Separate to any classroom, lecture theatre or book you might read, experience is something gained in the real world and there really is no substitute. Despite the best plans, sometimes you have to deal with a curve ball. It can cause disruption. The last twelve months has certainly proven that. Ultimately with experience, what you gain is the ability to make (faster and) better decisions.
Disruption Is Normal
Disruption is not new for DrivenByQ. A few years ago, a rival chauffeur company went out of business. They were established with a good client base but they failed to keep pace with technology. On hearing the news, I approached one of their corporate customers. Very quickly we opened a new account and the customer came on board. So what made the customer so special?
At the time, DrivenByQ was in a sweet spot. We were using a tax system which allowed us to retain a chunk of all the VAT we collected. The downside was no VAT could be reclaimed on purchases below £2k. That didn’t really matter though as the retained amount was always far greater than anything we could reclaim. It gave DrivenByQ additional revenue and improved profitability.
Adapting Is Standard
The new customer increased our turnover but pushed us over the threshold of the simplified tax scheme. We adopted a traditional approach to VAT but our profitability suffered. The only way to balance the books was to increase turnover and tweak our business model. In hindsight, the exit of a market rival caused considerable disruption at DrivenByQ.
We had to change our accounting methods, introduce new procedures and consider staff differently. It added complexity. The positive was that we grew, bought brand new vehicles and saw greater economies of scale. Though painful, it was a positive experience overall. Then, just as we thought it was going well, another curve ball came our way with Covid-19.
Competitive Pricing
At the end of 2020, I was scrutinising figures and our turnover had fallen dramatically. On the flip side, it was an opportunity to go back to the flat rate VAT scheme. It was reassuring to know any new rival in the corporate chauffeur market would struggle to compete on price. Most new operators will initially avoid VAT because consumers dislike 20% extra on their bill.
As volumes increase again and scale is achieved, I am confident profitability will return. From past accounts and previous experience, we know that, even if only 50% of pre-pandemic levels are recovered, life can still be comfortable. I suppose those grey hairs that are starting to appear do count for something after all? Who knows, I might even have time for a new project.