108 PRIVATE HIRE AND TAXI MONTHLY
MARCH 2009
point of sale ..... point of sale ..... KRYSTAL UK/LIMOWORLD UK
FIGHTING THE CREDIT CRUNCH WITH DILIGENCE
We have all felt the effects of the Credit Crunch in our own way and many businesses are having a really tough time at the moment, so how is the limousine business shaping up? Here we ask Nick Clarke, owner of Limoworld UK Ltd, for his view on the Busi- ness. ‘We started trading dur- ing the last recession and we are sure of sur- viving this current one. ‘We have two main businesses: a Limou- sine Hire business and a Limo Sales business and both have been affected by the current financial situation but in slightly different ways.’
What about the Hire side?
‘2008 was a good year financially for Star Lim- ousines which is our Hire business; we bet- tered our 2007 overall sales. The second half of 2008 was a testing time for us with the banking system in some disarray; monthly sales started to be affected. We took the early decision that we would review the servic- es we offer and re-align them more closely with customer require- ments.’
Do you mean discounting?
‘No, we did not discount the prices; we offered improved services, new services and revised our sales pitch and this has had the desired effect so far. The advent of the Credit Crunch caused us to take a long hard look at our busi- ness. We had to get out of the box and away from our comfort zone to review all aspects of our business and we have become more profitable as a result. Our fleet of limousines includes new Chrysler and Hummer vehicles which command a high- er premium than many of our competitors who use the older Lincoln Town Cars. Generally speaking it’s the older cars that have to be dis- counted to attract the work, but this brings its own problems because of their higher mainte- nance costs. This is a
recipe for disaster- lower revenues and high maintenance makes for a poor busi- ness.’
So what about 2009?
‘We think that we are well set to ride out the recession; enquiries for various packages are up on last year and for- ward bookings for Prom Nights are looking good. What we did notice very early on in this period was that customers were looking for something extra and we now have to sell the service rather than just taking a booking. This was a bit of a culture shock but we worked through it with the staff and its working. It was at this point that a lot of discussion took place in respect of discount- ing the services but a firm decision not to dis- count was made and this has held without detriment to our busi- nesses.
Are 2009 revenues holding up?
‘In late 2008 we noticed that the month on month revenues were inconsistent and this has continued into 2009. To try and iron out these peaks and troughs we have found it necessary to carry out more marketing activi- ties. To put this in context, it is said that more than 80 per cent of businesses that grow profitably do so by sell- ing more to their existing customer base. It follows then that the more you know about your customer the more you can sell to your customer, and the more you can use this infor- mation to sell to prospective customers. Customers are not the enemy, poor customer service is the enemy’.
So what about Limousine Sales? ‘The sale of new limou- sines in the UK has been hit hard for two reasons:
1. The availability of money. The sudden and unforeseen onset of the Credit Crunch meant that prospective buyers could not bor- row the funds needed
to purchase vehicles. The situation today has eased but it’s worth not- ing that prospective borrowers will need a good deposit, several years of trading accounts and a well thought through busi- ness plan to be considered for a loan. We are working on new and improved ways of funding limousines which will become clear in due course.
2. The US Dollar to Pound exchange rate. Most if not all Stretch Limousines are pro- duced in the US meaning that we have to buy in US Dollars. This time last year we were buying Dollars at the rate of $1.90 to $2.01 to the Pound. Since the onset of the financial problems the exchange rate has been hovering around $1.40 to $1.50. This has effec- tively increased the cost of a limousine by 25 per cent putting the cost of purchase beyond economic reach.’
So what’s hap- pened to Sales? ‘Whilst UK domestic sales have so far proved difficult, sales to Europe have been very good. The reason for this is the exchange rates; the Pound has slumped against the Euro and stands at 1.12 Euros to the Pound. At this exchange rate the value of Limousines in the UK was very attrac- tive to European buyers and we are quite suc- cessful in selling into this territory.
The UK market is becoming more viable and we continue to receive more and more enquiries for New Chrysler and Hummer vehicles that we have in stock. As these were purchased at favourable rates we can offer these at 2007 prices but only whilst these stocks last.’
What happens once stocks run out? ‘The UK market is con- sidered important to our US suppliers and we have been in discus- sion with them throughout the period in respect of the cost of
new stock and we will continue to work close- ly with them to ensure that products are made available at economic rates, but much will rest on the US Dollar exchange rate. In the meantime we can offer limousines at US Dollar prices, as long as the customer does not need finance.’ However, this situation caused us to go back to basics and review our business to make sure that we are geared to weather the storm and able to maintain our plan for the future of the business as a whole. Our review included: 1. Managing the money, review the costs and make sure that you are getting best value (cheapest is not always best, review the overall cost, service and quali- ty of purchases) but don’t skip essential maintenance. Ensure that your cash flow requirements can be met and that any credit terms are reviewed. Finance companies will require a lot more infor- mation now than they used to so be prepared, make sure your accounts are up to date and previous accounts are available. A busi- ness plan that shows how any loan will be used and the benefits to your business will help secure a loan.
2. Review the services that you’re offering and make sure that it’s the best in your area. Stand back and look at the business and the com- petition, compare what they do, how do they do it and are they better? Why should customers use your service? Doing it better does not necessarily mean adding cost as cleanli- ness, courtesy and appearance do add value to what you do at little or no cost. What else do you do or offer that is different, better or more special than the competition? Use this as part of your sales pitch, customers do take notice. Be POS- ITIVE about YOUR BUSINESS: sell the up side of using your serv- ices to beat the competition, don’t dis- count. Develop new services by talking with your customers, it is said that more than 80 per cent of businesses that grow profitably do so by selling more to their existing customer base. It follows then that the more you know about your customer the more you can sell to your customer and the more you can use this information to sell to prospective customers. Customers are not the enemy, poor customer service is the enemy. 3. Now is the time to
take those tough deci- sions you may have been putting off. Things that have a bad affect your business need to be resolved, but do take advice and formulate a plan for the future of the business. Be ready to recognise and take advantage of change and the opportunities that it brings. Investing in items of equipment – especially expensive ones – should always be cost justified and never done on a whim or a fancy. Where you can prove that new products will allow your business to grow and prosper then you should plan for the investment and this should include training both for you and your staff. Training doesn’t have to be painful but it does have to be effec- tive. After all, there’s no point putting in new computer systems if you can’t use them. We live in an ever changing world and customers just like ourselves are looking for something different, something better, and the best service providers will be better placed to recog- nise the opportunities and take advantage of what change will bring. For further informa- tion on Limoworld UK Ltd Tel 01435 812614 or see our advert on page 38.
BERNIE THE BOOK
Due to space restrictions this month we are unable to publish this month’s Bernie the Book which includes an updated league table, tips for both the Grand National and the US Masters and last minute information for Cheltenham. However if you go to our website a full column has been uploaded.
Visit
www.phtm.co.uk
Meanwhile we publish here the monthly winner for January. Until next time, good punting.
THE PHTM PREMIERSHIP FEBRUARY MONTHLY WINNER
This covered the period from January 22 2009 to February 23 2009. This month the qualifying period is from February 24 to March 23 2009.
OUR MONTHLY WINNER FOR FEBRUARY IS BILLY BATEMAN of BILLY’S 121 who wins £75
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