Time To Split

For some time now, I have been increasingly concerned that this Chauffeur Blog is conflicting. For anyone who has been reading will know, I am growing an established business while also growing a new one.

There is some crossover but the two companies serve different markets and different sectors, they are at different stages of development too and even have different marketing plans. It might be better to keep the themes running side by side?

From this point of view I have decided it would be better to write two separate Blogs. One for each company. I also think it would be better if the Blogs were actually on the websites of the companies they represent.

What I haven’t decided is if I should still keep this Blog as an overview of the other two? Either way, you can now find the two Blogs on their relevant websites by following the links below:

Manchester Airport Chauffeur Blog

DrivenByQ Chauffeur Blog

Turbo Lag

Standing outside a hotel, I’m waiting for a group to finish their meal when the first passenger comes out and strikes up a conversation. We talk about the economy, Brexit and how his business is doing. I drop in to the conversation that DrivenByQ have just had twenty-four months of continuous growth. He says that is impressive in the current climate.

Our figures for 2018 reflect a 30% growth in turnover. We brought in new drivers, bought new vehicles and improved our processes. It all sounds good - and it is! There is just one small thing to note though. Our profitability remained the same. The reason? We had to change our accounting method (a conundrum I previously wrote about).

As the turnover grew we were forced to abandon one VAT scheme and adopt another. At the threshold of £230,000 we could no longer use the flat rate scheme. Instead we had to use a traditional scheme. The difference meant claiming back VAT on purchases rather than retaining a generous portion of VAT on invoices as we previously did.

Purchasing vehicles and taking on an employee was the first step toward making the new scheme work for us. The reality however is that we are still in a transitional phase. I’m sure most companies go through stages where their business model changes and sometimes, you don’t really know the effect of that change until after the event.

So in order to generate more profit we have two options: The first (and easiest) is to reduce our turnover and go back to the previous scheme. The second is to grow our turnover, purchase more vehicles as a company and take on more employees. I will let you decide which one you think we are actively working toward.

The Rise of The Corporate Citizen

When I sit down and look at figures, the one thing which always amazes me is the way in which card payments have grown. A few years ago we introduced the option to pay in-car by card in all vehicles. Previous to this we had just one card machine which was a large (shoe size) device complete with a till roll for printing long receipts.

While the card machine was useful and offered flexibility it had some issues. Firstly, the battery did not last very long and always required charging for considerable time. Secondly it was expensive! Not only was a deposit required before receiving the machine but there was a monthly rental fee of over £30 and the fee on every transaction was an additional six percent.

The machine did help bring in new customers, especially if they wished to pay by Amex but it was clunky and slow. Added to this was the logistics of swapping the machine between cars and drivers which was challenging to say the least. With the advances in mobile phones and Bluetooth technology, time came to ditch the machine and instead use an app with a card reader.

The advantage of using a mobile phone meant a better data connection using the digital 3G network. Added to this was the removal of a monthly rental fee, no setup cost and finally the drastic reduction of transaction charges. They tumbled from six percent to 2.75% and now it is less than that. Tracking the sales figures is very revealing as the uptake is huge.

In the five years that I used the big old clunky machine, sales were at best £5k a year. As soon as apps were introduced the sales increased to ten times this amount in the next five years. The reason is what is known as ‘The Rise of the Corporate Citizen’ - which basically means travellers taking control of their own travel budgets.

Imagine having a large global company where hundreds (or even thousands) of people travel on business. In the old days a department (with staffing costs) would control the budget. They would be responsible for purchasing airline tickets, train tickets, hotel accommodation and ground transportation. These were all swallowed up in one big account which was then difficult to decipher.

Now compare this to all the people who travel having their own credit card. It becomes a lot easier to get a breakdown of costs and quickly identify an individual who is spending more than anyone else. It also provides a history specific to the individual so that trends can be tracked and interrogated for their data.

An additional bonus in all of this is the simplification of administration within an organization and the reduction of work for their accounts departments. Before the corporate citizen, we would have sent an invoice to a local site who had booked the travel for another site (usually overseas). The overseas site would then have been invoiced by the local site to recover the costs.

Although we charge the same amount for a journey on account as we do for card, the layers of administration which are removed by using card payments often means a company could pay more but still make a saving. There is also the transferring of payments across borders and exchange rates to consider and the time required to process all this.

