Are You An Uber or a Taxi? The Answer Could Predict Your Time In Business

How would you react if I tell you that if I asked just one question -- the answer could potentially tell you if you are going to be highly successful or if your days in business could be numbered? Well, I think I have just cracked it.

Over the last month or so, I have been undertaking a very detailed, precise scientific experiment and survey. Well to be quite honest, no science was involved and the survey was taken from different people who merely walked through my door. But the representative sample was good enough.

The question was a very simple one. "Are you for or against Uber -- the highly controversial taxi company?"

Being an entrepreneur, I love new business systems, or business models that totally transform an industry. Uber is doing just that and is disjointing a number of registered taxi drivers’ noses. Governments are being lobbied to stop Uber and that always is a concern because any attempt to stop the market usually ends in spending lots of money and being unsuccessful. Just look at Ford and Holden. Fat lot of good all our billions did there.

Here's what my research showed.

1. Most of my business savvy, successful business owners thought Uber is a great business and the industry needs to change. Not all these people are rolling in money. A few are struggling to get their business off the ground, but they are looking to the future. These are people who may not have a great business yet, but are still testing the market with different products or services.

2. Most of my ordinary business owners who are mostly small businesses and mostly work for themselves and maybe have a few employees felt that what was happening to the taxi drivers was unfair. Generally, these businesses had not changed much in the last 5 years or so.

3. Those not in business mostly wanted everything to stay the same as the taxi driver had trained and paid for their licenses.

But here's the thing. Business is not fair. If fact, it is a ruthless and cutthroat. Successful business people understand that you cannot stop market change. You either embrace and work with it or you have to accept that eventually you will be priced out of the market and have to shut up shop.

As a business, you have to change and adapt to the conditions of your business environment. The internet has totally transformed the way we do business. If you don't change, someone else will and before you know it -- half your business is gone. This is exactly what Uber has done.

Adapting change today

Due to outdated practices and cost structure, taxi fares in Australia are outrageously expensive. A couple of years ago I paid $160 for a 45 minute ride in Sydney. I flew into Sydney that morning from Brisbane for less! How can this be?

Now, I don't really want to get into a discussion on why Uber is good or bad, but if you are interested, it is below. My message is that if you are unwilling to adapt, accept that your days could be numbered because the internet has the ability to attack every business in every industry.

The problem was the taxi industry had a monopoly. A new player has come in and they do not know what to do. Instead of changing and adapting, they want to charge my business more money because their system is inefficient. As a business owner, my job is to keep my costs low. If that means I get the same or better service elsewhere and the cost is lower, can someone please tell me why I should not do it?

So here is my justification on why I think Uber is a great business model.

Taxi vs Uber

Let's go back to basics. The Taxi regulation was set up for safety reasons. If you were overcharged, you could complain even though most never did. The cars were meant to be clean. The driver informative about his route and pleasant to be with.

The government charges the taxi firms a lot of money for regulating our safety– which is then charged to us, the punters.

The problem is in this day and age, it's all nonsense. In the UK, a taxi driver still spends five years learning every route in London and how to get there the quickest. Can you imagine whilst being intimate with his wife, he is probably thinking about the fastest route from Kings Cross to Harrow. This could have catastrophic consequences. Why would he want to do that when Mr Sumsung can calculate this in 30 seconds.

I have forgotten the number of times I have been in a registered taxi where the driver could have been from Mars and had no idea where to go to the point that I had to show them. That's not all. Some of the vehicles were old and once I was certain one the wheels was about to come off. And remember we are paying for this.

So how does Uber keep you safe? Due to the internet, every vehicle is tracked so if anything goes wrong -- it gets picked up. Uber will ensure that the driver does not take you round the block seven times (that happens in regulated taxis by the way). I have used it quite a bit in the last few months and I have never sat in a vehicle older than 5 years. It is always clean and I can have a pleasant discussion with the driver. There's more. I grade the taxi driver and he grades me. So any hanky panky is a no no. Knowing this, we will always be on our best behaviour. Otherwise, he losses his license with Uber and if I am graded poorly Uber cars can refuse to pick me up. And the best bit – it is much cheaper for me and my business. As a business. if the service you get is what you want and the price is lower -- why on earth would you not accept it?

So why then I ask is everyone getting so upset? Yes, is not fair that the regulated taxi driver has to change his ways and has paid lots of money. But that just means the system is wrong and we need to change the system. Let's not stop progression for the sake of preserving old outdated practices.


