When you run a small business you need to keep a close eye on your cashflow. Businesses that fail, often fail because they can’t keep enough money in their bank account to pay their bills and expenses or direct it to productive activities that grow revenues.
One area that a lot of businesses struggle with is vehicle purchases. Here are some tips to get you the best deal and save on maintenance costs too.
Buy A Fuel-Efficient Vehicle If You Drive A Lot
A lot of cab companies are switching their vehicles to fuel-efficient models, like the Toyota Prius. There’s a reason for that: profits.
If your company puts down a lot of mileage in a year, you might want to do the same.
Of course, it really depends on what your company hauls. If you drive documents everywhere, or maybe a couple of passengers, it might pay to have fuel efficient vehicles. If you’re hauling heavy loads, the added premium for a fuel efficient car or truck might not make sense.
For most businesses, however, it’s hard to argue with 40 to 60mpg.
Don’t Be Afraid To Negotiate
Negotiation is in your blood as a businessperson. Don’t be afraid to use it at the dealer’s lot. Most vehicles can be negotiated for thousands less than the sticker price. So, put your best salesperson on the job when you need to buy new vehicles.
Research the type of vehicle you need in advance, scope out the dealer’s invoice price (this is the price that the dealer paid – it’s public information, so they can’t hide it from you), and make your bid accordingly. You know the dealer won’t go below the invoice price, but you do know there’s room for negotiation up to that point.
Be sure to leave a little profit on the table for the dealer too, as he won’t want to sell the vehicles without making something for himself. There’s also the matter of service. If you don’t give the dealer enough profit, he may want to try to recoup losses on the backend through service work.
Stay On Top of Maintenance
Most good shops will tell you to bring your vehicles in for regular maintenance to avoid catastrophic failure of important vehicle systems. And, with older vehicles, you might need to bring it in for some body repair. Mesa auto body shop, for example, recommends taking take of things like surface rust and chipped windshields immediately, before they turn into more expensive problems.
Factor In the Driving Record of Your Employees
You can’t control your employees once they’re out there on the road. That’s why you have to price in their previous driving records when buying vehicle insurance. Either hire employees with good records or budget extra for more expensive insurance.
If you’re looking for ways to save money though, strongly consider the former.
You can (and probably should) also send your employees to regular defensive driving classes, and provide additional driving training for them so that they maintain good driving habits. It’s much less expensive to pay for these classes than to deal with the liability of a crash and the increased premiums for years afterwards.
Don’t Sacrifice Cashflow
Sometimes, it’s tempting to get a deal on a new vehicle, especially when that vehicle is being paid for in cash. You have the money, they’re offering you 20 percent off. What’s not to love?
Well, sometimes, the hit to your cashflow is just too much. Even when a deal is almost too good to be true, you need to think about what it will do to the corporate bank account. All vehicles need maintenance and, unless you’re a taxi company, you have other expenses to think about.
Draining your company’s funds for a vehicle (or a small fleet) might leave you without enough money to pay other necessary expenses.
Separate Your Vehicles from Your Business
If your company employs drivers, one of the biggest liabilities you have are your employees. You can’t predict what will happen out there on the road. And, if one of your employees gets into an accident, the other party might decide to sue.
If they do, your entire company is exposed.
That’s why smart businesses separate that liability from the core company. They create a vehicle or property holding company. If another party sues, they will only get the assets in the holding company.
That protects you, and everyone, in your company. And, it’s one of the best moves you’ll ever make.