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.