Luxury Coach & Transportation

March 2015

Magazine for the professional limousine, charter and tour industry.

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56 LIMOUSINE, CHARTER & TOUR MARCH 2015 WWW.LCTMAG.COM hours a day. You have to look at the time of vehicle usage because that obviously affects your vehicle wear and tear, main- tenance, and replacement costs." Determining your chauffeur labor- business model also should be a major factor in business growth, he says. "You have to decide if you want chauffeurs as employees or independent operators. The IO model doesn't cost you much; maybe some inspection and regulatory fees. You can invest the money in other things besides feet. But, at what cost? Are you sacrifcing quality of service be- cause IOs are not employees and don't have your high standards? Again, you have to decide if you want to be a frst or second-tier company." issues. Unit costs are important. What are you making per hour per vehicle? Is buying that additional sedan cost effec- tive? Or should I farm out the business? He cautions growing operators that if they farm out some business they have to make sure the vendors have the same quality vehicles that you do otherwise, that's a problem." Assolin advises operators to study their markets when looking at growth and costs. "For example, some markets run 24 hours, like New York and Los An- geles with fights coming and going at all hours. My last fight might be at 1 a.m., so you have to weigh the market and hours of operation. My last fght is around 1 a.m., so my use of the feet is 15 hours a day. Maybe in Milwaukee it's only 10 that initial ramping up milestone," Rose explains. "So adding 10 more cars may not be as diffcult to get to the next tier." Tipping Points Rose recalls one lesson he learned from growing his company is there are certain "tipping points" along the growth curve. "Different thresholds come up at differ- ent times that you have to deal with, such as when do you hire that second dispatcher, or an overnight guy? Or now you need a bigger garage. Say you have 10 cars and have a 20-car garage, then 20 is your tipping point because that's your threshold. But if you have a 25-car garage and you're going from 20 to 25 vehicles, that's not a big deal." The 20-to-50 vehicles range resembles a fnancial plateau since net proft can stagnate while a company adds vehicles and staff, Assolin says. "The dynamics change at certain levels because you are now adding car washers, offce staff, maintenance people, benefts, and you may not see the return on that invest- ment for a while but you now have ev- erything in place to go to the next level." He stresses that growing your business hinges on what kind of operation you are running. "Are you a high-end profes- sional company with well-trained staff and chauffeurs and the best vehicles? Or are you a second-tier company that does the bare minimum? That will affect when you see more proft." Growth and profts depend on your market, Assolin says. "Are you doing de- manding airport transfers, road shows, or runs that require more staff and over- head? Or are you doing low-maintenance hourly work? That will affect your staff- ing, expenses — bottom line." On The Money For money management, Assolin advises looking closely at profts in detail. "A lot of companies I admire will turn away business if they're not making a least 30% proft. They really focus on what they are making per client. They might have 35 cars but 95 headaches because you have more cars, drivers and maintenance PEOPLE ARE YOUR GREATEST ASSET HIRE SMART: When staffing your growing opera- tion, New York operator Jeff Rose gets right to the point. "Be careful of hiring people like you. Don't be afraid to hire people smarter than you who will challenge you because they have strengths that you don't have. Keep your ego out of it. I have people who are better than me at certain things and hae strengths I don't have. I love that." BANK ON TRUST: "If I had a choice between hiring a person that ranked 10 on the skills scale and another who ranked [lower] but I knew he was more trustworthy, I'll take trustworthy every time. No matter how many non- compete and confidentiality agreements you sign, the lesson learned is to be careful whom you trust because people are going to burn you at some point. Just make wiser choices when you hire. The three things we look for in hiring are com- petence, reliability and character. We don't worry too much about experience. My current chief of staff never worked in the industry when he was hired but we saw his skill set and he was trustworthy and he moved up the ranks," Rose says. DOLLARS SENSE: Matt Assolin advises small operators moving from small to mid-size to hire a financial person. "It's important to have a clear picture about your money because if you don't — it just goes out the window. Owners of small operations have an emotional tie to the business and that can create a clouded picture. You need someone — a part-time financial advisor or bookkeeper — who is not part of the operation who can step back and examine your numbers and present you with a clear financial picture and statement. And it shouldn't be from the 40,000-foot view, but maybe the 10,000-foot view to see what you are spend- ing too much on and maybe cut back. It just gives you an objective view of your money without your emotional ties to the business." For example, "You may have an account that you worked very hard to get where you provide 20 rides a day. But your financial person looks at the account numbers and says you are losing $5 per ride. So when you multiply $5 x 20 per day, per week, that loss adds up pretty quickly. The owner is very attached to the account but his emotional cloud doesn't give him a clear financial picture. The financial person does." RESPECT: Rose also offers this gem: "It's very important for staff to respect the prerogatives of ownership because I'm the only one who can't quit." t h " MANAGEMENT & LEADERSHIP

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