Lancer Insurance
Monday, March 04, 2024

By Bob Crescenzo

COVID has undoubtedly impacted every aspect of your passenger transportation business and presented challenges that you have never previously experienced. The pandemic’s repercussions will also continue to play a part of the foreseeable future, and there’s good probability that as you solve one problem, another obstacle will crop up.

One of the most pressing issues is how to rethink and reshape your business to help you survive—and even thrive. This may include exploring hidden opportunities and expanding your mission as a transportation company in order to maintain a revenue stream. In fact, there are already many examples of businesses pivoting in the past year, such as branching out into medical transportation; transit on demand services; or package, grocery, and meal delivery services. Other companies are using their larger vehicles for small groups to accommodate social distancing guidelines; leasing vehicles to other companies; or utilizing their larger vehicles, garages, or lots for COVID testing or vaccination sites.

bob crescenzo The entrepreneur inside you is a key reason you started your operation in the first place, and this trait will certainly be useful as you think about your company’s future and what it will take to get you there. There is no proven playbook for this moment. However, with an already established business, it’s important to first evaluate the overall impact on your existing operation and your financial goals and objectives before you commit to any diversification or expansion. Here are some things to consider:

1. Revise your existing business plan to identify where your company is now, where you want it to go, and how you plan to get there. Doing so will help you determine whether the new endeavor will have a chance of turning a profit and uncover potential pitfalls in your idea. Your plan should include a financial analysis to find out what effect any diversification or expansion may have on your current cash flow. You should also look closely at the impact of new or different vehicles; driver pay and benefits; as well as passengers, routes, vendors, partners, fuel, parts, and maintenance/repairs. In addition, you’ll need to reanalyze the market, create a marketing strategy, and update your company’s advertising and social media communication plan.

2. Assess how your present customers may be affected by any changes in your operation, and the potential for disruption on your current business. This includes how your time and your existing staff time will be allocated, and if that time will detract from your core business. Remember, some business opportunities may actually cost you money, customers, or employees, rather than help your company’s profitability.

3. Consider the risks diversification or expansion might have on your business. This may include managing new or different passenger situations that could increase your exposure to bodily injury, general liability, workers’ compensation, product liability, or cyber security claims. To ensure you’re properly protected against these risks, speak with your insurance broker and carrier before undertaking any new business opportunities to evaluate your current policy(ies) and discuss how the changes may affect your coverage. This insurance review will determine whether your company needs additional coverage, a different type of insurance, or be named as an additional insured to cover the new exposures. In some cases, you may even find that your insurance carrier does not or may not wish to cover the new types of work you want to pursue.

4. Review your company contracts. Before any new business activity begins, determine whether any changes need to be made to your contracts. For example, consider adding a hold harmless agreement if your vehicles are being used by other entities to provide their services, such as a local health department administering COVID tests or vaccines aboard your vehicles.

5. Consult with your legal professionals, banker, insurance agent, accountant, and financial advisor, and have all contracts and financial commitments reviewed before making any business-altering decisions. These professionals are quite familiar with the mistakes entrepreneurs make, and can help you avoid them. 

Once you’ve decided to move forward with your new business endeavor, you may be tempted to jump in feet first. But, it’s critical that you work with your staff and clearly communicate any business changes to keep everyone on the same page. Update any job descriptions and operational procedures that need to be revised and, importantly, provide any necessary training and/or cross-training to help ensure a successful transition. Also, if applicable, be sure that your employees understand their responsibilities in regards to protective behaviors, social distancing precautions, personal protective equipment, and equipment cleaning/disinfecting protocols. Finally, it’s vitally important to keep track of the progress of your company’s new endeavor to determine what’s working and what’s not working. In the COVID environment, even the most stable of business plans will need refining. 

Despite the struggles of the past year, the pandemic has created an opportunity for passenger transportation businesses to think outside the box and find new revenue streams. Pursuing hidden opportunities can introduce your business to an entirely new target market and improve your company’s bottom line—as long as you do it right. Before you begin any new business activity, do your due diligence and consult with your company’s financial, legal, and insurance professionals. Only then will you know that the new endeavor is a good one for you and your passenger transportation business.   [CD0321]