August 2010: Tips from Tom Mazza
Don't Let "Dissatisfied" Customers Have the Last Word
I Googled a friend of mine's company the other day and I was horrified by the result. "Blank Blank Company are crooks" came up the first entry. After reading a horrible internet site review of the company I called my friend to get the 411 on the writer. Not only was the trip in question exaggerated, the account on the internet was patently false. I advised my friend to immediately respond and to ask satisfied customers to spread the word.
Most of us are busy enough in our daily business lives that the last thing we want to do is search the internet for gossip and half truths. But you need to do it periodically. Assign a person in your office the task of setting up a Google Alert for you and your company and make them answer negative reviews or information when appropriate. And make them respond quickly.
When Bill Clinton ran for president in 1991, he developed a strategy that has been copied by nearly every other politician since. He set up a "truth squad" and this squad monitored everything being said about Clinton in all forms of media. The squad responded to even the most mundane negative mention of their candidate in lightning quick fashion. In Clinton's autobiography, My Life, he said that strategy was the single biggest reason he defeated the incumbent, George Bush. (My apologies to my conservative friends for forcing you to re-visit those years of prosperity.)
Recover, respond, get your fans to post, and aggressively protect your company and your brand. And if the internet posting is patently false, such as you never did a bus trip to Downingtown, PA, on March 11th, send a certified letter to the website and demand the post be removed.
Hiring a Salesman VS Making an Acquisition: A Comparison
Hiring an outside salesperson is a huge gamble. Investing fifty or sixty thousand dollars plus taxes, benefits and the hidden costs of training someone is a huge roll of the dice. My experience tells me that "success" occurs in a very small number of instances. In fact, my personal experience tells me that maybe 2 in 10 hires achieve anything close to a result that could be classified as successful. By successful I mean at least covering their own salary in 6 months and clearly producing a profit for the company in 1 year or less. It is hard to sell limousine service, plain and simple. And the availability of highly talented, unemployed sales professionals is limited.
The alternative in my opinion is to buy a competitor at a reasonable price. Then, get the seller to hold paper, and make monthly payments, hopefully, from current income. If you do proper due diligence, the risk is smaller than that of hiring a salesperson. The key to making the deal is that the company you buy needs to have a similar pricing model as you do. It also helps if their business mirrors your business. A successful "tuck in" saves money and makes the deal work.
How much will I pay? You will probably pay between 2 and 4 times earnings OR you will pay 30 to 60 percent of 1 years gross revenue plus or minus the value of the fleet. If you are looking to "steal" a company, I believe that ship sailed in 2009.
For example, let's say you have a small competitor who is modestly profitable, doing $500k in annual sales. Take out gratuities and come up with a true number for annual sales based on the last few years. I add points for home grown sales and reduce the value of in-bound network trips. I add value if permits or medallions attach to the fleet. I reduce the value if the company is trending downward. Let's say the deal is for $150k. You liquidate the fleet and it's basically a wash.
The terms are $50k down, 100k paid in 36 payments of $2916 per month with 5 percent interest. You tap your credit line for the other 50k and that tacked on $1458 per month for a total of $4374 per month. You added $40k per month in sales. It was necessary to hire 1 additional reservations agent who earns $2200 per month including taxes and benefits. The Company you bought was profitable (8% annually) as a stand alone. You take out the owner's $45k salary, the dispatcher's $35k salary, the overnight dispatcher's $20k salary. Reducing 3 vehicles and 3 insurance and repair payments, consolidating in 1 office produces savings that far exceed your $4374 payment. And the payment is for 36 months, not that many years. Figure on giving YOUR staff a small raise and the "deal" is a winner even if the monthly sales figure went from 40k to 35k.
The other reason small companies rarely produce successful salespeople is that small companies do not normally have the resources to generate the amount of leads that produce big sales numbers. And if your company is 15 years old and you are doing $2 million in annual sales, it is a huge stretch to think a salesperson can bring in even 300k in annual sales.
TMC's Emerging Companies Group to Meet August 24-25th at Hotel Palomar in Philadelphia
Tom Mazza's Emerging Companies Group will meet on August 24th and 25th at The Hotel Palomar in Philadelphia. Nine companies are confirmed as of July 28th with 3 spaces still available. The group will share best practices, financial benchmarks, and will be joined by several guest speakers. For more information on the group, call 215-973-8201 or e-mail to tom@tommazza.com.
"Power Selling for YOUR Limousine Company" in Los Angeles on December 10th
Tom Mazza brings his highly acclaimed "Power Selling" Program to Los Angeles on Friday, December 10th. The one day program is geared towards reservation agents and inside sales staff. The program has been held in Atlanta, Miami and Newark in prior years to critical acclaim.
The day begins at 9:30 am and concludes at 4 pm with 5 breakout sessions. Sessions will include: Turning the "How Much" Callers into Sales and Selling MORE trips to Your Base and Re-Connecting with Lost Customers. Attendees will make sample presentations and will be asked to "sell" their fellow attendees.
Who should attend the program? ANYONE who is actively trying to sell limousine service! Reservation agents, outside sales people, owners, new hires are all welcome.
The cost of the program is $350 per person. Companies receive a $100 discount for a second attendee. Lunch and course materials are included. To register contact tom@tommazza.com or 215-973-8201.
Can we get a donation or some free limousine service?
