Adding a fleet is a weighty yet exciting decision for many business owners. Expanding your operations empowers you to provide your customer base with new services or improvements to existing ones. However, you must consider many factors, from the initial purchase price to maintenance and storage costs. The following tips can help you make wise choices throughout the process.
1. Understand Your Why
What factors led to your decision to expand into fleet operations — or consider it? You do have other options, including leasing. Understanding the unique benefits of having a dedicated driving team assures you that you’re making the right choice:
- Tax implications: Owning a fleet lets you deduct depreciation expenses, which can considerably reduce your taxable income.
- Regulatory compliance: Maintaining a private fleet lets you stay in compliance with driver hours and safety and emissions regulations.
- Pinpointed data analysis: Today’s tech can analyze routes and driver behavior to identify inefficient habits, idling time and areas for maintenance cost savings, resulting in more streamlined, efficient operations overall.
- Market expansion: The right fleet can do a lot, empowering you to offer a greater range of services to drive higher profits.
Is Your Business Ready for Fleet Ownership?
The benefits of fleet operations have many owners anxious to take advantage. However, this business model isn’t right for every enterprise. For example, although Dominos maintains a dedicated delivery fleet in many areas, today’s food delivery app market, which is expected to grow by 12.67% by 2027, offers another alternative to restaurateurs. Those who need heavy equipment can often find rentals, sparing them from the need for ongoing maintenance.
Asking yourself the following questions can help you make the right choice as to whether now is the best time to expand into fleet operations:
- Have you performed a thorough needs assessment? If so, owning a fleet versus the alternatives should emerge as the clear winner.
- Do you have the budget? Beyond the purchase price, you must consider insurance, maintenance and fleet management software.
- Comfort with learning new tech: Fleet management technology entails a learning curve — can you dedicate the time to mastering it and training employees in its use?
- Driver training: Depending on your industry and the types of vehicles driven, your drivers may require additional training on operation and safety procedures.
You’ll need to perform financial forecasting to ensure fleet ownership is your best long-term financial bet. Use various methods, such as bottom-up analysis, where you gather input and collaborate with multiple teams, analyzing trends in customer behavior and historical data. Run projections, such as Monte Carlo simulations, where you create a range of possible future scenarios based on differing variables. Once you feel confident, it’s time to shop.
2. Choose the Right Fleet
One of the first buying decisions you’ll face is whether to purchase new or used vehicles for your fleet. Both options have considerable advantages and disadvantages. Weigh the following factors when making your purchase.
Advantages of Buying New
New vehicles increase your peace of mind and decrease maintenance costs, at least at first. They also possess the latest technology, including onboard GPS with tracking and driver cameras. You can customize them within the specs to suit your needs. However, you will face a higher purchase price and monthly payments, including for insurance. New vehicles also give the benefits of greater depreciation deductions come tax time.
Advantages of Buying Used
Used vehicles have a shorter useful life span, meaning that you won’t be able to claim as much in depreciation. Furthermore, while many new models come with a warranty that decreases maintenance costs, you’ll rarely find this option on used trucks. However, you do get to look at their maintenance records, which give you a good idea of each vehicle’s dependability. You’ll also pay less for the initial purchase and have lower insurance costs.
3. Staffing and Training
Training is a must for all fleet operations. At a minimum, you need to train drivers in the fleet management software selected for tracking and optimizing routes.
However, heavy equipment may require you to take an active role in certifying employees in their use or ensuring they have undergone the correct training to operate. For example, vehicles over a specific weight rating require drivers to obtain a CDL license. Businesses utilizing forklifts must certify employees in their operation to remain in compliance with OSHA.
Training costs factor into your budget. For example, sending employees to school to earn their CDL license may mean pausing or decreasing operations elsewhere temporarily. Ensure you consider your coverage needs when selecting a fleet that requires extensive training.
4. Maintaining Your Fleet
Maintenance is a crucial component of fleet operations. Keeping your vehicles in good working order protects the safety of your employees and everyone else on the nation’s highways.
A major consideration is whether to handle fleet maintenance in-house or farm it to outside businesses. Much depends upon your level of expertise and that of those on your team. Doing the work yourself can result in lower per-mile repair costs. However, you’ll need the right tools to do the job. Do you have a lift suitable for a big rig and several trained mechanics on staff? If not, locating an appropriate shop to maintain your fleet is essential.
You’ll also need to perform routine maintenance to prevent damage and keep your fleet running strong and safe. Today’s fleet operation trends tend toward younger vehicles, but they go a longer distance before needing care. Coordinate with the service pros at your dealer to work out the right schedule for oil changes and testing belts, hoses, lights, brakes and other components for safety.
Get Ready to Expand Into Fleet Operations
Expanding into fleet operations offers many benefits to business owners. It empowers you to develop and provide new services. It may streamline your operations compared to the alternatives, leading to substantial gains in productivity and efficiency. Taking a mindful approach and considering all the factors that impact your budget helps you grow your enterprise wisely with the right fleet.
Jack Shaw, editor of Modded and author of numerous articles on business success and self-improvement, seeks to inspire readers with his practical tips and strategies for growth. His writings can be found on Innovation News Network, EPS News and more.
