The role of cash in running a successful taxi business is truly incredible. In many instances cash flow makes the difference between survival and extinction of a taxi business. Positive cash flow can buy time necessary to win. It provides resources necessary to maintain the office and the fleet of cars, to create and run marketing campaigns and implement customer retention systems. In this article I will talk about several methods that can help quickly generate positive cash flow and let you taxi business stay afloat.
1. Control your expenses.
It is not a secret that when the owner is not looking expenses start going through the roof. There are two solutions to this issue. First, you need to implement a management system that works even when you are out of the office. Second, you need to have a breakdown of expenses that tells you how much money you can spend on maintaining your fleet, spend on marketing, pay in salaries, etc. These numbers vary depending on the current condition of your business. When figuring out these numbers you also need to take into consideration the main goal for your business at this stage.
2. Increase the amount of business by creating attractive offers.
Below I will discuss several strategies that can help you obtain positive cash flow from doing more rides. However, this alone may not be the answer. If you do not have enough manpower, you dispatchers constantly make mistakes and cars that are down don’t get back on the road quickly simply using these strategies may not take your business out of the pit.
The first strategy is discounting. It is one of the most commonly used marketing strategies in business in general, yet not very popular in the taxi business except probably for coupons. You can and have to change it. To do so you may simply look at other businesses in your area. Who is doing what and why? What works and what doesn’t?
One word of caution about discounting: use it to attract customers, not to keep them with you. A customer who is with you only because of the cheapest price will never be loyal. As soon as someone offers a cheaper price, such a customer will leave.
The second reason why it is necessary to be careful with discounting is that if overused, this strategy may lose its effectiveness. Discounting can be very dangerous in the long run. The automobile industry is a perfect example of that. These days, with “employee discounts for all our customers” and offers similar to that, everybody knows that the sticker price on a car doesn’t mean anything. You can even buy an internal invoice with a dealer price to help you know the bottom line for your negotiation on a new car.
That is why it is absolutely necessary to always have a logical explanation for every discount. An introductory offer for new customers, a roundtrip discount, a special spring break airport offer, an advance reservation discount – these are all great examples of logical reasons for discounts.
The second strategy to increase your cash flow is a system of frequent buyer rewards. The examples to copy this system from are all the major airlines, big chain stores and even some gas stations and restaurants. The idea behind such offers is to encourage the customer to return to your business again and again instead of looking around for a better incentive. To make this type of offer even more effective, you can introduce a deadline, within which the reward points (bonus miles, rides with discounts, etc.) have to be used.
The third strategy is advance payments. Suppose a client uses your service to go to and back from work five days a week on a regular basis. You could introduce a 5% discount if the customer pays the fare upfront for a week, a 10% discount if the customer pays upfront for a month, etc. Note that is this case you are not only getting the money upfront, but you also secure the rides and can do a better job managing your drivers, since you know about the ride in advance. This method is one of the easiest to use when you quickly need to generate some cash in your taxi business.
For specific examples of all these strategies, CLICK HERE and get a copy of 17 Mistakes You Must Avoid That Can Ruin Your Taxi Business book today!