Hitesh Mohanlal

Hitesh Mohanlal

Director at WOW! Advisors & Business Accountants

I am known as Australia’s Number 1 Business Growth Strategist (profit increase and owner lifestyle improvement specialty), and have been recognised on CNN, Fox, NBC, CBS and ABC. I am also a Chartered Accountant in the UK and Australia and have been practicing for the last 22 years. I run three businesses. I have worked with over 3,500 businesses in Australia, America, UK, Japan and Europe. I work with small to medium enterprises to improve their profits by up to a staggering 2000%


Questions

Anonymous asks

Comments (4)

User
Loading...
Jef Lippiatt

Jef Lippiatt , Owner at Startup Chucktown

Typically I tend to agree with your articles but on this one I simply cannot. Is the business model innovative? Debatable. Why is a 'taxi' company one of the highest valued companies in the world? Because we are in another bubble of over-valuation. How did Uber scale so quickly? By skirting business and local law. They also misrepresented their drivers as contractors when in fact they are employees (being told can't drive a car older than 5 years and how much to charge among other items). Safer? Maybe in the last few months, before then there were numerous reports of abuse and mistreatment of riders (some even had criminal pasts). Yes the internet is disruptive (almost every technology is). But, there are several things you have failed to consider. How long have many taxi companies been in business? It wouldn't be a stretch to say some may have been in business for over 50 years. Think of all the previous disruption they've survived. How long has Uber been in business? A few years. Will Uber survive if the stock market has a drastic drop? Not with certainty, however, I would bet that traditional taxi services will continue. Another thing to keep in mind is if you believe the Uber CEO, the goal is to eliminate all their drivers in favor of 'driverless cars'. Ultimately, they don't care about their drivers (which is more alarming). They are only a necessary cost until self-driving cars are legalized. A self-driving taxi service is perhaps much more innovative than a taxi service masquerading as a 'new business model'. Let me end with this. If you had a direct competitor to your own business that was skirting the law and mis-classifying their employees to save money to uncut your prices, would you put up a fight? I'm sure you would lodge complaints to the Chamber of Commerce, Business Bureaus and local government. So before you try to paint Taxi companies as completely unnecessary and out of touch, put yourself into their position. It is easy to discredit one party when not examining the issue from another perspective.

Hitesh Mohanlal

Hitesh Mohanlal , Director at WOW! Advisors & Business Accountants

Hi Jeff. Apologies i have been away for a few days. Thank you for spending time reading and also posting you message. This is a topic that is controversial. I wrote this post about three weeks ago but did not publish it not knowing what reaction it would get. People are either for or against and nothing in between. In reality there is no right or wrong answer just an opinion I guess. In principal I agree that there needs to be the same playing field. But that does not mean it should be shut down. That just means change has to happen. And if we are going to change things i believe we should change it so that everyone wins, not just the government or the cab driver. As with any business model it starts, adapts and is told what to do by law. If what it does is wrong it must change so that it is put right. It may be skirting the law but it must be lawful otherwise they would be shut down by now. And I am not saying traditional taxi cabs should be put out of business. Just because businesses have been in business for many years does not give them the automatic right to be there forever. They just need to change and adapt to the market. Here in Australia every cab driver charges and extra 10% if you pay by credit card. Not many people are happy about that because they know it is a rip off so if an alternative comes up and does not charge this fee they are going to look at it.Driverless cars will be where the market goes. It does not mean the CEO does not care. That is just progression and business. Its a bit like when computers became mainstream. We did not stop computers hitting the offices even though the reality was that the office computer eliminated thousands of jobs. I don't hear many people say Steve Jobs or Bill Gates did not care about office workers. The reality is I have competitors who do a one day course and all of a sudden are NLP professional business coaches. Anyone who knows NLP will tell you that is impossible. Is that skirting the law?Probably but it is legal and if the market wants that who am I to say they should not have it. They should be informed of the differences and if they still decide that is what they want so be it. I spent 5 years studying to be a chartered accountant. But in my field you can have a few years of experience and join an lower level accounting institute and all of a sudden you are an expert tax agent comparable to me. But guess what, its legal and i just have to live with it, get on with the work that i do and find the market that my clients want. As a general rule when it comes to my businesses i rarely complain. All it does take my mind off what i need to do to make my business better for my client. This was taught to me many years ago by both my highly successful mentors.

View all (4) comments