Plan Insurance Blog

The Taxi Industry & Covid-19: The Plates Are Finally Moving

As the country, but definitely the taxi industry starts it long climb out of the languor of Covid there are few times in its history when the kaleidoscope of the various vested interests, onlookers, new entrants, incumbents and policymakers have been so active. There is much squawking currently about a desperate shortage of drivers whilst on the other hand the only desperation many companies have is to know where their next booking may come from and how they will start the long climb back.

Mix in with this the ‘new’ statutory guidance, two MPs trying to get their bills for reform of taxi and PH through Parliament, the Government’s apparently boundless optimism about the move to electric vehicles, and then add in the current mergers, acquisitions, congestion charging, ‘local’ services and workers’ rights oh and at the macro level the threat of inflation and we might rightly, I guess, term the climate as ‘the perfect storm’… but is it? I’d really consider the situation anything but perfect.

The Imperfect Road To Recovery?

With leisure and business travel at any serious volume a distant dream, with commuting apparently a thing of the past, the most optimistic expectations being a 40% – 60% end game, with the night time (not to mention the evening) economy on no one’s agenda… how will recovery come and what will it look like? Almost every company has had its cash management stretched to breaking point. Remember saving is the easy bit, although I concede it may not feel like it at the time.

Selling a car or two to raise some cash, even if it is sold under market value, laying off a staff member or two who should have gone long ago and shutting the odd office or closing early and saving a shift, cutting out advertising, sponsorship and putting off improvement to property or systems have all kept companies afloat. But what happens if things start to pick up, the old maxim that more businesses go skint in growth than decline may well kick in. So where will recovery spring from?

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When Exactly Was Normal, Normal?

You have to have a great memory to actually remember a time when things in the taxi industry were what could be described as normal. What do we mean by normal? Going well, calm, no changes, no new competitors, no breakthrough technology, government not actually doing anything very much – is that what we actually mean by normal. Well tin hats on! We ain’t going back there anytime soon. No siree! The rate of change and disruption, no I am not talking about people throwing free money around like drunken sailors and soppy journalists writing about it like someone has discovered an amazing new financial paradigm – if we subsidise rides by 60% we get more customers – wow just think if we subsidise meals by 60% more people might eat in restaurants! Wow we have discovered a new utopia – subsidise everything and call it clever business. No I am talking about that kind of disruption what I am talking about is challenge, demands, change that kind of disruption.

What is clear is that all of the stuff that was gaining momentum before Covid is coming back but added to that will be companies struggling with cash, struggling to find customers and if our trade associations are to be believed struggling to find drivers. The weak will go, the strong will struggle through… hopefully and most of the innovative and brave will thrive if they are lucky.

Why So Pessimistic?

I don’t as a rule do doom and gloom. I won’t go so far as to say every problem is an opportunity… but I like to think my glass is half full. But when I look around at the taxi industry, I really do so see some very dark clouds. There are some serious problems looming and yet these seem to be ignored, put in the too difficult box and left for another day. I’m an avid reader of the trade press and see little happening except old battles being reprised, sabre rattling about never going to happen legal proceedings and constant blame heaped on smarter people, regulators and new entrants. Does anyone actually ever ask what good should look like? Does anyone know or care?

We May Be Down But A Long Way From Finished!

Every business has a value. Values go up and down. But happily gone are the days when after generations of work someone sold their telephone number to their arch enemy down the road when they decided to retire. Business owners now recognise that they have a valuable asset to give to their kids, sell or expand. Even what appear relatively modest businesses can command seven figure valuations if properly run i.e. if you take the top man or woman out is there a structure in place to continue?

Individually most taxi and private hire companies have survived millions and millions of pounds being poured into the taxi industry apparently to move incumbents customers to new entrants – its been a failure for the new entrant however they care to rewrite their own history. But it has been a success for the incumbents. Likewise, Covid – every company in this industry has had to deal with an unprecedented crisis, most have survived. With scrupulous planning, careful steps and real attention to detail most will get back into growth and profitability even if the industry is smaller. But to prosper the stars have to align. Being a small ship in a rocky sea is not much fun. So how the industry is organised, what goals the industry has for itself, what steps it takes to realise those goals is vital to the health of the industry and ultimately the health of every company in it. Where is the leadership of the industry, who is tackling the big problems, where is the mandate? You have got to have good eyesight to answer those questions!

Domestic trivia, existential threats, prospering

There are different levels of problems in any business and any industry. There is the domestic trivia that everyone has to cope with Mary can’t do Saturday night and neither can John. There are existential threats – we have no cash for the payroll this month, the light bill and our licence fees. In everyone’s business they are used to prioritising these, having solutions in mind and generally muddling through. But when it comes to the taxi industry there seems to be a complacency, a misplaced confidence that ‘someone’ is dealing with it all. That it will all come out in the wash. In truth some might, if we are lucky most might and with the rest… well maybe it won’t be that bad. Listen folks, its your business, your future and your wealth you are gambling here. Well run businesses constantly look at what is coming down the line, what they want to happen, what they don’t want to happen and they take concrete action to make it happen or not. Most of all they know what they want.

The months and next year or two will be pivotal for this industry and for every business in it to prosper, to get stability and to thrive and prosper this industry needs laser focus on what good looks like, what will protect the taxi industry and as a consequence your business, your future and your wealth. Ignore it at your peril. It would be a shame to work your whole life to end up worse than your predecessors who could at least sell their phone number when they shut up shop!

Dr. Michael S. Galvin

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