Advice needed for a service business

[OhSimon]

Hi all,

I'm after some advice from anyone who has run a service business. I have previously run a trade firm with a team of sub-contractors and am now looking to create a similar type of business but centred around chauffeured cars in London.

Originally I was planning to start driving as a one man band, build a customer base and then create a team of drivers from there. Unfortunately, my PCO licence application with TFL is dragging on and on due to covid.

To speed things up, I'm considering just completing my operator licence paperwork and begin building a team without driving myself.

My question is - how does one build a customer base without drivers or vice versa; ensure regular work for drivers when I'm just starting out? With my previous business, I partnered with a tradesperson who worked alone so there was already a base to build on. How does any service business work in this manner?


Thanks in advance!

 

[NT8SeaterTaxis]

As a Taxi operator, what your wanting to do in my opinion is impossible. TFL is different to my local authority but ive been running my 1 man band for nearly 10 years now and i have enough regular customers, new customers and enquirys to keep me ticking over, just... starting out yourself as a driver is do able, but to find work for other drivers is near impossible. Most people licensed already will either have their work or work for an already established company.

PCO License is different to hackney or private hire licence which i think chauffeur would come under, with TFL? Not 100% sure.

 

[NT8SeaterTaxis]

And just as an added thing with hiring/contracting drivers.. whats to say they wont try to undercut you when on that job? Especially as your business will be new and wont have built up a relationship with the customer enough to warrant said customer showing loyalty. Just something to think about

 

[OhSimon]

I take your point and would agree as my plan was to start driving by myself.

However, that would mean that no one can start a service business without first providing the service as an individual. Surely, there are teams of sub-contractors whether it be cleaning, driving, etc. that were set up without the founder being 'on the tools' as it were.

Regarding your other point about undercutting etc. which I did encounter with my trade business.... If you give sub-contractors enough work and a good environment to work in, they can be loyal. There are people who just want to do the work and don't want to worry about customers and associated admin. I have had team members who tried to steal business and they were quickly shown the door. Refreshing the team to get rid of bad eggs is just part of the process.

 

[NT8SeaterTaxis]

Deffo see what your saying, but as a start up who doesnt have a customer base how are you going to get enough work to keep those subbies happy? Its ok saying if you provide enough good work they will be happy etc but getting the business is the hard part of it. Getting a customer to use you in the first place is the difficult thing. From what i understand competition in London for chauffeur/private hire is intense, which brings down the price paid which in turn means drivers are being paid less per job, as its your business, you wont be finding the work for free so you will need your cut, leaving less for the driver again. Where i am we have private hire offices where you pay a rent (this is where the company makes money) £120 a week is the going rate, can you provide enough work to warrant them.paying you that sort of money? Ir are they making enough wjere you will make a decent % from it.

Not trying to put a downer on your idea, and completely understand TFL is a different kettle of fish to most local authority etc, and i know you would prefer to be a one man band first but TFL makes that difficult at the minute, and should that change i hope you can get started and make a brilliant business, i just dont think you will be sustainable enough hiring contracters or even employing people with no current customer base to work with. In the beginning you may get 100 enquiries in week 1. From that 100 you may get less than 10 iobs, still not enough to get a contractor who will make a decent wage after outgoings. And again the competition is massive down there.

I get what yoir saying regarding starting a service business without first providing the service but in most cases a service business has small to limited initial outlay, ie cleaning business (low cost to start off as a 1 man band) or for example an ironing service (next to zero) but the outlay for a chauffeur/private hire driver is high. Vehicle, vehicle insurance, fuel, tax, licensing, thats before you even think of the marketing side. And as youve ran a business previously you may be able to get all that set up for yourself pretty quickly as a driver, but the initial cash needed is far higher than most service based business. A wealthy business person may have the funds to risk it and go all out on hiring a team they can cover expenses for, but most people starting out either dont have that sort of cash or dont want to risk it. I can count on 1 hand how many times ive needed additional drivers to help.me with an overload of work. So.for.me it wouldnt be worth the risk.

 

[OhSimon]

Thanks for your input. I suppose there only 2 options really, start the service yourself or have a decent amount of cash to take an intial hit. To clarify though, the goal isn't to have drivers to help with overflow - the idea is to continually grow demand for the service to warrant a team of drivers.

Looks like i'll be sitting tight while my Tfl application goes through.

 

[NT8SeaterTaxis]

Yeah i completely understand the want for an established team etc, my point regarding that for me was solely just to say i would love to have that and would love to have enough work/regular custom to offer that, but after 10 years im still in a position where my balance is healthy but i dont have anything spare to make even 1 permanent driver a decent living after myself. Without putting in a bag full of cash i cant afford.

Genuinley hope you get sorted with TFL, and have a successful business. Did you get out of your last business or still doing it?

 

[OhSimon]

Thanks, I hope so too. No, I'm not with the last business anymore. I'd been keen to find a tradesman again and build the same model but that's easier said than done.

 

[Gecko001]

What you are proposing to do could probably be done if you had quite a bit of capital to keep you going until you started to make money. Maybe you could do it as as a side line to another business and that way you would not have to depend to much on the new business during its first few lean months/years.