Since 2018, Driving Transactions Principal Business Analyst Ken Lucci has performed financial reviews and business valuations of more than 250 companies that range in size and revenue of $1 million to $150 million. Using the financial data gathered in these analyses, Lucci and partner Chief Financial Analyst Cole Weber have developed what they’re calling the chauffeured ground transportation industry’s first complete financial reporting program that provides a “blueprint for growth and profitability.” As a former operator himself, Lucci’s on a mission to help his fellow industry professionals dial in on their financials and sustain profitable enterprises. We spoke to Lucci about the course, its development, and what he hopes it will accomplish for the industry.
Driving Transactions Principal Business Analyst Ken Lucci
Chauffeur Driven: What exactly is the program and what does it entail?
Ken Lucci: It’s called Driving Financial Success, and there are several elements to the program. First, there’s a series of videos on our website that cover specific financial topics. These videos can be watched as many times as you need to absorb the content. We also offer a 35-page workbook that you read and write down your questions. After the course, you get a strategy session that will align how you will implement our recommendations and financial reporting templates. Then, you’ll be invited to monthly webinars, at no additional cost, that will exclusively cover the subjects of finance and profit. Finally, you’ll be invited to an annual financial forum along with other operators who are members of our financially focused community.
Basically, it’s simple; if you implement everything we teach you, your definition of success will be changed. This course will alter what you focus on in your business. In the end, you will concentrate more on management of critical financial data and industry-specific financial metrics. I’m not saying you’ll lose your focus on growth, but you’ll gain a renewed focus on profitable growth.
I’m not in this to sell courses. In fact, we’re offering a money-back guarantee. Ultimately, I’m in this to change the industry’s mindset and get people to focus on their financials and profits—NOT just top line revenue Why? Because 82 percent of business fail due to poor financial management. Most businesses we review are unable to borrow from a traditional bank because they don’t understand the financial metrics of their business. If you wait for your accountant, you’ll be waiting in vain, because in most cases they don’t know the industry. We do. We’ve seen the good, the bad, and the very, very ugly.
CD: What was behind the development of the Driving Financial Success program?
KL: We were shocked at the lack of detail in most of the financial statements we’ve reviewed for banks, sellers, and buyers. Furthermore, we were surprised by the lack of financial acumen that many operators had. Their financial knowledge was negligible, and one of the key things we found was that most of the financial records we were looking at were generically templated. There was no analysis ability ... no ability to dig into what may be wrong with the company until we reformatted them.
I’ll give you an example: Every time a bank, buyer, or seller sent us a profit and loss statement, we would reformat them into an industry specific cost-of-goods format, breaking down labor to department and process. Because of that, we were able to compile an industry-specific analysis of what’s healthy and what’s not. We can take it down to the average revenue and profitability per vehicle. In this industry, we have found that the number one problem that keeps people from making a profit is they don’t know their true costs or manage their business by financials. Moreover, their financials are not set up specifically for this industry, so they are unable to manage the critical fiscal metrics of their business.
CD: Are these metrics something you learned during your time as an operator?
KL: Actually, I knew what some healthy metrics were as an operator, then I uncovered all of my mistakes as we reviewed 250 companies and compiled financially healthy data and statements into our industry-specific format. As an operator, when my accountant sent me a P&L statement, the only thing I cared about was whether I made any money. Looking back at the financials I kept, they were as rudimentary as what I see today. When I was an operator, I did everything by gut ... I was obsessed with the top line alone and that was wrong. I should have been managing these key financial metrics every month. What I now tell operators is that what you make doesn’t mean anything if you’re not focused on what you keep.
This course was born out of the best practices that we created on how to format financial statements specifically for this industry, and what are the healthy and unhealthy metrics to look at. The course we teach will tell you about the strong metrics for your business. Top-line revenue growth is important, BUT, if your costs are going through the roof due to overtime and mismanagement of all expenses, it doesn’t matter.
CD: Was the course developed with all size operators in mind?
KL: It’s really interesting: We expected interest from operators who do $1 million to $3 million in business, but we have $20 million operators who have bought this course. After a strategy session with that large operator, we determined that this course is as good for them as it is for the $1 million operators. We can advise them if they need extra steps. Keep in mind the reason they bought it is because they wanted their management to understand the financial metrics of the industry. It’s true—every manager in your company should understand gross profit margin and the direct cost of goods: What does it cost to take a reservation? What does it cost to dispatch it?
We didn’t go into the M&A side of the business or business analysis to compile industry data—it just happened. At the end of the day, this course teaches you where every expense line item needs to be. And, more than anything, it’s about teaching operators the financial metrics of their business, what they should be focused on, and what they should be managing. They should learn the healthy and unhealthy metrics of their business.
For example, the unhealthiest metric is having gross profit margin under 30 percent. There’s no way to make a profit if your margin is less than 30 percent, I don’t care how tight your overhead is. Having low margin trips is a fatal financial flaw.
CD: What has been the reception of the program from operators?
KL: So far, it’s been very favorable. It took us two years to develop the course, in part because I’m a perfectionist, but also because we had it thoroughly reviewed by a CPA. At the time I said, “I don’t know if there’s an appetite for this, but I know there’s a need.” Successful entrepreneurs are fantastic at delivering their services, but where 80 percent of businesses fail is not the service level, it’s the lack of financial management.
I go out of my mind when I see operators ask on social media, “I just bought an Escalade, how much should I charge for a ride?” or “How much does it cost to put a sedan on the road?” None of those metrics can be found on Facebook because your cost structure is totally different than the operator next to you. What another operator charges is not germane.
CD: Where can operators enroll in the course?
KL: They can register at drivingtransactions.com. Currently (at press time) we are offering a special of $500 off with the code “Early Bird” at checkout. [CD1123]