If your business runs on deliveries or you manage your own inventory logistics from top to bottom, or you simply rely on vehicles to carry out the services that you offer, then your business is going to depend on its fleet of vehicles like few other assets. If your fleet costs start going up, it can affect the whole business. Similarly, if you’re able to save money in managing the fleet, it can be a business-wide benefit. Here, we’re going to look at ways that you can ensure your fleet stays as cost-effective as possible.
Mind how you fund your fleet
When you first establish your fleet of vehicles, you are going to need to put together the capital necessary to either purchase the vehicles outside or to pay for the vehicle loans that help you pay them off over time. One mistake is making a funding decision based on financial details that are likely to change. The vehicle loans that you took out previously may not continue to be the wisest choice three or four years from now. As such, it’s wise to think carefully about which ways of funding your fleet are most reliable, whether it’s working with owner-drivers of their own vehicles, using contract hire to keep costs down over time, or simply ensuring that you get the best deals on truck loans possible.
Don’t buy more vehicles than you need to
It is important to make sure that you are accurately assessing just how many vehicles you need in your fleet in the first place. With every vehicle that you buy, you are also buying the fuel, insurance, and maintenance that comes with it. This can be thousands or even tens of thousands per vehicle per year. If you have a vehicle that you are not making as much use of as you should be, then you should look at selling the truck to recoup some of the money spent on it. Don’t hold onto vehicles waiting for the opportunity to use them.
Be smart with your fuel expenses
Aside from making sure that you have fewer trucks to be concerned about, you should also be looking at ways you can reduce the running costs of those trucks. If your business relies on extensive driving, then you should always keep your fuel expenses in mind. As a variable cost, it can be hard to rely on fuel savings enough to budget for it. However, you can track your fuel purchases over time to get an idea of how efficiently fuel is being used. You can then look at methods of cutting those costs, such as using discounted fuel cards available to businesses instead of simply paying at the pump.
Don’t drive for as many miles
If your vehicles need to make deliveries and stops, then there isn’t much you can do to stop them from going to A and B as necessary. You can, however, make sure that they’re not adding too many miles to the journey in finding their way there. Cutting both the miles traveled and the time it takes to make journeys can have a profound effect on the cost-effectiveness of your fleet. The single best way to do this is to better analyze and track vehicle routes using GPS and telematics solutions. You can improve the routing through the business and make sure that your drivers are not driving excess miles.
Finding your balance with insurance
Another of the ongoing costs that you should be consistently thinking about is the auto insurance that you pay for every vehicle. Needless to say, insurance is necessary to protect your business from the financial impact of a vehicle accident or breakdown, but if you don’t manage your cover well, you can end up paying a lot more for it than you need. Shopping around for the best insurance possible is a good idea, but you should get a firm idea of what kind of coverage you need, setting a baseline minimum that you don’t go beneath,. You may be able to supply proof of your safe ownership of the vehicles as well to help get premiums down, some.
Be thorough with your planned maintenance
Preventative and predictive maintenance are key in maintaining the costs of your fleet. The worse their condition, the less fuel-efficient your vehicles will be, the greater their chances of getting into accidents, and the higher your eventual repair bills are going to be. Maintenance will not prevent repairs, but it can at least make sure that not every initially small problem grows into a major cost. Create a schedule for your team that involves staying on top of routine servicing, oil changes, part replacements, and more. You can even use fleet management software that tracks every vehicle, reminding you of when you should carry out these essential maintenance tasks so that you don’t forget.
Encourage more efficient driving
Ongoing training with your drivers can help them start to learn habits that will cut down your costs, as well. For instance, you can train them to be more fuel-efficient by better using their gears to keep revs low, by reducing their acceleration and deceleration speeds when possible, and by cutting down on air conditioner use when it isn’t essential. Similarly, there are ways of driving that can decrease the wear and tear done on each vehicle as well. Fleet management software can also help you track infractions and poor driving habits when they are discovered, so you can target your personnel more directly on problems that they might be having on a more regular basis than your other drivers.
Work to prevent accidents as best as possible
There are few things more expensive to a business than a road accident. Not only are there the vehicle damages to consider, but also the damage that might be done to any inventory, the injuries that your driver might suffer as a result, and the liability that might come your way should it be found to be your driver or your business’s fault. It is essential that you take the time to research some of the most common causes of truck accidents and think about how to prevent them as best as possible. The aforementioned maintenance is going to go a long way, but you should also consider regular safety training for your drivers to make sure they are being as secure as possible out there on the road.
Reducing the costs of accidents
Prevention is always better than the cure. However, when it comes to accidents and crashes, that isn’t always possible. As such, when you do get into accidents, make sure that you have plans on how to handle it as best as possible. This will include legal preparations to ensure that if the accident isn’t the fault of your business, vehicle, or driver, you can recoup the costs needed to get back up and running again. Safety programs in dealing with accidents must be run from the top-down, meaning that if you are not insistent on enforcing policies across the board, your drivers are far less likely to adopt them. It’s also a good idea to make sure you have a good working relationship with a local garage. They may be willing to reduce costs if you can assure them that they will have reliable business from your fleet.
Factor for depreciation
When it comes time to sell vehicles that you are no longer using or if you are planning to update your fleet, then you do not want to be caught off guard by how much your fleet has decreased in value over the years. Depreciation is a contributing factor to the true whole-life cost-effectiveness of any vehicle. There are ways to combat depreciation and to maintain the value of your vehicle as best as possible. However, there are other decisions aside from maintenance and upkeep that matter, too, such as choosing vehicles that typically have strong used values, keeping a tight hold of any paperwork for them, and being timely with when you defleet them. Sometimes, waiting a single year longer can result in a huge decrease in value.
Handle additional demand with care
The first time that we offered was about ensuring that you do not buy more vehicles for your fleet than you need and we are going to finish by returning to that same point. In this case, however, we’re talking about resisting the urge to buy if you experience a sudden swell of demand. Most businesses are seasonal or cyclical and you need to make sure you know when your most in-demand seasons are so that you prepare the resources and the infrastructure to handle it. In terms of deliveries and logistics, you should consider hiring additional trucks to the fleet instead of buying them. As such, if demand decreases again after the surge, you’re not left with more vehicles than you need.
Your business fleet should be treated as not just a collection of assets, but rather a whole department of the business that can dictate the health and profitability of the rest of it. Hopefully, the tips above help to put that in some perspective.
- 4 Tips For Entrepreneurs Looking To Start A Business - January 26, 2022
- Grudge Purchases You Can’t Go Without - January 26, 2022
- The 3 Mistakes To Avoid When Starting As Business Consultant - January 23, 2022