For me, one of this biggest advantages to using card payments is the speed in which drivers receive payments. Today some payments are almost instant and at most a couple of days. In comparison to that big old clunky machine I had years ago, that is fast! I still remember having to wait up to three weeks and then work out what the lump sum related to.

For passengers, the biggest advantage is speed and convenience. Just yesterday afternoon I did a local transfer for less than £30. That meant the passenger could pay using contactless technology just like he did with a colleague in the morning. The only difference was when he asked for a receipt, I smiled and simply said ‘already sent’ - the app recorded his email address from the earlier trip. Simples.

Going The Right Way

Recently I have been writing about how I first started working in the private hire industry. Following on from that once I decided to make a go of it, I then started looked for a niche. With both DrivenByQ and Bluestone Cars, a crucial part of the business model was to introduce online booking. Today it is the norm but back then it was quite revolutionary. One thing to note here is that smart phones were new and only sold in small numbers, broadband didn’t really exist and computers were quite expensive. In 2003 the Internet was still in its infancy with most people using a 36k dial-up modem.

At the time, most companies were using fax to book their executive travel but this wasn’t great. First off, a fax could drop on the floor and be trampled. It could be mixed with other faxes and be lost or it could even get wet. If the information had been received intact, it still had to be transferred to a diary. This in itself introduced issues. Taking the experience of my engineering background and looking at the situation, I drew on a project I completed for my apprenticeship in the 1990s. This considered CAD/CAM and computer integrated manufacturing techniques.

As computer aided design (CAD) started to become popular so too did CNC machining. This allowed a skilled tradesman to program a precision tool path which cut a shape out of a piece of metal. The toolpath was determined from the CAD drawing. At some stage, someone realised the CNC programmer was simply copying the information on the CAD drawing but with the opportunity to introduce errors. The solution was to electronically feed the CAD data to the CNC machine with no manual transposing of data. This eliminated errors, reduced the time, simplified the process and decreased paper waste.

For me, creating a fax, feeding it through a machine and then reversing the process to create a diary entry was exactly the same as printing off a drawing and manually programming a machine from it – old fashioned and prone to ‘transposing’ errors. To add to this, in the early days I would receive numerous phone calls on a Friday afternoon from companies who wanted to check and confirm their bookings for the following week. With my lean hat on, I realised this was not ‘value add’. After all, what a customer really pays for is a vehicles wheels to turn, not for us to do admin. What they really required was access to share my diary.

Again, going back to my engineering background I had read multiple books about Toyota. One principle they have is that projects should be managed using a sheet of A3 paper and posted on a wall. This keeps the data simple and available to all users. It also ensures no matter how many times the data is updated, it is always the ‘current’ version which is shared. For me, this was a great principle to adopt and combine with the CAD/CAM integration. Quite simply, if a customer used an online booking form, they had created the data – all we had to do was share between users.

By introducing a database driven website, it gave the opportunity to collect data accurately from a customer through an online booking form. The data was automatically added to a diary system where it could be manipulated by an admin user (or manager). This process eliminated the need to transpose data and the need for paper. By using a smartphone the manager could be anywhere thus eliminating the need for bricks and mortar too. Not only did we do a great job with data by speeding up the process and reducing errors, we cut the cost of overheads too. Essentially a booking could now be received and processed within 30 seconds.

Another benefit of the online booking system was that customers could access it. Now they could view their bookings without needing to call. They could also access the system and make changes or just look at who the driver was. The final benefit to working this way was when it came to invoicing. No longer did we need to separate customers and drivers manually and create separate documents. This was now done through the database reporting tools where an invoice took just three seconds to produce and then it could be sent electronically further reducing costs. My Dad always said my head was in the clouds – these days, so is my business too.

Reflection Time

Every once in a while (like January), it is good to stop, reflect and review a few things. For a business to succeed, there has to be a strategy or goal so that our efforts are not wasted. I love the principle Toyota use for this of ‘Hoshin Kanri’ or True North. Hoshin Kanri is setting a compass needle and then following it to a desired destination. Having such direction is great as it keeps a team focussed, it informs everyone where they are going and it makes everyday decision making easier - all you have to ask yourself is, ‘will this help us fulfil our goal’?

