Clear Answers Enlighten Path To Profits

COLUMN DEBUT: It is with great pride and enthusiasm that I introduce my column for LCT Magazine, appropriately called Profit Driven. I would like to show you better ways of growing revenues and making money, drawing from my long career as a business executive.

I will cover the major areas of finance, revenue, marketing and business development. Each segment involves many sub-topics that I believe can supply you with detailed information to apply to your operations and businesses.

I also welcome your input on topics that you’d like to see covered, as the primary goal here is to give you value and help in improving your business.

This column will cater to owners running fleets of all sizes. I will share different strategies and benchmarks for your business, and explain how to grow it to the next level.

Our industry faces so many obstacles. To navigate through them, we need a sound plan to execute. Obstacles vary in difficulty, but with the right knowledge, talented employees, financial capacity, ingenuity and proper leadership, we all can face and conquer any challenges that emerge.

Topical Tour
My column will deliver insights gleaned from detailed research and the experiences of businesspeople who found solutions in strengthening their businesses:

• In the articles addressing finance, I will offer information on how to analyze line-by-line income and expense categories, balance sheet considerations, direct billing versus credit card processing, leasing versus buying equipment and vehicles, mergers and acquisitions, vendor negotiation, use of barter and a host of related topics.
• On the subject of revenue, we will explore analyzing each client for profitability, cultivating an account, solving client incidents, avoiding too heavy a concentration within the overall revenue base, referrals, client surveys, affiliate relationships, customer service, commissions, discounts and overall rate structure.
• In approaching marketing and sales, I will divulge details including the various methods used to attract new business: Use of free advertising, promotional ideas, value additions, referral networks, cold calling, use of the Internet, social media, newsletters, company websites, and a list too lengthy to put here.
• Lastly, for business development, you will gain information on: how your team can play a role in business development, commissioned sales reps, concierges, reaching the decision makers, the 80/20 rule, how to listen to your client needs, reaching the clients’ goals, and required follow-up steps to maintain the business.

Applying Solutions
I know firsthand that simple solutions to ground transportation problems are rare. But I find most answers to problems involve a series of bullet point approaches that are well thought out and easy to understand.

In today’s business climate, the challenges often seem to outweigh the opportunities for success. Over the years, our industry has encountered issues with overregulation, independent operator vs. employee debates, airport and port obstacles, rising costs of almost every line item, stagnant rate increases, local and national competition, and now the growing presence of transportation network companies (TNCs), such as Uber and Lyft. Despite all of those issues facing us, we must find ways to survive.

I’ve seen many owners and operators struggle. My goal for this column, along with the services I provide through my consulting company, is to alleviate that stress and get everyone on the right track to drive profits.

In addition to sharing vital information and ideas, I will rely on you to email me questions on column topics so we can all learn from each other and grow stronger in business together. Everyone in this industry works tirelessly to succeed. I’m here to help you on that well-deserved and earned path to profits.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

business growth   business management   finance   operator finance   Profit Driven   profits   revenue growth   revenues   Ron Sorci   

 

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Is Tipping a Thing of The Past?

Gratuities have always had a solid presence in the transportation industry from cabbies to chauffeurs and bus drivers.

It is rumored that to offer someone “tips” was an act To Insure Prompt Service, or TIPS, as it became known. It was intended to reward exceptional service rather than be a compulsory payment.

Today, people wonder if it is appropriate to tip everyone, from the gardener to the mattress delivery team. You would never tip your Starbucks Barista in England nor would you tip a cabbie. Yet, in the U.S. even fast food counters have obvious tip jars begging you to up the employee’s pay for the day. 

The New Concept

Danny Meyers, a popular restaurateur in New York City, decided to forbid patrons from tipping his wait staff. He instead raised the prices on his menu and began paying his employees top wages with health care benefits. Joe’s Crab Shack, a national seafood chain, followed suit, raising its employee wages to $14 per hour and requested guests to refrain from tipping.

Other companies outside of the restaurant industry forbid tipping employees, such as Albertson’s Grocery Stores, a Boise-based chain. If a clerk helps you carry groceries to your car, he is not allowed to accept a tip.

Limousine Industry

BostonCoach has long maintained a no tipping policy, even stating it on its website and in literature provided to new corporate clients. A direct statement says, “Remember our no tipping policy.” My former company, Limousine Scene in Bakersfield, Calif., eliminated mandatory gratuities six years ago in favor of a starting wage of $12 per hour when the minimum hourly wage was $6.75. 

Clients are free to tip their chauffeurs at the end of rides. Many transportation companies have implemented a “service charge fee” and pass on only a portion of the amount collected. While completely legal, it may deceive the client, who falsely believes the entire amount goes to the person providing the service. 

On the other hand, if an operator passes on a portion of this service charge and the client doesn’t understand the difference between a gratuity and a service charge, the driver may get a double dip.

Are Tips Fair?

Do tips really cause employees to work harder and deliver better service? Customers can use it as a weapon to punish a person for providing bad service. If an employee relies primarily on tips rather than wages, he can be financially penalized for a mechanical failure. An angry client can withhold a tip as a result of a service failure. 

Likewise, is it fair to force your client to pay a 20% gratuity before your chauffeur has even rolled out of bed in the morning? Suppose he is late, picks up the client in a dirty vehicle, and gets lost? Why should a client be forced to pay what was intended to be a gift? Yes, that’s right, the dictionary says, a gratuity is a gift. It’s not really a gift when it is forced upon a customer.

Fairness

The IRS ruled in June 2013 there is a distinct difference between a service charge and a gratuity charged to a customer. A service charge is a non-negotiable charge forced upon the client and collected by and for the business. A gratuity is an amount decided solely by the customer and can be any dollar amount or percentage the customer decides to pay.

If you are collecting an amount designated and presented to the customer as a gratuity, the entire amount determined by the customer must be paid to the chauffeur. The employer cannot keep any part of it. While this ruling applies to tax and tip matters, keeping any part of an employee tip violates the Federal Labor Standard Act.

At the end of the day, your policy should reflect your values and your bottom line. Each approach, tips or no tips with higher wages, has its pros and cons. Make sure you check with your employees, your clients and your spreadsheets to see what reflects best on your company.

About the Author

Smooth Operations provides a broad range of information focused on new ideas and approaches in management, human resources, customer service, marketing, networking and technology. Have something to share or would like covered? You can reach LCT contributing editor and California operator Jim Luff at Jim@LCTmag.com.

Keywords

chauffeur gratuities   chauffeur tipping   customer service   employee management   employee wages   how to   Jim Luff   New Operator   small-fleet operators   smooth operations   

 

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