On The Up

Since the start of this year our figures have improved. Not just slightly but quite considerably. That means we are generating revenue and it means we are revisiting the plans we placed on hold two years ago.

When the financial crises hit the headlines in September 2008 we were aware of the news and exercised caution but there was no visible effect on our turnover. We remained cautious in to 2009 but still there was no effect. We began to think we were immune and perhaps we should carry on regardless?

In April 2009 the impact of the recession struck. Bookings stopped and our drivers had time on their hands. We abruptly encountered a different situation. Our cash flow suffered, our profits disappeared and plans for growth were put on hold.

A veteran of two recessions offered me some advice. He simply said “Don’t spend a penny!” and with hindsight he was right. The danger now is holding that position for too long and I believe at some stage we have to start action for growth. With revenue increasing, the big question is, should we start spending?

Competitive Information Technology

Few people know it but Henry Ford picked up the idea for an assembly line from an abattoir. He simply took the principle of a disassembly line and reversed it. By implementing mechanisation and standard procedure in a process he achieved economies of scale. The system was known as mass manufacture.

When the Japanese decided to produce cars in large numbers, they took the principle of mass manufacture and questioned where waste could be removed. They call it ‘lean manufacturing’. They focus on the value adding part of a process and then set about removing everything else.

In previous blogs I have discussed a common theme of efficiency, innovation and strategy. I have written about transposing information; exploiting the power of databases; controlling costs and improving quality. All these equate to establishing and maintaining a competitive advantage but for me, at the very centre of these issues and the real key to success for a service company is how we collect, control and processes data. Just like Henry Ford’s production line there are huge advantages in developing standard procedure and automating processes. As in the Japanese principle too, if those processes are lean and efficient in adding value they deliver maximum benefit.

At the end of the day we have to be realistic and recognise most people can drive and many chauffeurs offer a quality service. However, what a large number of chauffeurs neglect is the streamlining and efficiency of their data acquisition and information processing. Further still the majority fail to facilitate remote processing of that data. For me this is critical! It is the key to achieving economies of scale, maintaining quality and reducing cost. After all, isn’t that what being in business is all about?

The Cloud - don’t download, don’t upload, just connect.

Let us say you work from home and gaze out the window. You notice a neighbour planning some ambitious DIY. They’ve hired a mini digger for some modifications to their garden. They unload the machine from a lorry and begin moving large amounts of earth. They feel confident with the controls until suddenly, they hit a power cable and take out the electricity supply. They kill your computer and paralyse your business.

Usually a Chauffeur starting up in business just needs a mobile phone and a diary. As their work level increases they might prefer a calendar system or a lap top. Either way they often need some kind of system to log journeys (and help with invoices). A bigger company could use a dedicated software system (loaded from a disk and run on a single computer in their office).

The problem is a computer requires someone to sit at the screen and enter or alter information. This increases overheads because the operator also needs heating, lighting, premises and insurance etc. One way we overcame the issue was to use remote desktop, logging in through the Internet but it only allowed one user at a time to connect. There was also a 20 minute upload cycle which meant a delay for customers viewing new bookings on their dedicated web page.

In 2008 we approached a software developer and asked them to build an online booking system which we could access and control from smart phones. In April 2009 it went live. Now all our customers, managers and drivers connect in real time with no delays. Today it is called cloud computing (it used to be cyber space). Best of all, the data is stored in a secure centre which has battery backup and diesel generators - just in case someone else hires a mini digger!

Invisible Back Room Costs

A one-man-band chauffeur company begins to grow and soon there are two full-time drivers and then three. The owner realises it takes time to organise: bookings, schedules, enquiries, alterations and other administrative tasks like filing receipts or sending invoices. So what management fee should they factor in?

I have spoken to people in the industry recently about administrative costs and commission charges. It’s a discussion I love because you find out just how efficiently other people manage their business. It is surprising how some don’t see the time it takes to manage, as a cost or an overhead.

One person proudly boasted “I pay drivers the same as I charge customers”. Little does he realise he is actually declaring himself a charity and a martyr. A 0% commission rate is not a prudent choice. On the flip side however, some companies charge up to 40% because they are so inefficient and have high overheads.

At DrivenByQ we have modernised, improved efficiency and automated processes. This lowers costs which reduces commission rates and increases driver pay. With good systems, motivated drivers and a quality service, is it any wonder our customers prefer to pay less for a whole lot more?

Tough Times

Recently I attended a network club with other business owners. There was a guest speaker who asked everyone ‘How’s things?’ and most people answered ‘very tough’. I can’t say I was surprised but I was grateful not to be in the same situation.

The truth is, two years ago we hit a brick wall. In April 2009, our revenue nose dived. We lost 65% of turnover that month and it didn’t really recover for almost a year. Looking back, 2009 was probably the toughest year of my entire life. We expected some reduction in demand but we never anticipated such a big hit. Companies closed down, some stopped travelling and others didn’t pay on time.

For the first time ever, our business used credit and our relationship with the bank became very important. The hours I worked ON the business increased and the hours I worked IN the business decreased. I adopted a different management style and dealt with situations with a text book, almost academic approach. My attention focussed on cash flow and bank balances before anything else. I even asked bad customers to find alternative suppliers.

Slowly things returned to normal. Each month of 2010 was profitable (although very volatile) and today we are busy and growing. We have lots of new ideas and we are preparing to spend and invest if this April proves reliable. I wonder how many other businesses can currently say the same?