You asked for it and we listened. In this column, we ask operators of all sizes and from all walks of the industry a question about their business and report their answers so you can assess how your own company compares to your peers. If you would like to participate, please email Rob Smentek at rob@chauffeurdriven.com for next issue’s question.
TOPIC: How did you manage to keep cash on hand during the COVID pandemic? Did you find any “hidden cash”?
Fortunately, 2019 and the first two and a half months of 2020 were great. Of course, that seemed to be universal throughout the industry. When the pandemic hit, I did take advantage of loan deferment on our cars. To save money, I also wore all the hats within the company to survive. Without the PPP, it would have been next to impossible to go on eight to 10 months at 20 perfect efficiency. But, I am good at squeezing the nickel ‘til the buffalo *ahem* s--ts'— a little humor for the times.
Gary Arndt, President
A Limousine Service in Pittsburgh, Pa.
My wife is old-school Italian so I went under our mattress and found $600.
Jason Dornhoffer, Co-founder
United Private Car in Boston, Mass.
Our vendors were our first and best source of cash control. Asking our lenders and vendors to delay or defer payments helped us conserve cash until we could sort out the different grants and loans that were available to us. Once we secured from lenders such as Dedicated Funding and FFI, we talked to local vendors about delaying. Chosen Payments and other vendors came out immediately with some level of support by reducing fees temporarily. We were also fortunate to have an SBA loan, which allowed us to get six months of loan payments forgiven. That was huge. The final part was pushing large institutional clients to pay outstanding receivables. We reduced our A/R to almost zero by working hard to get outstanding invoices paid.
Sean Duval, President & CEO
Golden Limousine in Ann Arbor, Mich.
For our survival, we asked for all of our credit statements. Once we had them, we began to renegotiate all the payments. First, we addressed the payments that had a deadline coming. Those payments we couldn´t renegotiate in the first month were authorized by the third. Also, we requested a personal credit to finish our payment with a few of our cars, but sold others from our fleet. To free up some cash, we canceled some cell phone plans and additional credit cards.
Agustin Hernandez, Owner
Blackcar Offers Limo Services in Mexico City, Mexico
We cancelled our limousine insurance as soon as reservations started cancelling. After what would have been an amazing March, getting the refund was helpful. We managed a workers' comp insurance refund too. We also have two rental properties and some lease vehicles. I used the advice of a my former professor who warned against keeping all your eggs in one basket. We also have a used car lot and had record sales in June. Every little bit helps!
We have been blessed that we are in a "low virus" area and have had income from limousines since the end of June, not the whole fleet but one or two. It’s been enough to cover insurance/maintenance and keep the vehicles on the road and visible. PPP helped greatly during May and June and the EIDL is in savings in case we need it later—like November and December.
Karen Lotts, Owner
A Knight Rider Limousine Service in Cadott, Wisc.
Sock drawer. Underwear drawer. Shoe box. Under rugs. Oh ... not that kind of money!
We simply slashed expenses, hard and to the bone. We made sure we weren’t spending what wasn’t absolutely critical. Unfortunately, we had to furlough most of the team. Most important were our cash reserves—the money that’s never touched, unless there’s an emergency. This counts as an emergency. Thankfully, it’s still sitting there, and we’re being conscious of every penny coming and going. So far, we’re keeping our heads above water, and staying on track. I’m proud of us.
A wise woman once told me: Have enough cash reserves to get through six months with no revenue. (Yes, it was you Andi Gray [of Strategy Leaders].) Guess what? She was right, and not nearly as nuts as I thought she was at the time. Hidden cash is like pennies from heaven. Proper advance planning and putting money away before we needed it was the smartest thing we can do. I’m very thankful that I listened.
Tracy Salinger, President and CEO
Unique Limousine in Harrisburg, Pa.
We’ve loved hearing your answers to our benchmarking questions—but we always welcome suggestions for future topics, too!
Send an email to rob@chauffeurdriven.com you just might see your query answered in our next E-News.
[10.14.20]