October 20, 2010
In the Driverâ€™s Seat
Passengers who take the backseat with W&T Travel Services L.L.C. (www.wttravelservices.org; 301-899-9887) are always in for a smooth ride.
The Camp Springs, Maryland-based company is a full-service ground transportation business. From airport shuttle services for corporate patrons, to private transport of celebrities, and shuttle bus service to government agencies, W&T offers an array of services to its clients.
After working 15 years in the transportation industry, Darnell Lee founded the company in 2006 with just two employees and two vehicles. Lee invested from $30,000 to $50,000 out of pocket to purchase vehicles, equipment, and supplies. Just three years later, W&T reeled in more than $6 million in revenues. Now, with more than 50 vehicles and 66 full-time employees, Lee expects W&T to reach nearly $7.5 million in 2010 because of multiyear contracts in the pipeline, among them one with the Food and Drug Administration for three years and $3.5 million. Yet the biggest turning point remains the five-year, $35 million contract W&T was awarded in 2008 by the National Institutes of Health. Other clients include Washington Suburban Sanitary Commission, the U.S. Department of Agriculture, and the General Services Administration.
Lee, 46, says his inspiration for starting the company came after he attended a men’s conference in 2006 where his pastor spoke on the importance of leaving behind a legacy. Lee had a moment of insight and felt it was time to set out on his own. “I wanted to honor my late parents, William and Teola,â€ says Lee, who named the company after them.
Even with W&T’s success and its ability to retain clients during the recession, the company encountered difficulty securing funding from banks. Lee says more than 15 lenders turned them down, citing high risk–losing just one major contract could blunt its ability to repay its debts–despite a 90% loan guarantee from the Small Business Administration. Lee concedes that his two largest clients make up about 80% of his business, but to address its high-risk profile he’s hired an accounting firm to scour the company’s records and prepare its books as if for a Defense Contract Audit Agency audit.
To avoid negative cash flow Lee took and expensive route. We’ve been working with a factoring company paying an interest rate of 18%â€ he adds. “But by the end of the year we’ll have graduated from the factor and will be working with a bank. We’ll have a line of credit at 10% by the first of the year.â€ (Factoring companies purchase accounts receivables from a business and provide immediate cash but charge high interest.)
Despite the former funding uncertainty, Lee refused to put W&T in neutral. He and his proactive team are securing new contracts and following up all leads. Over the next year, Lee says W&T will continue pitching its services to government agencies in hopes of securing additional contracts. For Lee, business victories are about seizing opportunity and taking charge of one’s own entrepreneurial roadmap. “Successful people don’t just talk,â€ he says. “They go out and do it.â€