A Different Model. A Different Company.

My last Chauffeur Blog set out the difference between an executive car company and a minicab office and the way drivers work for them. An executive company largely accepts bookings in advance where passengers have planned ahead. A minicab office mostly accepts spontaneous bookings. There has been a massive upheaval in both of these markets in recent years by new ‘tech’ companies. Uber, Lyft and Ola are typical of disruptors using mobile phone technology to book and organize journeys.

The way new ‘tech’ companies offer cars at short notice is just the same as traditionally cab companies have done for years. They ask a self-employed driver to pay them a fee in return for work. The driver will then work a shift and be available on-demand. For a busy driver it can be lucrative, for a quiet driver it can be dire. Some drivers work sixty hours a week with many hours spent sitting around waiting for a job. The hope is that over a week, the busy times cancel out the quiet times and the average is sufficient to make a wage.

Last week, one of the UK’s biggest private hire companies ‘Addison Lee’ made the media after three of their drivers took them to court. The ruling said the drivers should not have been self-employed. The impact could be immense and I wonder whether many operators will survive as the knock-on effect is huge. Just to highlight a simple fact: historically what a driver earned from fares was their income, now it would be considered the companies. This in turn leads to all sort of complications when managing money!

Firstly, the operator (or company) would no longer receive a fee from individual drivers as their income. Instead they would have to collect the all fares which would be considered collectively for multiple drivers. Ultimately this requires VAT to be charged at an extra 20%. For business customers like we have at DrivenByQ this is not an issue but for the general public this could be catastrophic. The money would need managing and a payroll established. Add administration costs to the equation and there would no doubt be cash-flow issues.

Since becoming a Limited Company in 2007, DrivenByQ registered for VAT and at all times informed drivers in advance of what their bookings would be. Between jobs, drivers go home or have downtime. This means their hourly rate is favourable because there is no requirement to sit around for hours on end and wait for a journey. We never charged a weekly fee either. Instead we earned a commission from each driver’s journeys. The commission increases with their turnover so it is favourable to increase their overall earnings.

I wonder where the industry will now start heading. With the Taylor Review having an effect, court cases coming to a head and new technologies emerging, I am sure there will be lots more change to come. Just consider electric vehicles, driverless cars, workers rights, drones and the possibility of car ownership becoming a thing of the past and you could quite easily be excused for feeling gloomy. On the other hand, this change we are seeing could lead to a very exciting time where there are lots of opportunities on the horizon. Maybe, you just need a different vision to see it?

A New Model. A New Chauffeur.

In the last year, DrivenByQ has been through some fairly big technical changes which have mostly occurred in the background. If you were to go back and read through my Chauffeur Blog you would see that acquiring a new account customer lead to a domino-effect. Simply increasing the turnover past a certain point meant changing our VAT arrangement. This lead to the purchase of new company owned Mercedes vehicles and that in turn lead to the hiring of our first ‘employed’ driver.

Not many people know it but the private hire industry works quite differently to most business models. The majority of the time, the cars and drivers are not owned or employed by the company. Instead, they work on a self-employed, sub-contract basis. Historically, DrivenByQ has been the same. Using self-employed drivers who own their own vehicles. The advantage of this is that it keeps costs fixed and it provides a flexible workforce. Additionally (and it may be brutal but) anyone underperforming is quickly replaced.

Minicab offices use the same model and always have done with drivers paying a rental fee (or settle) for their radio equipment. At DrivenByQ we use a commission rate which is proportional to what a driver earns. The difference however between a minicab (or taxi) office and the executive work which DrivenByQ carries out is that a minicab driver will work a shift pattern of up to twelve hours and wait to see what they earn - which is sometimes very little. An executive driver will know in advance what they are working and will only work when required.

The real separation between the two models is that a minicab (taxi) office will have drivers ready to go ‘on demand’ whereas the executive company will struggle to cover jobs at short notice. This was the industry standard until a few years ago when digital disruptors (like Uber and Deliveroo) arrived in the market. They attracted a new kind of person to the industry who demanded conditions more akin to a traditional type job. Comparing earnings to hourly rates of pay resulted in legal claims being made and over time, the government’s response was to publish the Taylor Review.

The outcome of this report was to recommend more people be employed on an hourly rate where they could also receive worker’s rights. I am proud of the fact that DrivenByQ has always paid some of the best rates to self-employed drivers and they have in turn been able to invest in nice vehicles. This summer however, with the purchase of company owned vehicles and a change in the way we reclaim VAT, we spent time constructing a bespoke ‘contract of employment’. We then took on our first ‘employed’ driver who has sick pay, a set hourly rate and a holiday entitlement.

Chauffeur Blog Of The Century

So here it is! Blog 100! In all honesty, when I started a ‘chauffeur blog’ I wondered if I’d still be writing original content after authoring this many. Initially, the blog was meant to enhance the presence of DrivenByQ on the Internet and demonstrate technically proficiency but nowadays it is so much more important than that. It plays a major role in my thought process each week and it forces me to focus on topics very analytically.

Looking back over previous blogs many posts attempted to differentiate DrivenByQ from other chauffeur companies. Mentioning how our mobile technology and processes are so far ahead should have triggered a deep thought process for anyone still using pen and paper. Strangely as the ‘cloud’ becomes more main stream DrivenByQ is reaching a similar level of maturity.

Thinking about IT, the truth is, I like to plan ahead. Even if obsessive sometimes, I think it is a key strength. Looking toward the future and visualising what our operation could be like helps engineer out many of the problems a growing business encounters. It ultimately prevents crisis situations occurring when demands on the business increase or systems are pushed beyond their original requirements.

Coincidentally Blog 100 comes at a time when we are achieving the aspirations of our original business plan so it is time to revisit all that we do and ask if our processes are still fit-for-purpose. The Toyota Lean Principlesadopted by DrivenByQ work well but when I recently toured one of their factories, I experienced something never mentioned in any of the books! It was eerie. It felt clinical and obsessive about theory. There was a distinct lack of fire fighting or mayhem sometimes associated with production environments.

Seeing this for real was a valuable lesson. Witnessing such little drama combined with genuine objectivity regarding the process provoked me in to recognising we need to implement this principle at the heart of any future plans. We certainly have the time and the money and the opportunity available like never before. It makes me ask, if the resources are in place to support rapid growth, constant improvements and continual development, what will happen to the future of DrivenByQ?