So what is our goal? Well, it was set out in our original business plan many moons ago: First we wanted to create a great local company with a reputation for customer service. Second we wanted to manage it with an online booking system and then we wanted ‘growth’. That growth would utilise economies of scale - which were possible through the efficiencies created by our booking system and regional branding. So how are we doing?

Well, our ten-year-old cloud system needs a rebuild. Luckily, we have already started work on a state-of-the-art new system which comes online later this year. This time it can be sold to other companies too (so it will generate revenue).

To keep growing locally, we changed our VAT system last year so we could increase from £200k a year turnover to £1m without any more hurdles. This has already seen the employment of new staff members and the introduction of a pension scheme.

Further to this we replaced older cars with ‘brand new’ Mercedes vehicles. We also recognised that to grow regionally we needed work from a new source. To achieve this we went live with our new Manchester Airport website and had our first booking.

On reflection, despite the technicalities of specifications and regulations and legalities, we are on track. It is encouraging too when DrivenByQ keeps growing despite new customers saying they had “never heard of DrivenByQ”. Maybe that wasn’t part of our plan but at least it saved on marketing.

A-to-B, B2B or B2C?

In the early days of setting up my airport transfer business, I initially targeted the general public (or holiday makers). For the uninitiated this is known as business-to-consumer or B2C marketing. It requires a lot of input and constant effort to build it up. Back in 2003 the Internet was still in its infancy so attracting new customers required local advertising campaigns complimented with business cards and leaflets which could be costly.

I realised that to develop an airport transfer business in my local B2C market was futile. It required either a collaboration with a travel agent (giving them a cut of your profit) or constant advertising in a local magazine week after week. Either of these options ate in to your revenue and prevented you growing bigger than a busy one-man-band. This is because there was not enough margin left to bring in other drivers and exceeding the VAT threshold would kill you on price.

The alternative I chose was to target people from outside the UK who were travelling in to Manchester International Airport. The black cabs based at the airport were so expensive that there was plenty of scope to be competitive on cost and still have a margin. The only issue here was that I was based nearly 50 miles away from the airport and attracting any such customers would require good rankings on Google. In 2003 however, there was very little competition on the Internet.

As an experiment I built a website (www.bluestone.gb.com) and added a lot of tourist information. I added the site to a few directories such as DMOZ and surprisingly it ranked. Initially it was a top twenty page for the search term ‘manchester airport taxi’ and with some fettling behind the scenes it improved. I started to learn about the dark art of Search Engine Optimisation and things improved further still until eventually the site ranked in the top three of Google.

The result was some great work. I started to meet celebrities, VIPs and other interesting people. I also started to visit all sorts of new places across the UK. I had some great conversations too. There were a few issues with this business though. Firstly, it could be seasonal. Secondly, despite good prices there could be a lot of dead mileage and hidden cost which affected your margins and thirdly, it could be dramatically affected by a change in Google’s algorithm.

For anyone who doesn’t know, Google’s algorithm is its closely protected secret formula for how Google decides to rank web sites in the search results. In 2003, if your web site was your only income, it could be nerve racking! In fact, when Google rolled out a major change to its search criteria you could plummet down the rankings in an instant. This would effectively mute the business overnight.

Although the work Google provided could be rewarding it was sporadic. It was simply too wild to provide a regular income too. Recognising this fact, it was time to look for something more regular and something more stable. After dipping a toe in the B2C market and recognising its turbulent nature I turned to the local business community instead. With the tenth largest industrial estate in Europe on my doorstep and two major airports less than an hour away it seemed a logical step.

I had a few contacts which eventually brought in some good work. It was regular too and it began to grow. Now, after thirteen years of building my company DrivenByQ, it is established as the main airport transfer supplier to companies on Wrexham Industrial Estate and Deeside Industrial Park. This gives us a very stable customer base which (although slightly seasonal) keeps us busy all year round and pays the bills. It is our bread and butter income and has facilitated steady growth.

While DrivenByQ has been my main focus for all these years, I have to admit that the excitement which came from www.bluestone.gb.com was something which never left me. For that reason I have been working away quietly in the background creating a new company called Manchester Airport Taxi Ltd. With the extensive network of professionals I have come to know over the years and with Google rankings now easier to control with paid advertising, it is time for a second attempt at the International B2C market.