Certain industries and services continue to be in demand irrespective of the economic conditions. Fleet management is one such business. Organizations will always have to transport goods and people from one location to another.
Having a demand is the first consideration while entering any business. Given that there is a good demand, a fleet management company can be really profitable if you plan well and make the right decisions.
Wondering how to start one? Here is your complete guide to starting a fleet management company.
Create A Business Plan
A business plan outlines your vision for the company for the next three to five years. Creating a business plan will make you provide you with clarity on all aspects of the business. It also comes in handy when you need to apply for funding.
The business plan is a comprehensive document. You must start by defining your business and its expected customer base. Are you delivering goods? Or serving food and catering as a business? Or are you interested in starting a taxi service?
You should also mention your expected income and expenses, the number and type of employees you expect to hire, their salaries, the kind of office space you have in mind, whether you plan to rent or lease certain equipment, and your marketing plan.
When you sit down and create your business plan at the very beginning, it benefits you on two fronts. First, it makes you consider every aspect of the business and, therefore, offer clarity. Without a business plan, you may miss out on some finer points, and these points may impact your business in the future.
Second, a business plan helps you stay on track. Once you start your business, you may get overwhelmed by the decisions you have to make. However, the goals that you laid out in your business plan will help you make the right ones.
Source The Vehicles
The vehicles are the backbone of your company. Not only must you decide the make and model of vehicles, but you must also decide whether you want to purchase them or lease them.
The make and model of the vehicles depend on the cargo you expect to carry. How much power should your truck have? What should its carrying capacity be?
Once you have made these decisions, the next step is to decide whether you are going to purchase your fleet or lease them. The vehicles are not cheap. Purchasing the whole fleet upfront will drain your finances. However, when you purchase the vehicles, you have full control over them.
Leasing is the cheaper option. But you may have to abide by the terms and conditions of the vehicle owner. When you are starting your company, there may be a few uncertainties regarding the kind of vehicle and the amount of business you expect.
If you buy the vehicles as per your initial estimate and things change in one or two years, you will be stuck with vehicles that don’t serve you well. Leasing turns out to be the better solution in this case.
Choose Your Employees
You have vehicles. Now you need to think about the drivers. You should always hire drivers with good experience and a good track record. Always check their references and speak to previous employers.
You also have the option of hiring subcontractors. They are drivers who own trucks. You pay them based on the trips they make for you instead of a fixed monthly salary.
You should evaluate the pros and cons of both before making a decision. You can even have a few drivers on payroll and a few as subcontractors to meet additional demand.
Apart from the drivers, you need to have back-end staff for fleet management, invoicing, payroll management, and various other activities. You may be able to do some of these activities yourself.
Here, you should strike a balance between hiring too many employees and getting overwhelmed with work yourself.
Understand Your Operating Costs
Most new fleet managers underestimate the operating costs and end up losing money for the contract. Since you have to bid for most of the contract, you should get a clear picture of your operating costs.
Apart from the fuel and the salary for the driver, you must also factor in the insurance, maintenance and repair charges, the pay for the back-end employees, rent for the office space, and other expenses.
Never underbid on a contract. Even if you do get the contract, you will end up losing money.
Get A Fleet Management Software
Make no mistake. There is no dearth of fleet management companies in the market. It is a competitive world, and you need all the advantages that you can get. Fleet management software makes use of technology to revamp the fleet management process.
Live GPS tracking and AI integrated systems show the drivers the best route to take for delivery. It also provides real-time updates regarding the route. The routes are also scheduled to ensure maximum deliveries with the most fuel efficiency.
The software also provides detailed reports regarding driver behaviors, fuel consumption, security features, etc. These reports will enable you to make informed decisions that can increase your profits.
Samsara also provides wireless dash cams that are integrated with AI to proactively prevent accidents and maintain safe driving practices and driver and truck safety.
Keep A Tab On Your Finances
Any business requires a lot of capital investment, and it applies to fleet management companies as well. When you are starting out, you may not get payments from your clients immediately after delivery.
The payments take 30, 60, or even 90 days to come in. Other expenses such as employee incomes, insurance payments, lease payments, loan repayments, etc. will not stop in this duration. Make sure that you have enough capital to tide you over in this duration.
Get Started Right Now!
If you have been toying with the idea of starting a fleet management company but were unsure about how to proceed, the above guidelines should have given you a general idea.
Starting any company, especially one that is as capital heavy as fleet management, requires calm consideration of your resources and thorough planning. Pay attention to all the details and keep the bigger picture in mind to ensure that you succeed in this venture.