How
long has it been since you’ve taken a good look at your business? Is it
everything you want it to be? Do you have clear goals? Are you working toward
those goals, or have you lost your focus in the day-to-day grind?
Ask
yourself questions like these, and stay involved in every aspect of your
business. Be obsessed with the numbers. Stay focused on what you want your
business to be, yet be flexible. Know how well your employees are performing.
How well you do these things is directly proportionate to how much money you’ll
make. That was the message from Neil Abrams, president of Abrams Consulting
Group Inc. in Purchase, N.Y., during his seminar at the 2002 Car Rental Show,
“Can Anyone Make Real Money in the Car Rental Business? Yes, You Can, Here’s
How…”www.7mcar.com
“There
are great challenges and great opportunities in this industry,” said Abrams.
“I’m here to tell you that you can make money in this business even in this
economy.”
Abrams
offered several moneymaking ideas to a packed room at the Las Vegas Convention
Center in October, including:
1.
Challenge your business model. Take the time to look at your vehicles,
customers, market, rates, technology, the people operating your business, and
think about all the possibilities.
“You
must evolve with the changing landscape of the marketplace,” said Abrams.
Ask
yourself some questions: Does my business model work today? Has it become
stagnant? Has my market position eroded? Do I want to build the asset value of
the company, then get out? Have a plan and constantly challenge it.
“I know
you all work hard and you think you challenge your business. But are you
challenging it enough?” asked Abrams.
2. Be
obsessed with numbers. “Those
companies that are obsessed with numbers have the best shot at success,” said
Abrams. Take the time to look at every possible benchmark, including, but
certainly not limited to, revenue per user, utilization, average length of
rental, reservation build and earnings. Scrutinize your P & Ls. Know what
you did this time last month, this time last year, this time three years ago.
3. Know
your fleet and your customers. Don’t let the deals drive your decision.
Instead, let your customers dictate your fleet. Will your customers be happy
with a used car that’s in good shape and has 30,000 to 40,000 miles? Try it
out.ecabsin.com
What
will customers pay? Test a rate class and see. “I’ve got a client that rents PT
Cruisers for $70, $80 and $90 a day. The customer perception is that this is an
expensive car, a fun car,” said Abrams.
Keep
your fleet costs in check or the business will fail. It’s your greatest
opportunity to make money and your greatest risk.
Also,
have a 12-month fleet plan that is constantly moving out 12 months. Change it
to meet the demands of the constantly evolving rental market, travel industry,
economic climate and the aftermarket.
4. When
acquiring a vehicle, know when, where and how you’re going to dispose of it. If the aftermarket wants bells and whistles
and a pretty color, get them. Whatever it is, have a disposal plan.
5.
Manage risk. Dedicated people in the risk area will pay for themselves many,
many times over. How
much time do you spend on subrogation? Do you let your insurance company worry
about it? Do you follow up on it? “In theory, good money can be made buying and
selling vehicles,” said Abrams. “Then, it can leak out through not pursuing
claims.”
6.
Don’t neglect sales and marketing. Without sales and marketing, you’re just
another rental company. Define what makes your business unique. That’s what you’re
merchandising, and you’ve got to make your customers aware of that distinction.
Your business’ unique characteristics provide opportunities to draw the
customer to you and pay more.
7. Look
for marketing alliances. If
you’ve got a large hotel next door, propose a deal. Refer customers to the
hotel, and have them refer business to you. Put a brochure together that talks
about your alliance with the hotel, or put a phone in the hotel that dials your
location. Be the rental car agency for the local convention center.
8.
Optimize your profitability. How
much will your business be worth when you’re ready to cash out? At the end of
the day, you’re selling the value of the brand. There is intrinsic value in an
established brand with real customers and real revenue. There’s always someone
who will see value in your business that you don’t see.
9.
Fight for the lowest fleet finance interest rate. Every 1% you save has an enormous impact on
your bottom line. Use your sources, friends and colleagues to find it. Meet as
many lenders as possible. Once you get that 1%, start looking for the next one.
10.
Manage revenue and adjust real-time prices based on your utilization. Companies that do this with passion can
squeeze up to an extra 15% to the top line. Look at your availability and your
competition’s availability. “I had one client who called his competition and
found out they were out of cars for the weekend. He increased his prices by
25%,” said Abrams.
11.
Identify your great employees and pay them well. They will pay for themselves many times
over. The value of an exceptional employee is so critical to making money in
this business. According to Abrams Travel Data Services, the average pay for
rental agents is $8 to $9 per hour. Remember, these individuals are renting
$20,000 -plus vehicles to strangers.
12.
Provide full disclosure to your customers. The customer should acknowledge anything
special or unique about your rental agreement. Penalties must be clear to the
customer. At the end of the day, it’s your word against the customer’s.
Above
all, Abrams said, continue to challenge yourself and challenge your business
model. Business is fluid — your operations must be as well.
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