Las Vegas Business Press - Movers Prosper Despite Gypsy Competition

Las Vegas Business Press
Movers Prosper Despite Gypsy Competition

BY STEVEN MIHAILOVICH
BUSINESS PRESS

The endless stream of people moving to Las Vegas makes moving companies one of the healthiest businesses in the valley.

Los Angeles-based Starving Students moving company has seen nothing but growth since opening here five years ago. The company did 3,777 moves in Las Vegas last year, up nearly 59 percent from its 2003 total of 2,229. This year it is on track to complete 5,600 moves.

That kind of success has brought quite a few players who don't play by the rules.

"People can get a business license easily," said Richard Preston, manager of Starving Students' branch on Kimberly Avenue and the company's supervisor for all three Las Vegas branches. "You can buy or lease a truck and call yourself a moving company."

Movers need more than a business license. They must have a Certificate of Public Convenience and Necessity from the Transportation Services Authority to operate legally in Nevada. There are 36 certified movers in the state. There are 76 movers listed in the latest edition of the Las Vegas Yellow pages. (Some are legitimate packing and loading companies, moving brokers and storage sites.)

According to Preston, there were 17 certified movers in Nevada when he joined Starving Students in 2002 and 95 listed in the Las Vegas Yellow Pages. The Transportation Services Authority did not dispute the figure.

Legal companies are bound by numerous regulations, each adding to operating costs. Licensed movers must, for example, use full-time employees and carry workers compensation insurance, as well as indemnify the customer's goods. They also have to maintain their trucks. Unlicensed outfits don't follow those rules and undercut Starving Students' $65 to $104 hourly rates.

"The guy operating illegally can take his truck anywhere -- to his nephew's garage," Preston said. "The illegal mover uses contract labor. We have to have full-time employees. The illegal company doesn't have this administrative requirement, so he doesn't have the same costs as we do and so he is taking home more in revenues."

Preston knows price is the sole criteria for many people but he warns that there are also dangers. If law enforcement closes an illegal operator, there's no way to get a refund on unfinished work. And any injured worker can sue the client.

The Transportation Services Authority began cracking down on illegal moving companies in 2003 when the Legislature strengthened the legislation. State agents were empowered to impound trucks and disconnect the phones of illegal operators. In the past 18 months, the agency has impounded 18 vehicles and disconnected 32 phone lines.

And that has boosted Starving Student's business. "When illegal or unlicensed businesses are driven out, the business comes to us," said Sachin Gadhvi, vice president of sales and marketing at Starving Students' corporate offices.

With margins averaging as much as 25 percent, Preston has no illusions that the crackdown will close the black market.

Whatever its disadvantages, Starving Students operates 19 trucks with about 30 full-time employees, which balloons to 60 during the busiest summer months.

The Beverly Branch near Boulder Highway draws more business than any other local office across 10 states. Demand in Las Vegas has been so great that the company recently opened a third office in 2,000 square feet of leased space near Russell Avenue and Valley View Boulevard.

Despite the booming population, Starving Students does 80 percent of its business with people moving house within Clark County.

"Our business is very good," Preston said. "It's primarily the large amount of people coming to Las Vegas every month. People come into an apartment and then find a better place to stay. They figure out where they want to be in reference to their job."

Starving Students mostly operates in western states and that means many of the newcomers have never heard of it. To capture their share of that market, Starving Students has relied primarily on ads in the Yellow Pages.

"It's tough to market yourself in that manner," said Preston. "People coming from out of state already have other carriers to bring them here from another state."

Starving Students has learned that the best way to get potential new customers is to build its reputation with existing customers. Trucks with the familiar Starving Students logo painted on three sides become large mobile billboards on the job.

"People see us and we get a lot of calls," said Preston. "They ask a neighbor or a real estate agent who they would recommend. We really rely on word of mouth."

Started in 1973, the privately-owned company is exploring alternatives to its current marketing direction, including a possible change to the stalwart logo. Gadhvi said those decisions will be made in winter.

"There is a whole host of marketing initiatives," he said. "We'll do testing and look at all our messages and the media. We have a very strong brand. The trucks are very recognized by people. We want to build on our strengths."

Starving Students also rolled out its Next Day Express Service in July.

People moving between Las Vegas, Los Angeles and Phoenix can have their furniture and household moved to their homes within 24 hours. That beats the national movers that usually require five days to complete a move.

"When you call a (larger national mover), they can't give you a specific time," Gadhvi explained. "They say sometime between Monday and Friday and we'll give you call. They contract someone locally to unload. We don't have to hire someone else. We already have guys in the local branches, so it's just one more move." Just as the company is contemplating changing the image, the express service was added to protect the brand while expanding its lucrative Southwest operations.

"Because we have a great brand name in the local business, we get so many calls for long distance," Gadhvi added. "Instead of selling to a company that isn't ours, we'll keep it in-house. If the customer has a bad experience, they're not going to say it was the long distance subcontractor. They'll associate it with us."

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