our fixed, semi-fixed, and variable expenses.”

For example, Qua acquired a substantial 30+-year-old company this year in Cleveland whose owner died. “When it came apart, I was the only one standing there with a check in my hand. We were able to go back in, take a look, and say, ‘We’re going to add this much revenue to our top line based on our experience levels. What is the distribution of trips, revenue, and expense going to be? And what will happen to our variable expenses based on that change?’”

Qua has a spreadsheet that, when you change a line item, distributes it through the rest of it. If you are interested in receiving a copy, email him with the subject line “spreadsheet” at [email protected] “It’s going to be based on our percentages and not yours, but it’ll give you an idea of what we did.”

Schwartz also did an acquisition similar to Qua’s. “I didn’t make any forecasts, charts, or studies. I looked at the gentleman’s gross revenue, how much he wanted from the business, and how I could fold it into my operation. I’m a sole proprietor, so I have control of those things and I don’t have to answer to anybody. We went ahead with it, and four years later, we’re doing well.”

Handling Rapid Growth

(L to R) Steve Qua and Doug Schwartz react to some of the thoughtful answers operators came up with in their roundtable groups.

(L to R) Steve Qua and Doug Schwartz react to some of the thoughtful answers operators came up with in their roundtable groups.

Scenario: Seven roundtables of operators discussed the following situation: You wake up tomorrow and have an opportunity: A business fell in your lap and your revenue stream and trip count goes up 30%. What do you do?

Table One: Is there a contract in place? Where’s the guarantee the new business that comes in will protect you? You have to be able to identify your reasonable acquisition rate to take that 30% and add assets, back office infrastructure, and other elements. If you don’t have a contract, you can work with your local networks to identify the support infrastructure to help you until you can build on that asset.

Table Two: You have to hire quickly. At first, you would have a lot of overtime and would need to invest in equipment, but then you would probably take a harder look at what you have and make sure you are using it properly. Hopefully in your marketplace you get along with your local partners, and you would have to use some of them initially before you could ramp up. If it’s just overnight, you will not have the equipment on hand to service 30% more, and if you do, you’re probably not properly using what you have. If it’s a contract, that’s totally different, because normally they give you some time to buy equipment for it.

Table Three: How profitable is the additional 30% revenue? Are you charging full rate? Or are you giving a 20% discount to get this additional revenue? Don’t just assume you’re buying a company or somebody is going out of business. If it’s an influx of business, do you have the processes in place to handle it right away? If you’re already at 80%, 90% usage, and your vehicles are moving all the time, your natural reaction is, “I can’t handle this.” Some of those at this table said, “Well, I can actually take 30% more revenue and be semi-okay.” Generally speaking, they had to decide one, is it profitable, and two, is it contracted?

Table Four: One of the biggest challenges if you went up 30% would be scrambling for chauffeurs. The biggest thing would be having the staff on hand to make that happen.

Table Five: There are many variables to consider. Depending on your size, it affects everyone differently. It depends on the type of revenue. If it’s sedan transfers, that’s one thing; if it’s a bus contract, that’s totally different. The biggest challenge we pinpointed was staffing. At certain levels, it will be a challenge for most people.

Table Six: We’ve found it difficult to find CDL chauffeurs with passenger endorsements in the quantities we need during the last year. We talked about some of the different things we do to find people who are different and use our staff to its best abilities, getting them to do more than they had in the past. Finding new systems to discover new people and getting them trained up to your standard as quickly as possible is always something you struggle with.

Table Seven: What we said at our table is how do you go out and find something that will increase your business by 30%? You have to develop relationships by joining associations, the GBTA, your local Chamber of Commerce, and MPI. You have to talk about what makes your company different — because without a differentiator, you’re only just another chauffeured car company. The differentiator is never the car, period. Nobody cares about cars; what they care about is what levels of service you are providing.   

[email protected]

Related Topics: Atlantic city, business growth, business management, Doug Schwartz, LCT-NLA Show East, Steven Qua

Lexi Tucker Senior Editor
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