As a remodeling company grows, it may reach a point where it considers putting together a fleet of vehicles for its work crews. This is a great way to make sure employees have all the needed tools. And it is another medium to market the company. For expert advice on putting together and managing a fleet, Qualified Remodeler spoke to Bob Johnson, director of fleet relations at the National Truck Equipment Association.
Qualified Remodeler: What are some of the advantages of putting together a fleet of vehicles for a remodeling business?
Bob Johnson: It becomes a great way to advertise the business, especially if the vehicle is maintained and looks good. If I’m a remodeler and have well-maintained vehicles with a logo or billboard on it, people are going to say, “boy those sure look nice, they must be a good remodeling company.” On the other hand, if you don’t take care of them and beat them all to pieces, people will think, “they don’t even take care of their equipment, I sure don’t want them to come work for me.”
Without a fleet, a remodeler generally requires its employees to use their own vehicles and the second you do that, those people become your agents and you assume a lot of liability because they’re not your vehicles. If I don’t provide vehicles and just expect employees to provide their own trucks, I have very little say in the condition of those vehicles, which can reflect negatively on a jobsite.
QR: What are some of the things that remodelers should think about before putting together a fleet?
BJ: The first thing I tell people to do is sit down and define their application. For example, if I was a remodeler I would think, “I’m going to need to probably start with a pickup truck or a van.” What they first need to do is really define what they’re going to be doing with the vehicle and what their job requirements are.
Once they define the job of the vehicle, they need to identify the additional requirements that the job is going to have. What do they need these vehicles to do? Do they need a vehicle to transport tools or certain materials? Do they need it for jobsite water protection or security? Once applications are defined, then it can be determined what sorts of vehicles they’re going to need. It’s a lot better than just saying, “I need a truck” and then just going out and buying it. Start by really analyzing the requirements of the job.
QR: What things should a remodeler be concerned with when putting together a fleet?
BJ: In conjunction with defining your requirements, another really important thing that you need to do is determine what your payload requirements are going to be. One of the biggest mistakes that people make with vehicles when they’re first starting out is ending up with the wrong size vehicle. They’ll have more truck than they need, or more likely, they’ll have less truck than they need.
If you have less truck than you need, you’re going to overload the vehicle, which is going to lead to extremely high maintenance costs, safety issues and a shortened vehicle life. So it is important to carefully analyze what your payloads are going to be and then investigate the available options, making sure to match the truck to the job.
If you’re going to err, it’s better to err on the side of too much truck than too little, but the second you’re buying more truck than you need you’re investing more money, and you may or may not have it paid back to you. If you look at it and say, “OK, I can get by with X today, but maybe in two or three years I’m hoping to grow the business and then I’m going to need Y.” Realistically then, if you can afford things, you should go ahead and buy the bigger truck.
QR: When should a remodeler look at leasing and when should they just buy?
BJ: First of all, leasing is a real wide open term. There are just literally dozens of types and styles of leases. So before you make a decision you need to research all your alternatives within the leasing market. You need to make sure you know how you can treat the lease from a tax view point.
Second thing you need to do is determine how long you’re going to be keeping the vehicle. As a general rule, if you’re going to keep the vehicle three years or less, it is better to go with the lease just because of the hit you’re going to take on the depreciation if you purchase. If you’re going to keep the vehicle five or more years, you’re almost always better to purchase assuming you have the money. That in between three- to five-year period is going to depend on lease rates vs. finance rates.
So in buying vs. leasing, especially in a smaller business, it all comes down to available funds.
There are a number of large fleet management companies out there that work with companies to design and purchase a fleet. At the more local level in some of the larger metropolitan areas, there are also dealerships that specialize in fleet sales. Just make sure to do the homework, know what the requirements are, and don’t get something that’s not right for the job.
QR: What are the things a business owner should keep track of for their fleet?
BJ: You want to keep good basic records on each vehicle. This helps to look for recurring issues and determines if it’s a manufacturer problem, if it’s someone driving the vehicle hard, or that the vehicle might not have been the best one for the job.
You want to look for reoccurring issues, especially if you have multiple vehicles of the same make or model; look for recurring problems and failure issues. That tells you that there is something wrong with the vehicle specifications or a component the manufacturer supplied. Look for recurring failures and analyze them with a mechanic. Are these a result of a defect in the vehicle or are there are problems with the specifications and the vehicle is overloaded? And then you take that into consideration when you replace that vehicle down the road.
QR: What should a fleet owner be doing as far as maintenance on their fleet?
BJ: You need to establish a standard maintenance policy for your fleet. Determine the frequency for the services and stick to the schedule. This is generally based on X number of miles or Y number of months. If your vehicle is classified as a commercial vehicle, some of your maintenance and inspection is then mandated by government regulations, and you need to make sure you know what those are.
If all of your vehicles are under warranty, you want to keep your vehicle under warranty, plain and simple. You want to make sure that you set up a maintenance schedule for efficiency and to keep the vehicle under warranty. At the same time, keep very close track of what your warranty coverage is and make sure you take advantage of it. Don’t pay for repairs that you could have warranted.
Every time you take a vehicle in for an oil change or have something fixed, take the opportunity to have the vehicle completely looked over. Check the front end for excessive wear damage. Look at the tires to see if they’re wearing. Rotate the tires on a regular basis. Check the tire pressure. Check the exhaust system. Inspect the suspension. Basically just look the vehicle over.
Fleet vehicles tend to be very high maintenance in the areas of hardware, too. Because people are going in and out of them so much, door hinges and door latches tend to wear out a lot more quickly than your typical vehicle. Basically, while you’ve got the vehicle in the shop, take advantage of the situation to do more than just change the oil. You may be saving on oil and oil filters by only changing it every 10,000 miles, but then you don’t have those opportunities to look at all those other maintenance problem areas.
QR: What options should a remodeler consider to get the most out of their fleet?
BJ: There are several things you want to look at. Some heavy-duty options are really not worth the effort, but it all depends on what you’re doing. Especially if you plan on towing trailers, definitely go for a heavy-duty transmission, heavier suspensions and heavy-duty cooling is always a good idea for a commercial vehicle.
Some options are quite cheap while others can be quite expensive, so you have to look at it and say, “do I really need it or not.” Upgraded electrical systems, heavy-duty battery and alternator, heavy-duty cooling are very cheap upfront. A heavy-duty transmission can be $1,000, so you need to look at it and think about if you’re ever going to be towing a trailer with this truck
One thing you need to consider is driver comfort items. In today’s world a vehicle comes pretty nicely equipped, but there might be a few add-ons, and you may want to spend a few dollars extra just to make the driver happy. You don’t need a 10-disc CD player in dash, but at the same time, you don’t want it so stripped down that they’re going to dislike the vehicle. If they feel the vehicle is cheap and just junk, they’re going to treat it that way. So you need to strike a balance. You also need to consider options that add something to the resale value.
QR: Finally, what are the risks of managing a fleet?
BJ: Having a fleet increases your exposure to accidents. If the vehicle is involved in an accident, the other party is going to come back on you, because you probably have deeper pockets than the driver does, so make sure the fleet has the correct amount of insurance.
From a risk-management viewpoint, you need to make sure that the vehicle is designed to do the job you need it to and is maintained. You also need to make sure your drivers are properly licensed and don’t have an excessive number of driving citations.
Having a fleet can help a business owner make sure his team has the tools it needs to get the job done and with the right upkeep, can help bring in new business.