Transportation is a problem that is constantly evolving but there are few places in the
world that have the transportation problems of Southern California. With its beautiful beaches
and fancy malls also comes a lack of an effective train or bus system. Transportation is
difficult for an average citizen but can be nearly impossible for those who lose their ability to
drive. In the United States alone there are close to one million older adults who are forced to
stop driving due to poor health (Dickerson et al., 2007). As these older adults stop driving,
they start to lose some of their communication with the rest of the world. When they are no
longer able to socialize with others it can lead to further physical, functional, and mental
decline and reduced friendship networks (Mezuk & Rebok, 2008). A reduction in these
functions is likely to send them further into isolation when they should still have the ability to
go out and enjoy their lives. This is why it is so important to make sure that we keep
accessible ways to travel for elder adults as their own means of personal mobility decreases.
Not only does lack of transportation potentially lead elders to a mental and physical
decline but it can actually cause mental illness. Without available methods of travel older
adults can start to develop the perception of transportation barriers to visiting their friends or
family, which was associated with higher depressive symptoms (Chio & DiNitto, 2015).
There are a few ways to break down these perceptions of barriers in transportation but not all
options work for everyone. The easiest mode of transportation is walking, but even in a
metropolis like Orange
County there are very few places within walking distance of most elderly and disabled
citizens.
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A lot of older adults end up depending on rides from family members but this could be
stressful and time consuming for all members involved (Kostyniuk & Shope, 2003). For this
reason, many people rely on quick forms of ride services such as calling a taxi or requesting a
Uber. While some older adults can just call a ride service, others do not have the physical
ability to help themselves in and out of cars or need wheelchair availability for their rides. For
those elderly or disabled patients there is an option known as disabled accessible
transportation services or non-emergency medical transportation (NEMT) that can change
their way of life. These services require a van that is specially designed for transporting the
elderly and disabled with mobility issues and can transport patients that must be moved in
wheelchairs or stretchers.
While NEMT services are used to go to and from doctors’ visits, disabled accessible
transportation services can be used as a daily form of transportation for the elderly and
disabled that would otherwise have no means of getting around. This is why we are starting
Beach
Transportation, an alternative to NEMT that offers disabled accessible transportation services
for South Orange County, which helps make sure that the elderly and disabled, looking for
quick transportation service, have a viable and affordable option in their community. We will
be targeting this market to help them with their daily transportation needs.
NEMT and disabled accessible transportation services are part of the Ambulance
Service industry, which is a $15.8 billion dollar a year industry. Of this $15.8 billion, 41.8%
is for basic life support non-emergency medical transportation (IBISworld, 2015). That means
there is over six and a half billion dollars being spent for some type of non-emergency
medical transportation and close to two billion dollars per year being spent in California
alone. Not only is there large amounts of money in this field, but it is still in the growth phase
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of its life cycle. Entering the growth phase means there is increasing demand which will help
drive sales in the industry and the market allows more new entrants to compete for market
shares. The NEMT market that has a lot of future potential for creating niche services,
expanding into new territories, and increasing efficiency which we will be targeting to help
our business expand quickly. The industry is now more focused on quality growth and will be
expanding at 3.2% per year for the next 5 years (IBISworld, 2015). This quality growth is
why Beach Transportation will focus on providing the best quality of care at all stages of
customer interaction and will be our focus for success and customer retention.
Target Market
Beach Transportation will start as a small business with a narrow target market. We
will be targeting the elderly and disabled looking for private payer transportation services in
South Orange County, specially Huntington Beach and Newport Beach due to their close
proximity to each other, high median household incomes, and high rate of elderly citizens.
These cities have maintained a high annual income per household and have an aging
population that will continue to be in need of the services from disabled accessible
transportation. Current competition appears to be lacking a local presence in the South
Orange County and starting our company in this region will give us a wide customer base and
the potential future expansion into other cities.
Beach Transportation is focusing on the elderly because an estimated 60% of people
from the “baby boomer” generation already have at least one chronic medical condition
(LeRouge, Van Slyke, Seale, & Wright, 2014). This demonstrates baby boomers and the
older generation are already experiencing medical conditions that may soon require them to
need other forms of transportation other than personal automobile which makes them great
for current and future potential customers.
