Whether you’re a small business or a large national fleet you will, in all likelihood share the same goal, growth. Growth is excellent news for any business owner or fleet manager, but there are still plenty of factors to consider before you make your final choice. We’ve compiled just 5 that we believe are some of the most important things that you need to consider before you expand your fleet.
1. How many vehicles do you really need?
It’s important to consider whether fleet growth is the best option for your fleet. Sometimes, business growth doesn’t just come from the sheer amount of vehicles you can put on the road.
Real business growth fundamentally comes from a clear and structured business plan. It’s important to ask yourself, and your staff a few questions before you seriously consider adding more vehicles to your fleet.
Questions such as:
· Will we have enough increased sales/cash flow to justify the fleet expansion?
· Where are our new customers/clients going to come from?
· Can we afford the extra staff expense to operate the growing fleet?
· Can we safely and cost-effectively store these vehicles when they are not in use?
· Can we afford the extra costs in insurance, road tax and fuel?
Whilst it may seem that having more wheels on tarmac equates to more orders every month, that may not be the case. In the worst-case scenario you will grow your fleet, and therefore monthly costs, quickly and in time you might not be able to support these costs. Ultimately, this could lead to the necessity of retrenchment tactics and cost-cutting exercises. This could be potentially fatal for some small fleet owners.
To be clear, if you’re thinking of expanding your fleet that’s great! But remember, it’s best practice to ensure you know how many vehicles your fleet needs to expand by; and that your business’s growth in the market suitably justifies a larger fleet.
2. Do you want to purchase or lease, and on what finance type?
Business vehicle leasing is an attractive option for many companies, however, some may still consider purchasing. Both have unique advantages, so it depends on how your business operates.
Business leasing can be very financially attractive for fleet owners, as the monthly payments can be offset against VAT. Perhaps one of the biggest advantages is that leasing a vehicle allows businesses to keep their fleets relatively up to date, without having to separate with a large amount of capital.
Having a fleet constituted of new vehicles has benefits extending beyond the visual appeal. Newer vehicles have enhanced safety features, and are in general better to drive than older vehicles. Resulting in happier drivers and more efficient fleets.
Of course, when you lease a vehicle you do not have ownership of the asset. This means it will not appear on your balance sheet and therefore will not contribute to the overall value of the business. However, when you own the vehicle you also take the risk of depreciation and the cost of disposing of the vehicle.
If having the vehicle appear as an asset is important to you, there are other leasing finance types which will facilitate this, to find out more about the different leasing types > Click Here.
3. Ensure your drivers are trained with the new vehicles
Ensuring your drivers are fully trained in the new vehicles you are adding to your fleet is crucial. Having drivers fully competent in the new vehicles not only improves driver safety and well-being it also has an impact on fleet efficiency.
A trained driver will in all likelihood have fewer accidents and therefore your fleet will incur less vehicle downtime. Perhaps this point is particularly important if you’re switching to electric for the first time.
Training your staff to be prepared for the differences in handling an EV such as the more reactive acceleration and braking, as well as range and charging times. Having drivers who are more able to effectively manage driving an Ev will result in higher fleet efficiency.
4. What Fuel type is best for your fleet
Many businesses and individuals are now making the switch to electric vehicles. This can be beneficial for some businesses, with efficient fuel management, good brand image and tax savings. However, there is also the issue of charging infrastructure and some concerns over wait time.
An ICE (internal combustion engine) vehicle, otherwise known as petrol and diesel engines, could be a great option for your business. They require less infrastructure to fuel when compared to an EV or plug-in Hybrid. In addition, these ICE vehicles are generally cheaper to purchase and lease than their electric counterparts.
However, many ICE vehicles could receive charges when travelling in clean air zones, and if you expand your fleet into new areas these charges may apply to your business. Additionally, electric vehicles do not incur road tax which could save your business money.
On the other hand, when operating an ICE vehicle, you do not need to factor in charging times. This of course is a massive advantage for ICE vehicles. Ultimately, which fuel type you choose depends on your business’s operations and how you plan to use the new additions to your fleet. To find out more about the various fuel types and their pros and cons take a look at our alternative fuel guide > Click Here.
5. Consider the total ownership costs
When acquiring new vehicles for your fleet, and particularly if you are leasing, it is important to have a clear understanding of their cost over the entire time you intend to run them. Typically, this whole-life cost analysis (WLCA) includes costs such as vehicle acquisition, admin fees, vehicle maintenance costs, fuel depreciation, finance costs and end-of-life disposal.
Calculating this cost can be very time-consuming and difficult. However, it is very effective when deciding exactly what vehicle to obtain, the fuel type and how you finance it. Having such clear data is a vital tool in your decision-making armoury and can make a difference when it comes to fleet profitability.
If you would like to find out more about WLCA > Click Here.
Are you ready to make your decision?
Expanding your fleet is an exciting sign that your business is growing, or at least
thinking about how to grow. However, to ensure this growth is sustained, many
factors need to be considered. This, by no means, is an easy task and often
requires considerable time and effort.
You may be ready to take the next step and grow your fleet, or you still may be unsure whether it is the right time to do so. Either way, we are here to help, get in touch with one of our experts today, and where appropriate we will be able to advise you on what step is best to take. Get in touch on 01332 205828 or complete the form below.