Ken Lucci reviewed 250+ transportation company financials. Here's what the most profitable operators do differently.
Most operators have no idea if they're actually making money on their fleet.
They can pull a reservation report from Limo Anywhere. They know how many trips they ran last month. They know their revenue number.
But profit? That's a different conversation.
Ken Lucci, from Driving Transactions, might just be the most qualified person to speak on this.
He reviewed 250+ transportation company P&Ls. From $1 million to $150 million, from 5 cars to 500. He built Ambassador Limousine from zero to $5 million before selling it. He's also on the other side of the table, working with banks who are making lending decisions on transportation businesses.
Ken has spotted patterns that every operator needs to see for themselves.
Today, in 5 minutes or less
Today, in 5 minutes or less
- 1 The Question That Changes How You Run Your Business
- 2 Why Revenue Over Profit Is an Outdated Playbook
- 3 Growing Revenue and Going Backwards
- 4 Your Gross Margin Benchmarks (By Vehicle Type)
- 5 Gross Profit vs. Net Profit and Which One You Never Sacrifice
- 6 Where the Real Money Is (Hint: It's Not Black Car)
- 7 The "Top-25 Client" Exercise That Uncovers Hidden Revenue
- 8 How To Streamline Your Fleet Like the Most Valuable Companies
The Question That Changes How You Run Your Business
Ken presents to large groups of operators all the time… and he always starts by asking this one question:
“Are you building a business you can sell, or is this just a lifestyle job?”
Nothing wrong with either answer. But they are two completely different paths.
One builds something that runs without you. That a bank will lend to. That a buyer will pay for.
The other ends when you decide you’re done.
If you want the first path, everything in this post matters. Because real value isn’t created the day you want to sell. It’s created when you execute proven strategies to grow profitably every single day.
Why Revenue Over Profit Is an Outdated Playbook
Before COVID, this industry was obsessed with fleet size and top-line revenue.
How many cars do you have? What’s your annual revenue?
I’ve seen it too, and still do, frankly.
Fleet size is not what matters. Top-line revenue is only part of the picture.
Here’s what actually matters to banks and buyers: net profitability. Consistent net profitability.
A bank doesn’t care that you brought in $5 million. They care how much cash you kept at the end of every accounting period. They want to see it month after month, not one good month out of twelve.
If your business can’t pay you a salary, it’s not sellable. A bank won’t lend to it either.
💡 Making a net profit solves every other problem you will ever encounter.
Growing Revenue and Going Backwards
Here’s a scenario Ken sees all the time.
A company did $2.5 million last year and made $300,000 in profit. This year they grew to $3 million. Great, right?
Except this year they only made $150,000 in profit.
They grew revenue and went backwards.
Banks and buyers want to see 10% revenue growth. But if that growth doesn’t come with increasing profit, it does not create enterprise value. Period.
Your Gross Margin Benchmarks (By Vehicle Type)
This is the data that quiets the room when Ken presents…
These numbers come from reviewing 250+ company financials.
Gross margin targets by vehicle type:
- 🚗 Sedans and SUVs (airport trips): 30-35%
- 🚐 Vans (Sprinters, Transits): 40% or higher
- 🎉 Stretch limousines: 50%
Gross profit margin is what you keep after paying every direct cost. Fleet insurance. Vehicle payments. Driver cost. Fuel. Detailing. Repair and maintenance.
On a stretch limo, after all of that, you should have 50 cents left on every dollar. Why so high? Two reasons. The risk involved is greater. And that vehicle doesn’t go out every day. So when it does, it needs to make more money.
🎯 The target for a diversified fleet: a blended gross profit margin greater than 40%.
You’re never hitting that number with just sedans and SUVs running airport trips. It’s too competitive. Your neighbor could drive someone to the airport. They could take their own car. There’s Uber.
Gross Profit vs. Net Profit and Which One You Never Sacrifice
I asked Ken one time: is it ever okay to lower your profit to grow? Like Amazon did?
His answer was immediate.
“You never, ever lower your gross profit.”
Here’s the distinction. Gross profit is what’s left after you pay all direct costs of running the vehicle. You should have 40 cents on every dollar.
What you do with that 40 cents is your business. It pays overhead, pays your salary, and generates net profit.
Net profit is what’s left after everything.
If you spend extra one month on a new sales initiative and your net profit dips? Don’t kill yourself over it. As long as your gross profit margin is where it should be, you’ll have enough capital long-term to grow the business, cover overhead, and pay yourself.
⚡ Protect gross margin at all costs. Net margin has room to flex when you’re investing in growth.
Where the Real Money Is (Hint: It's Not Black Car)
I’ve said this to my own clients for years, and Ken’s data backs it up completely.
The most successful operators are not the ones doing only black car service. That segment is insanely competitive.
The best profits are coming from larger vehicles. Sprinter vans. Mini coaches. Stretch limos. Party buses. Motor coaches.
And there’s less competition.
Profit is the new growth.
Profitable trips over more trips. Higher margins per trip over higher trip counts.
If you’re thinking about growing your fleet, don’t buy another sedan.
Think about a Sprinter. Think about a mini coach. That’s where the margins live.
(Obviously this blanket statement doesn’t apply to ALL operators in all markets and all situations… Do your own research.)
But even if you don’t own the equipment yet… Put it on your website. Find an affiliate partner who does. Start marketing it now.
And if you see demand, that may be an indication for which vehicle should (or shouldn’t) be added to your fleet next.
The "Top-25 Client" Exercise That Uncovers Hidden Revenue
Here’s a simple exercise most operators never do.
Pull up your top 25 clients. Ask yourself: what else can I sell them?
There are only so many airport trips you can sell someone.
But can you sell them a concert package? A sporting event night out? A Sprinter for a couples’ night?
Do your clients even know everything you offer?
If you’re driving them to the airport and they don’t realize you could handle a special event or a night out, that’s on you.
Then ask the next question:
Are there other people like your best clients?
When Ken ran Ambassador Limousine, they did business with Kevin Harrington, one of the original sharks on Shark Tank. He introduced Ken to the president of Home Shopping Network.
Why? She lived in his neighborhood.
Simple as that.
Your best clients know people like them. Identify the persona. Find more of them.
And one more thing: When was the last time you actually talked to your best client?
Not drove them somewhere… But talked to them. Checked in.
It’s easy and takes just 5 minutes.
There’s no telling where it may lead.
How To Streamline Your Fleet Like the Most Valuable Companies
The most valuable transportation companies I’ve seen all share one thing.
Cookie cutter fleets.
Lincoln Aviators for every crossover. Cadillac Escalades for every high-end SUV. One brand of van across the board, whether it’s the Ford Transit or Mercedes Sprinter. Same front end on every minibus.
Why? Because you can stock air compressors, alternators, and belts that fit everything. Your mechanics know every vehicle inside and out. Your repair and maintenance costs drop.
🔧 Resist the urge to have seven different brands. It sounds fine until you see what it costs you.
Key Takeaways
Sedans/SUVs should hit 30-35%, vans 40%+, stretch limos 50%. Blended fleet target: above 40%.
Net profit can dip for strategic investments. Gross profit is the line you don't cross.
A company doing $3M with $150K profit is worth less than one doing $2.5M with $300K.
If you're only running sedans and SUVs, you're competing with everyone including Uber.
Sell them more. Find more people like them. Actually talk to them.
The most valuable companies run cookie-cutter fleets. Variety is the enemy of margins.
The question is whether you're one of them.
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