What does your transportation service really do for you? If you’re like most people, they get in the car, find themselves where they need to be, and pay the cabbie. It’s not that simple. You probably also bought an expensive car or two to help facilitate your business. All this comes with a price tag that will hurt if you don’t know how to manage it wisely.
I’m going to tell you what I’ve learned in my years of owning and managing a taxiservicencc.com business.
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Know Your Numbers
First, you need to know your numbers. What is the average ride price for an airport run? How much do people pay to go downtown? Where do you make most of your money? Where do you not make any money, but it’s an “important” client who needs service? Where are people getting in the car that is costing you money (this could be many things)? Depending on your area/market, this may require some market research or possibly just a visit to the local airport with a taximeter.
You also need to know how long a typical ride takes. If I get in the car, it’s about a 10-minute drive to my destination. If I get in a cab at the airport, there is a 15-20 minute wait time while they find another passenger. After that, it’s another 20 minutes to get me downtown. This is someone else’s experience and I suspect varies by time of day and traffic conditions.
Here is a quick way to estimate a typical ride: Multiply your average wait time by two or three, then add 15 minutes. You’ll have an idea how long the trip should take.
Know contracts you have with drivers. If you’re getting a flat rate for a specific number of trips, it’s fairly simple to know how many people are using this service and get an idea of how much they pay for each trip. You can also look at numbers from other similar services to compare. Above all, know the total cost of the cars you use and any other support vehicles you have leased or purchased.
Know your expenses. People often forget to include fuel and maintenance. What does it cost you to fill the tank of a car? Do you need to pay for preventive maintenance, or do you only pay when something breaks? Knowing this will tell you how much money is spent on each trip.
Make Sure You Are Getting A Good Deal On Your Vehicles
Now that you know what your business is doing, let’s look at ways to cut your costs. First, have a written lease for each vehicle that includes the price of the car, depreciation value, mileage allowances, and due dates for payments. You may be able to negotiate these leases with your bank or credit union. If not, there are many vendors who will lease cars at reasonable rates. You can also make payments through your credit card, but do not go this route if you are not paying your bill on time.
You’re probably leaning toward taking a loan on the car. If you are, you’re probably getting a lease without the right amount of depreciation or payment options that don’t fit into your company’s cash flow. It may be necessary to take another loan or increase lease payments to get the vehicle at an appropriate rate.
The other consideration is what happens after your leases are up. A new vehicle is often worth less than what you owe on it, so have some backup plan for when the time comes to replace or upgrade vehicles.