By Michelle Seiler-Tucker Special for USDR
New taxi service apps like Uber and Lyft are using technology to connect passengers with drivers, while threatening local cab company businesses. Both Uber and Lyft appeal to the public, because all business arrangements and payments are done through the app. Each city have their own laws, which require taxi companies abide by specific regulations. Some city’s states have bent regulatory laws for the taxi service apps, while others have banned the apps altogether.
Local cab companies and government bodies are spinning their wheels in an effort to keep up with the technologically driven structure of Uber’s business operations. As a leading authority on buying, selling and improving businesses, I always inform my clients that a key element in identifying how much a business is really worth is found in whether or not that industry is desirable to buyers. The fact that other start-up companies quickly attempted to duplicate the Uber pioneered business model is just one example found in my best-selling and award winning book, Sell Your Business For More Than Its Worth, that reinforces whether or not something is worthy of great market value.
The fact that Uber is only four years old and estimated to be worth billions proves the company is desirable to investors. However, great market value does not signify sustainable success. Too much competition from similar startups could saturate the market, or the company may fall short in other avenues. My book continuously stresses that customers are the fuel that drive a business. Without them, a company like Uber would run out of gas. And that is where my concern lies with this company. Uber is notorious for its lack of concern over the safety of its passengers. The company does not conduct background checks, nor do they insure its drivers in the case of a collision. Ultimately, Uber will never sell for more than its worth, if it continues to operate in such a manner. In order to sell a business for more than it’s worth, a company needs to be able to identify if it is a company that is based on brand loyalty, location loyalty, or ideally both. Uber is based on none of them.
Not all the taxi service apps are so flawed though; I particularly favor the Lyft app. Lyft insures its users—both passengers and drivers—with regulated safety policies; and makes sure employed drivers are identifiable by fuzzy, pink mustaches placed on the front of their vehicles. Now this is a company working to build its customers through brand loyalty!
There is no doubt that the taxi service industry is changing for the better. And this new way of doing business is really just an opportunity in disguise for commercial cab companies to optimize their own businesses. The software designed for taxi services already exists. All the cab companies must do now is choose whether to adapt and customize their businesses in compliance with the digital age, or to endure the inevitable changes as they occur.