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We are targeting private payers because it helps us create a niche in a large
marketplace while making it clear to clients what we are offering. These customers would be
paying full price for our ride services so the target market would not be the poor or those on a
fixed income because generally they do not have as much extra money to spend. The two
cities I will be focusing on, Huntington Beach and Newport Beach, have a median household
income of $81,389, and $106,333 respectively which are both well above the California (CA)
average of $61,094 (U.S. Census Bureau, 2014a). With these two cities greatly exceeding
state income averages there is huge potential for customers with disposable income to utilize
Beach Transportation services.
Market Size
The market size is going to depend on the aging population in the cities to be serviced;
we’re going to examine those who are already 65 and older because they are much more
likely to utilize disabled services and will be our largest target market. Huntington Beach has
a population of 200,809 with 14.2% 65 years of age or older and Newport Beach has a
population of 87,266 with 19.0% who are 65 years of age or older which is well above the
California average of 11.4% (U.S. Census Bureau, 2014b). The South Orange County market
has 45,095 citizens that are already 65 and older and could be targeted for our business. Not
all elderly citizens are going to need help with transportation but more than 20% of people
older than 65 do not drive due to reasons related to health, access to cars, or diminishing
mental abilities (Wagner, 2015b). This estimate narrows the market to approximately 9,019
senior citizens who cannot drive for one reason or another. Of those who lose the ability to
drive it is found that 0.6% hire private organizations /agencies to help with transportation
(Choi, Adams, & Kahana, 2012). We believe this percentage would be even higher in these
areas with greater socioeconomic status (SES) but to be conservative would mean that there
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are around 540 people in just these two cities that would be willing to pay for our services.
The goal is to find and foster a relationship with 20% of these people (approximately 108
citizens) which would make Beach Transportation extremely profitable and give us the ability
to expand as needed.
Pricing and Gross Margins Trends
There is not a lot of competition in the private payer market since most NEMTs
decide to go through Medicaid for reimbursement and our customers are able to travel to any
place they want without the need for Medicaid payment. This is why Beach Transportation is
basing prices for disabled accessible transportation services closer to taxi services a similar
model of private transportation. Taxi services do not have the ability to transport the elderly
or disabled with the same level of safety as our company can and they do not offer the
premier door to door service that we will be offering. The average taxi service is charging $72
every 30 minutes of drive time
(Taxi Fare Finder, 2015). Beach Transportation’s model will charge $70 every 30 minutes
and will offer a door to door service as well as other services that may be required inbetween.
These other services could include helping with errands, making a quick stop for the
customer, or waiting for them to finish an activity.
Since there are 108 people that Beach Transportation is targeting, we would plan on
averaging around 2 hours per month per customer which would lead to 216 hours a month or
just over 7 hours a day. If this increases where it could not be run by a single employee the
business could easily scale accordingly due to the instant payments from our clientele.
Anyone using our service will be able to pay in cash, checks, debit, and credit cards as our
company will have the Square application for all drivers, which allows charging of credit and
debit cards with only a smart phone and a small add-on. These payment options would give
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clients the option to use the payment service that works best for them. Additional office hours
would be spent scheduling new clients and marketing the business. For the first few months
we would need to get more hours of service from new clients while building name
recognition and trying to expand our brand. At $140 per hour and 216 hours per month we
have the potential business for $362,880 in the first year alone. Even with the initial costs of
purchasing equipment, obtaining licenses, and getting insured, which would be around
$10,000, it would be reasonable to forecast a profit. The single employee will be driving the
van and scheduling until the business needs to expand which means more profit can be put
back into expanding the business.