It is often like fingernails on a blackboard. Incessant calls for cash or in kind donations to charity is a constant for operators of every size. It is awkward. It can produce bad feelings with important clients and it eats up time and energy that could be spent elsewhere.
Here are some tips on how to deal with requests for donations:
1.
Have a clear process in how to handle these calls. Put the process in writing. Copy it and put it next to every phone. Do NOT let calls for donations come to the owner directly, it is a time waster.
2.
Make sure all requests for donation come to you in writing on the letterhead of the charity seeking the donation.
3.
If it is a charity, get their 501c 3 number.
4.
Give gift certificates with dates and black out dates, never money.
5.
Pick a deserving local charity and reach out to work with them. If it is the charity of your top clients, even better! Tell all callers that we EXCLUSIVELY support _____________-and you are sorry that all of your discretionary resources support your charity.
Be polite but be clear. If you give the caller hope, they will call you back forever.
Content, Content, Content: Let TMC Create Your Next Newsletter
Tom Mazza Consulting can create content for your next company newsletter or website. It is inexpensive and affordable. Most companies rely on generic content or on outside marketing firms that neither know nor understand the chauffeured transportation business. The results, and I read 100 e-newsletters a month are often beautiful documents with poor, boring, or worse content.
Newsletter articles are a collaboration with Yvonne La Mar. For pricing or to create content for your website or newsletter, contact tom@tommazza.com.
Late Breaking Deal
TOM MAZZA BROKERS: Ken Lucci, who bought the late Julie Herring's limousine company two years ago, becomes one of the largest operators in the region with his purchase of Allstar Limousine.
CLEARWATER, Fla. - AMBASSADOR LIMOUSINE AND SEDAN INC. closed a deal Monday to buy ALLSTAR LIMOUSINE & TRANSPORTATION SERVICES of Tampa, including six 55-passenger MCI motorcoaches.
The acquisition makes Clearwater-based Ambassador Limousine the largest diversified fleet in the Tampa Bay region, with a total of 38 vehicles ranging from sedans, to buses, to Rolls Royces. It can now provide transportation service for big groups with company-owned buses.
The deal, arranged and brokered by industry consultant Tom Mazza, is valued at an estimated $1.6 million, said Kenneth J. Lucci, CEO and president of Ambassador Limousine. In the deal, Lucci bought the buses only, the company books, and client lists of Allstar.
Allstar Limousine, founded in 1985, has been Tampa Bay's oldest operating full service transportation brand with a fleet ranging from sedans to motorcoaches.
Lucci founded Ambassador in 2007, and one year later made his first acquisition when he bought Julie's Limousines of Tampa, the company of the late Julie Herring. Herring, a longtime Tampa Bay operator, served as a board director of the National Limousine Association until she died of cancer in 2008.
Lucci plans to keep the respective web sites and phone numbers of Ambassador, Julie's, and Allstar, but will consolidate all companies by the end of the year and run all vehicles under the Ambassador brand.
Ambassador's market shares break down about 35-40% corporate, 33% resort, and about a fourth retail and wedding. It also operates a location at the Saddlebrook Resort in Tampa, one of the region's top luxury hotels and spas.
Other high profile Ambassador clients include the Sandpearl Resort, Hilton Carillon Hotel, New York Yankees, Philadelphia Phillies, and the Tampa Bay Rays.
With the acquisition of Allstar, estimated annual revenues for Ambassador are projected at $3.3 million for 2010, up from $2.2 million in 2009 following the acquisition of Julie's Limousine a year earlier, and up from $1.2 million in revenues for 2008.
Ambassador will increase its staff from 36 to 43 employees, with seven bus chauffeurs and administrative employees being brought over from Allstar, Lucci said. Although Florida is a right-to-work state with many operators using independent contract chauffeurs, Ambassador is an employee-only company, Lucci said.
"The independent operator model is popular in Florida but you can't get the level of service you need if they are not employees," Mazza said. "You can't tell them what to do."
The Ambassador fleet consists of nine sedans, five SUVs, three 10-pack stretch limousines, three 6-pack stretch limousines, one Cadillac Escalade stretch limousine, another stretch limousine, three Mercedes-Benz limousine mini-coaches, three mini-buses, one limousine bus, six motorcoaches, and three Rolls-Royce sedans.
Lucci said the fleet qualifies his company as the largest diverse luxury fleet in the region ranked by public permits, excluding those chauffeured operations that are mostly sedan or bus fleets.
The negotiations on the deal took about six weeks, Lucci said. "I got a call from one of the owners who wanted to have lunch. I didn't know why or what it was about, but he introduced me to the other owner and we started a dialogue. . . They knew we had just opened a branch at one of the resorts and started using one of their buses."
Added Mazza, "The Allstar brand was one of most recognized in that market and suffered during the downturn. We were in a position where we could see growth with the added business of Julie's that you wouldn't see in a stand alone company."
"They saw we had bought Julie's and were capable of buying a company and doing a full consolidation," Lucci added, and "operating the business and making it grow after the fact."
Ambassador emphasizes concierge-level hospitality service in its transportation, Lucci said. "One of the reasons we've gone from two to 38 vehicles and being a leader in the marketplace is because we are an employee-based company and because of of the training methods we use." He added that chauffeurs carry "pledge cards" in their pockets that remind them of the company's core service values.
[SEE SMOOTH OPERATOR PROFILE OF KEN LUCCI IN THE SEPTEMBER ISSUE OF LCT MAGAZINE]
- Martin Romjue, LCT Magazine
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