Adding a fleet of vehicles to your business can be an excellent strategy, especially with the explosion of e-commerce. If you’re a growing company racing to meet new customer needs, read on for more information.
The benefits to having your own fleet
While you can hire drivers from delivery companies, having your own fleet means driving services will be more readily available and reliable. Plus, SambaSafety notes that having your own fleet can help your company better surmount supply chain challenges, as you will be relying less on outside companies. However, purchasing and successfully managing a company fleet is no small task. It can take a lot of paperwork, and a lot of expense. Here are some guidelines for surmounting some of the challenges to acquiring and managing a company fleet.
You will probably need financing
Unless you are planning on expanding over time, you likely will not be able to purchase an entire fleet without funding options such as borrowing from a bank or drawing from a line of credit. Determine the number and type of vehicles you will need and look at different options for sourcing them. Some companies may prefer to lease their vehicles. This can be a prudent approach if you aren’t planning on using them year-round, or if yours is a newer company that needs to keep a tight watch on cash flow.
Hire trained drivers or train team members
Having a fleet of vehicles out on the road means they and your drivers will represent your company. So, your drivers should all be safe, professional, courteous, and knowledgeable. When hiring or training fleet drivers, make sure they all are licensed to drive whatever type of vehicles you are using. Drivers must all be able to pass drug and alcohol screening tests, have a clean driving record, and have good references from prior employers. Even if training is not legally mandated for your drivers, Fleetio points out that it’s advisable to offer routine programs that will help them maintain safety and efficiency and stay abreast of any significant industry changes.
Be prepared to deal with vehicle maintenance
The expense of managing a fleet has a lot to do with keeping the vehicles well maintained. This includes any repairs or replacements necessary due to breakdowns or accidents. Make sure you have a schedule for routine vehicle maintenance, including oil changes, tire rotation, tire replacement, brake and brake pad replacement, and a coolant flush. Get your vehicles in for tune-ups when scheduled. And be sure all fleet drivers know how to look over vehicles to spot potential issues. Find a reliable local mechanic in the area to attend to your fleet vehicles when needed.
Expenses with maintaining and managing a company fleet
Don’t forget that you will need to have business fleet insurance. The bare minimum you are usually required to carry is liability insurance, but you should probably look for a plan that offers specialized coverage as well. In addition to paying for fleet insurance, you must also budget for fuel use. Another possible expense to factor in is the purchase of a good fleet management system that will allow you to monitor your fleet and communicate with drivers remotely.
Starting a new business?
If you are purchasing a fleet as part of the launch of a brand-new business, consider the benefits of forming your business as an LLC, which will give added protection to your personal assets, plus certain tax breaks. Registering as an LLC is not difficult. You can find an online company to take care of most of the paperwork for you. Check out ZenBusiness and Legal Zoom reviews and costs to determine which formation service works best for you.
After you’ve established your company as an LLC, you may decide to switch to an S-corp at some point, which, unlike an LLC, will require you to have a director and board members. The IRS also has certain restrictions in place for S-corps, such as a limit on the number of shareholders and guidelines regarding stock. However, S-corps often have better oversight than LLCs and offer more tax advantages. Determine which is best for your business.
Launching a business fleet as part of your company strategy may not be cheap or easy, but it can make a significant difference for your company’s efficiency and profits in the long term. By hiring trained drivers, handling vehicle maintenance, finding financing, and forming an LLC if you’re starting a new business, you can manage your fleet effectively.
