A sensible business model
Ray Griffin
These days I’m in Sydney at least once a month and I allow myself one luxury: to travel from and to the airport in what might be called an ‘up market’ taxi.
The owner-driver is a man called Ali and he is from Pakistan, having been in Australia for around 13 years.
One of the things about Ali that fascinates me is his approach to his business.
Indeed, I can’t help but think how similar his job is to my own.
About 18 months ago I stood in line for a taxi at Sydney airport and after navigating a 15-minute suitcase and briefcase-laden maze to the front of the queue, it was Ali who collected me.
As he bounded out of the car to stow my luggage, I was immediately struck by his professionalism.
His car was immaculate and he wore a coat and tie. I sensed I was dealing with a professional.
On that first trip into the city Ali made a very gentle pitch for future business with him.
He offered to meet me at the airport and take me to the city for a fare that is about $15 higher than a standard taxi ride. I could ring him directly to arrange for him to be waiting for me at the airport.
This resonated loudly as it meant no more queuing and I could speak to the driver directly rather than speak to a large taxi company’s strung out, dispatch clerk or automated booking system.
So for an extra $30 or so on the airport — city — airport round trip, Ali is waiting at the airport and then waiting to return me to the airport when I’m ready to escape the big smoke.
On the rare occasions when things are beyond his control — like traffic jams — mean he will be late, he rings to keep me posted.
When Ali cannot personally collect me, his always smiling brother Mohammed (‘Tony’) steps into the breach or they make arrangements for another owner driver to meet me. It’s a seamless service.
While transporting people around Sydney is, on the surface, substantially different to financial planning, at the end of the day, the underlying principle of Ali’s business is very similar to that of my own business. That is, to provide an ongoing professional, personal service at a price that is acceptable to both parties.
The key point is the way in which Ali is building a recurring income stream in his business. For him it makes more sense to build a portfolio of clients who use his transport services on a regular basis; be that daily, weekly or monthly.
This is very similar to planning businesses that have client service models based on ongoing fees.
Ali very proudly owns his taxi plate and therefore, provided he complies with the relevant legislation, is in charge of his own destiny.
While he is part of a taxi group, he represents no one but himself as the licensee and pays no fees to a parent licensee. Witness that many financial planners now have their own Australian Financial Services Licence and similarly seek such business control and commensurately, a commitment to professionalism.
Make no mistake, Ali is a shrewd businessman for he knows what it costs him to run his business. He probably needs about 60 clients like me to cover his costs.
Ali and Tony are happy to have what seems to be a very profitable small business; to not be lumbered with the stress, strain and risk of building a taxi ‘empire’.
In a similar vein, I have come to know that a growing number of financial planners understand that small can be beautiful.
For such planners, it’s not all about getting more of everything in business in pursuit of the mighty dollar.
And for planners who base their businesses on recurring fee-for-service models, life is much less stressful for they are not compelled to take part in the never-ending search for new investors. Just as Ali is not reliant on ad hoc fares.
Recently, when I feverishly searched my pockets for my wallet, momentarily thinking it was lost, Ali simply said, “No problem — you can pay me next time”. This, from a man who knows only my name and mobile phone number.
While the wallet materialised and I had no need to invoke Ali’s generous offer of 30 days credit, it was refreshing to know that in a city of five million people, at least one was less than mercenary in his approach to collecting business income.
The Ali I know is a thorough professional. He is client focused and follows through on his service delivery promises. Additionally, he charges me a fee for service — he is not paid a commission from the companies who manufacture the products he uses in his business — the motor vehicle, tyres, petrol, his phone company and so on.
When things unforeseen inhibit service delivery, he keeps me informed. And because I am part of his regular income stream, I know he will look after me for I know that my regular travel with him is important to him. Indeed, he drives past random street fares en route to collect me.
His approach to doing business is fundamentally sound and one that can be easily overlaid to any financial planning business. It’s a simple, reliable, methodology and it seems to me that, in another life, Ali might have had the potential to be a good financial planner.
Pity then that as result of a checkered history of public relations events for financial planners, some Australians might have more trust in their own ‘Ali’ — their regular taxi driver — than for the financial planner they are yet to meet.
In terms of a goal to bring about a higher level of community trust in financial planners, we’d get there much sooner if many more financial planning businesses had the courage and foresight to adopt Ali’s business model.
Ray Griffin is a Tamworth-based planner and former chairman of the Financial Planning Standards Board International CFP Council.
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