Luxury Coach & Transportation

March 2016

Magazine for the professional limousine, charter and tour industry.

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Whether it's spending $1,000 for unexpected maintenance, or additional advertising, or whatever, you'll need to gen- erate an additional $10,000 more in income because of that $1,000 you had to spend in order to maintain that 10% proft margin," he said. Added Michael Callahan, "Operators need to look at their yearly proft and loss statement and compare line item by line item over the pre- vious year and look for ways to cut costs." "We know the day we open the door each month we have to generate X amount of dol- lars in gross proft to pay for all overhead and semi-fxed expenses," Qua said. Insurance Operators nationwide have seen signifcant insurance spikes recently, with some going out of business because they could not secure vehi- cle insurance. The panelists agreed that operators need to take control of reducing their insurance costs. "The insurance market is hardening up and the industry is seeing some ridiculous rate increases," Assolin said. "You need to shop your agent, bro- ker, carrier — all of them. If you don't have 10 proposals on your desk, you're not getting the best deal. And make sure the insurance company doesn't send you a renewal the day it's about to expire. If they want my business, I need it 10 days before expiration or they're not getting my business." Reinforcing the point, Cal- lahan said operators should seek bids from multiple agents who can go to different pro- viders to secure the best poli- cy. He added it's important to make sure your vehicles are insured for their actual cash value, as they depreciate over time. "You shouldn't be pay- ing the insurance price for a $40,000 new vehicle when two years later the vehicle has 140,000 miles on it and is only worth about $15,000." In the event of an accident, it can be more cost-effective to repair the vehicle out of pocket than fling a claim, Cal- lahan said. It's all about loss runs to insurance companies, so you have to minimize your losses and know when to fle a claim. Insurance companies go back three years and look at your claims. That will affect your rate increases, so out-of- pocket spend this year may pay off three years from now. Another way to save money is to increase your deductible, he added. Assolin noted that opera- tors can help reduce their insurance costs (or at least hefty hikes) by monitor- ing chauffeurs to make sure they don't have too many accidents, speeding tickets or other negative factors that can affect rates. Having ran- dom drug testing in place can alleviate potential problems while installing drive cams — all risk management measures to save on insurance. "If you manage your risk, you can control your costs," he said. Fuel With fuel being one of the top spends, the panel agreed that anything operators can do to save money goes right to the bottom line. Qua said fuel cards offer rebates and cash back that can save money. Even if you get as little as a 1% discount on $100,000 of an- nual gas spend, that's $1,000 in your pocket," Assolin added. The panel also advised against operators installing their own fuel tank in an ef- fort to say money. "Fuel is a hot topic for everyone," Qua said. "There are a series of li- abilities with installing your own tank that may not be worth the savings, such as fuel leaks and pilferage from the tank which could wipe out any savings." Assolin added, "Owning your tank is a huge liability is- sue to justify the extra costs, such as permits, OSHA certif- cations and some municipali- ties require you build a cement wall around the tank. That's a lot of investment, and if your chauffeur is on the road and needs fuel and isn't close to the offce, there's no savings." The panelists agreed that installing GPS devices on ve- hicles controls fuel costs by monitoring fuel consumption, speeding, excessive idling, and other fuel-wasting mea- sures. "If you don't have a GPS in 2016, you are way behind the curve and missing out on fuel cost savings," Assolin said. "I've had GPS for 10 years and it's a way to save money by catching chronic speeders, chronic idlers, and chauffeurs who go off route. In addition, miles equal dollars in terms of maintenance costs. You save miles, you save dollars." Technology The panel concurred that tech- nology investments can help reduce staffng and operation- al costs, but cautioned to frst maximize every component of every application before you buy additional software. "Operators need to un- derstand what your software does before you go out and purchase something that you think you need because may- be that component you need is already built into your exist- ing application but you never used it," Assolin advised. Callahan agreed, adding that technology can help min- imize offce, saving money. "I read that it costs about seven to eight dollars to book and manage every reservation, so if you can use technology to book a reservation and push clients to your portal, you re- duce labor costs." Squeeze Vendors Just as clients squeeze opera- tors for discounts and lower prices, operators should do the same to their suppliers to reduce operating costs. "We use a Cadillac dealer for maintenance and get a dis- count for parts and the hour- ly service rate, but if another dealer offers me a better deal, I would move my business or ask the present dealer to match the offer," Assolin said. "Make vendors responsible to you. At the end of the day, people squeeze us for discounts, so if you have volume business to give to a vendor, they need to meet my needs." — Tom@LCTmag.com LIMOUSINE, CHARTER & TOUR MARCH 2016 45 Cost cutting panelists (L to R) Steve Qua, Michael Callahan and Matt Assolin covered money saving ideas across key operational activities.

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