Competition and Strategy
No matter where you go there will be some competition for disabled accessible
transportation services and South Orange County is no different. There are the paratransit
services offered by multiple private companies and a few public ones like the Orange County
Transit Authority (OCTA). Many older adults can get rides on these services for free or low
cost due to the Americans with Disabilities Act of 1990 but 40% of older adults with a
disability do not qualify for these services (Rosenbloom, 2009). Some other limitations of
paratransit include: rides must be scheduled in advance, rides are typically shared by several
people, and can be set on a fixed route (Knight, 2011). Beach Transportation will be working
with individuals who do not qualify for the disability services and we will look to fix other
issues that paratransit does not have the ability to improve upon so we do not consider them
direct competition. Instead the focus will be on the disabled accessible transportation services
in South Orange County which offer direct routes for clients on an individual basis. Rideshare
options such as Lyft and Uber have become popular private transportation services but
these business currently do not have handicap accessible transportation options or offer the
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door-to-door service that we offer so unless they make major changes to their business they
are also not considered direct competition.
This leaves the closest competition as NEMT services around the Huntington Beach and
Newport Beach area.
When searching for disabled accessible transportation services including NEMT in
Orange County the search engine comes up with 49 results but only 10 of them are actually
located in Orange County, the rest are located elsewhere but offer services through multiple
counties (Google Maps, 2015). Within Orange County you find that most services are located
in Irvine or farther which can be 20 minutes or more away. This could cause a delayed
response time when picking up clients and creates a void of local services in the targeted
cities of Newport Beach and Huntington Beach. Our strategy of establishing an at home
business located near Pacific Coast Highway in Newport Beach would provide access to any
location in both cities with a drive time of 15 minutes or less. This allows Beach
Transportation to be more local than other competitors and still gives us access to all potential
clients within our target market.
This leads into another one of our strategies of rapid transportation. Almost all
competition in the area requires 24 to 48 hours before the pickup time to allow for scheduling.
At Beach Transportation clients will be able to call anytime and get our closest appointment
to their desired pickup time without the need for a day or two lead time with appointment
times being scheduled first come first serve. For future bookings we will check the schedule
and find an opening as close as possible to the desired pickup time depending on availability.
This service can be helpful when older adults have family come over to visit and they may be
in need of more immediate disabled accessible transportation options to go out and enjoy their
day. Customers will have multiple options on ways to schedule an appointment. They can call
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the business directly to get a fast response or go onto our company website and see when a
ride is available to book it directly from the site.
Another way that Beach Transportation sets itself apart from the local competition is
that we will only take private payers and do not accept any insurance for reimbursement.
Even though this will lose some customers that cannot afford the service, our target area has
more than enough financially stable older adults that can support and expand the business.
The only way we will be able to support the demand of such a large area with a small fleet is
by shrinking the market and this is the easiest way to narrow our services to those looking for
exactly the service we provide. While other services may require a larger fleet due to routine
doctor’s visits paid for by Medicaid, we can operate at a smaller fleet serving those who are
elderly or disabled and looking for premium private transportation. That means all customers
would pay out of pocket at the time of service and we would not have to work with insurance
companies or the government to try and collect payment at a later time.
The marketing strategy will be geared towards the elderly, disabled, and those who are
affected by their driving ability. One opportunity is to educate the local medical facilities and
nursing homes of our new transportation service and offering it as a resource to their patients.
These companies deal with a large number of elderly and disabled so establishing a good
relationship with these local businesses can really lend credibility to our name while also
expanding our business.
Beach Transportation’s final strategy for a successful business is to guarantee a clean,
professional, and friendly service or the customer’s next ride is half off the cost. This is a
promotional strategy that will be one of our main selling points because the price discount
would ultimately be part of our company policy and help us advertise our focus on high
quality. Not only does it guarantee top of the line service but if there is a bad experience it
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makes sure our customers come back to give us another try to provide them with our premier
client experience.
This is why we will print this as one of our main slogans on business cards, billboards, and
media. Once the business starts to expand we would have to make sure all new drivers
respected and maintained the company standards with clients. This is why hiring correct
personnel that fit the company image would be crucial to the success of our business. To
make sure we could keep this high level of service each potential employee would have a
thorough background check and at least two physical meetings, followed by one drive along,
to see if they were a fit for Beach
Transportation’s high quality standards. We would pay drivers above market value, as will be
discussed in the financial section, to make sure we retain the top disabled accessible
transportation drivers in the Orange County area. Since private payers are investing top dollar
to utilize our services it is extremely important to foster positive relationship so they become
returning customers.

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