People

Longtime Operator Offers Wisdom For Worst Times

Martin Romjue
Posted on March 27, 2020
Rose Chauffeured Transportation founder H.A. Thompson at the 2017 LCT Leadership Summit in Miami Beach, Fla. He's now retired in Myrtle Beach, S.C. (LCT file photo)

Rose Chauffeured Transportation founder H.A. Thompson at the 2017 LCT Leadership Summit in Miami Beach, Fla. He's now retired in Myrtle Beach, S.C. (LCT file photo)

Don’t worry about the sturdy statesman of the luxury ground transportation industry. He’s as sharp and mobile as ever and doing just fine.

Like most of America, H.A. Thompson, 86, is staying in his one-story house in Myrtle Beach, S.C., where he is retired and lives close to his daughter and family. He retired from Rose Chauffeured Transportation and Rose Charters of Charlotte, N.C., in January 2019, 34 years after he founded the company. His son, Andy Thompson, 51, now runs Rose, which has a fleet that includes sedans through motorcoaches.

Although he no longer runs a fleet business, Thompson is keeping up with the COVID-19 crisis that is decimating the ground transportation industry and hearing about it firsthand from his son and former colleagues at Rose. They face painful numbers like everyone else, such as losing $500,000 in booked business in just two short weeks.

“The ground transportation business is getting slammed because it’s a total cash flow business,” Thompson said. During his time running Rose, Thompson was always a vocal advocate for making each vehicle earn its keep. Whether a sedan or a 57-passenger motorcoach, each vehicle was broken out as its own P&L unit on the financial balance sheet.

His advice now is the same as in good times.Look at the revenue each vehicle generates. If it’s not making money, get rid of it. You can’t get romantic or sentimental about any vehicle.

“The biggest thing of all to remember is this is a people business,” he adds, citing the value of client and customer service and relationships. “Some operators say a vehicle is paid for, but it still depreciates and has maintenance costs, so there is no excuse to keep it.”

Thompson says an operator needs to look beyond total fleet revenue. “It’s very easy to get over-vehicled. Better to be ‘under-carred’ and farm out to your affiliates and get your vehicles paid up.” That will be the best approach once luxury ground transportation operations have to ramp up again once the current crisis wanes or subsides.

What’s so difficult about this downturn is the question of whether operators should mothball or sell off their fleet vehicles. Thompson says it’s a judgment call for each operation in each market. “This crashed just before the April-May-June boom market, and we will get killed. I don’t think you could sell a bus or minibus easily right now.”

This economic crash is proving the virtue of strong cash reserves, says Thompson, who always took a conservative financial approach to managing his operations. “Like a club or restaurant, a (ground transportation) operation is dollars in and dollars out. You have only a short window to do business unless you have a big bankroll behind you.”

Thompson disciplined his finances so his company could maintain a healthy savings and checking account. “I always kept excess money in the bank. Payroll can be very high every two weeks. If you have to tell employees not to cash their paychecks until a certain date, then it’s the kiss of death,” he says, adding he’s observed too many chauffeured transportation operators doing that over the years.

Thompson adds he could not have accumulated strong finances without the help of a CPA and sees such services as vital to any business and worth the cost. “When times are tight, I don’t spend it down. I’m real disciplined when it comes to the money. Remember, it’s not really your business. It’s the company’s business and also belongs to the people who work for you. You have a responsibility to your team.”

While Thompson points out there are many good vehicle deals out there now in this downturn, he strongly advises not to buy one unless absolutely necessary, saying it can be the kiss of death. If an operator does buy a vehicle, better to look at used ones and finance them at low rates than pay cash for them.

“Everyone will give you a good deal today with so many people out of work. Everyone has to survive. But a good deal doesn’t help you if the business is not there and may not be there for a few months.”

Operators should also not pay their chauffeurs and drivers unless they are working. Period. You will be saving on maintenance, labor, and gas, so it’s important to maximize cash flow, Thompson says. As painful as it may be, lay off admin and part-time employees first, and don’t spend more money on remaining employees than you have to.”

Another tip: “Know how to get the best credit.”

On a more positive note, Thompson believes top-line service that doesn’t skimp will be the critical determiner of which companies succeed in getting business back when the crisis turns. To achieve that, operators should respect all their drivers and chauffeurs: Invest in training and skills for those who stay on the payroll and keep in touch with the ones who must be furloughed or laid off. “Help all of them with what they have to do. Don’t lose them.”

The vehicle is always second to the chauffeur or driver in appealing to customers. As quality service and customer experience defined the industry before the pandemic, it will be the prime driver of success afterward, Thompson says.

“Service and performance come first. You want to make sure they love their jobs, because there is so much mediocre service out there."

For now, the spry senior will keep healthy and look forward to the day when he can once again enjoy the local attractions of Myrtle Beach. The former D.J. and radio show host enjoys theaters, Broadway-style singing, and Bee Gees tribute bands.

He remains optimistic about the company he started in 1985 as a limousine service with two Rolls Royce classic sedans.

“Thankfully, Rose is a mature, established company that’s built up assets and we can survive longer than average. It’s just tragic what’s happened.”

Related LCT articles:

Related Topics: coronavirus, cost efficiencies, cost savings, covid-19, crisis management, disasters, emergency planning, emergency preparedness, finance, fleet management, H.A. Thompson, North Carolina operators, profits, revenues, Rose Chauffeured Transportation

Martin Romjue Editor
Comments ( 2 )
  • john lee

     | about 19 days ago

    Dont want to sound mean...But maybe many bad limo companies will go out of business...This will help the industry get rid of the unprofessional and corrupt ones.. In my opinion only about 10-20 % are great companies.

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