Whether you use your vehicles to transport stock, set up pop-up retail outlets or reward your customers, it's important to find the right cars or vans for you
Should you buy or lease? Choose cars or vans? Use diesel or alternative fuel? When it comes to buying company vehicles, the options can seem baffling.
And whether there is a need for one vehicle, or a fleet of them, it isn't just the practical issues, such as the capital outlay and running costs that business owners have to consider. The chosen vehicle also has to maximise business efficiency; in other words, be the most appropriate one for the job.
The place to start is with the fundamental question: "Who should have a vehicle?" advises Tony Murtagh, head of SME at Lex Autolease.
He says: "Traditionally SMEs have used the company car as a benefit to reward their most valuable employees. As a result there are far more 'perk drivers' within this sector than there are in larger organisations. While this has its benefits in terms of staff motivation and retention, it can also be very expensive, as many small businesses use cash or hire purchase agreements to fund their vehicles, and in doing so, take on all the risks of ownership such as depreciation, repairs, servicing and maintenance costs."
Having established who needs a vehicle and for what purpose, business owners then need to align the costs with the value of the vehicle and where possible, fix them. Many fund their company vehicles using cash or hire purchase, however, paying up front can put a strain on cashflow and expose the business to fluctuating costs.
Alternative funding methods, such as leasing, can bring immediate cost efficiencies, requiring minimal cash outlay and freeing capital to be used more productively. The business also avoids being saddled with a depreciating asset, while all costs can be fixed and budgeted for in advance. Leasing can also be more tax efficient as a small business could potentially claim back 100% of VAT if the vehicle is used solely for business purposes.
When calculating the whole-life costs of a vehicle, remember to consider maintenance, repairs, accidents and driver training to avoid unexpected outlay over the duration of the lease, says Matt Dyer, commercial director at LeasePlan.
He adds: "Business owners can make further savings through car selection policy. Higher emitting vehicles are attracting ever rising taxes, which were reinforced by the changed tax bands, based on emissions, announced in the last budget. By choosing more efficient vehicles, the tax savings and environmental benefits to the business will be considerable."
Choice of vehicle is also critical to business efficiency. For example, a business that in the course of its work clocks up thousands of motorway miles each year will have different requirements from a company that only needs to make short journeys in towns and cities. Light commercial vehicles require an even greater level of insight to understand how they can be used efficiently.
With its fleet of around 150 Volkswagen Transporter vans Pimlico Plumbers believes it has the perfect solution. Karl Plunkett, public relations director at the firm, says: "This particular model is ideal for our business; it does what we want it to do, in terms of technology, fuel efficiency and emissions, and from an aesthetic point of view over the 15 years we have been using them, our vans have become very well recognised in the London area."
Unusually, Pimlico Plumbers owns its fleet, and operates its own garage and body shop. By ensuring the vans are properly maintained, the company has gained maximum service from them, with many still operational after 15 years.
Plunkett adds: "We could choose larger vans that carry more stock, but our vans carry exactly what's needed. We could go smaller and switch to alternative fuels or electric, but we don't feel the technology is there just yet. It is about choosing the van for the job, and given the area we cover, mainly central London, we can operate to maximum efficiency in terms of capacity, function and mileage, with the vehicles we have."
For many businesses, however, company vehicles are more than just a means of transportation; they are also part of their marketing strategy. Since its launch in March last year, London-based voucher code website MyDeals.com has used taxis to get out to see potential clients. The business is growing and expects to expand its workforce of seven to 25 this year, half of whom will be in sales roles and on the road for much of their time, so the search is on for a leased fleet of vehicles that meet their needs.
CEO Tom Packer says: "Size and economy are high up the list, so something small and fuel efficient like the Fiat 500 would make sense, plus many are congestion charge exempt; a major plus for a business based in central London. But as a consumer-facing business, brand marketing is also important. A well-branded company vehicle is a very effective way of promoting your business, making an impression on clients, creating good exposure to the public and reinforcing your brand."
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