If your small business heavily relies on a fleet of vehicles to carry out a central aspect of its daily functions, then it’s inevitable that you’ll feel a degree of concern surrounding how much of your monetary resources are being used up by it. It’s natural, smaller businesses are generally on a restricted budget, of which, a vehicle fleet can dominate spending. Indeed, rather than being an opportunity for lucrative development, fleets can make business owners feel increasingly pressured, primarily owing to the financial demands of the transportation industry.
Especially in today’s context of exponentially growing fuel prices, it’s essential for smaller businesses and larger franchises alike to come up with an adequate response so as to continue thriving amidst current volatility. It’s for this reason why we’ve collaborated with the experts at MICHELIN Connected Fleet, to outline the 7 standout ways in which you can reduce the cost of running your fleet.
- Plan efficient fleet routes
Fuel consumption often represents around a quarter of a given fleet’s total expenditure, making it the highest variable cost associated with the industry. Followingly, decreasing the amount of fuel used up by your fleet’s vehicles is the most direct way of reducing your operational costs. The most effective method of doing this is to plan more efficient fleet routes, in particular, those which negate unnecessary idling & detouring. Likewise, incorporating multi-stop schedules into journeys works similarly. The logic is simple, less fuel used = less money spent. As a rule, fuel wastage categorically equates to financial losses.
- Encourage good driving habits
Logistically, drivers are at the very centre of a fleet; how they behave on the road significantly contributes to a business’s productivity margins. Namely, if your drivers exhibit frequent over-acceleration, harsh braking, and risky behaviour while working, then this can considerably impact your business by the inherent financial implications of each. While it may appear that drivers act wholly independently, it’s up to you to actively encourage habits which keep your fleet both safe and efficient. The cost involved with periodically training your drivers in an according manner is entirely outweighed by the long-term savings on fuel, maintenance, and insurance.
- Ensure regular vehicle maintenance
On the back of the last point, you can manage the condition of your fleet’s vehicles by controlling how they are handled. However, even if you adhere to this latter principle, it remains integral to make regular vehicle checks, and subsequent repairs, as soon as they are required. Evidently, the cost of vehicle maintenance is determined by the scale of the issue. And so, it’s best to arrange servicing early, i.e., to catch any extant problems before they worsen. Moreover, well-organised maintenance will guarantee that all of your vehicles are consistently safe and roadworthy, meaning you will avoid detrimental fines resulting from regulatory compliance breaches.
- Lower fleet acquisition costs
Whereas fuel is the foremost variable cost for fleets, those attached to your vehicles themselves are the largest direct fixed cost. Specifically, this regards the price and finance rates at which they are acquired. There are a number of ways whereby you can reduce your fleet’s acquisition costs including taking cost-effective volume discounts, accounting for prospective depreciation in value, buying undervalued models, coming to longer-term agreements with dealers, and securing cooperative purchasing arrangements. In essence, it pays to have a thorough purchasing strategy in place.
- Assess your fleet’s size
Whether you were perhaps overly-ambitious in gauging the size of the fleet you needed, or that your business’s circumstances have since changed, it’s necessary to ordinarily evaluate its scope. Even just one fleet vehicle alone can eat up financial resources in its fees for fuel, maintenance, insurance, and tax. Saliently, if a vehicle is being underutilised while still entailing these charges, then this strongly suggests that you should downsize. It may be that you just need to plan more efficient routes, as opposed to having more vehicles. On top of this, you can sell such vehicles for potentially substantial returns.
- Transition to an electric fleet
Given that fuel constitutes one of a fleet’s greatest expenditures, cutting out the need for it altogether would signal a prodigious reduction in your operational costs. A few years ago this would not have been practical, but fleet electrification is now a pervasive trend. Notwithstanding the fact that electric vehicles cancel out costs on fuel, they also allow you to benefit from incentives like government subsidies which lessen the initial investment you make. As such, reducing your fleet’s CO2 emissions by transitioning to a greener fleet is not only advantageous for the environment, but for your business’s financial health too.
- Use fleet management software
Technological advancement influences virtually every part of our society, and vehicle fleets are no exception. Pertinently, all we’ve discussed so far comprises a fleet manager’s responsibilities. Of course, these duties are, collectively, formidable for a single individual to undertake. Although, having said this, purpose-built software can facilitate the completion of these tasks in a singularly streamlined manner alongside equipping those fulfilling the role with features that are intrinsically designed to decrease your overall operational costs, such as KPI analysis tools. In a word, if you want to access leading ways of reducing your fleet’s expenses, then you must implement modern solutions.
To conclude, reducing your fleet’s costs can be a very overwhelming prospect, despite the implied benefits. That is, there are various ways to achieve the aim, and each can signal the beginnings of a fundamental overhaul. We understand that change can be difficult, albeit, proactively up-to-date approaches are vital if you want your business to stay relevant. The primary takeaway here is that enabling improvements regarding the figure of the fleet manager via current industry developments is key to their success and, by extension, your business’s.
