A fleet of corporate vehicles — a few or a few hundred — is no small investment. While providing cars or trucks to your cleaning crews may mean big dollars, it could be worth avoiding the alternative. If you count on your employees to provide their own transportation, you are rolling the dice on what image they will project on your behalf.

Do you really want your employee’s jalopy to show up at your customer’s work site? How about that same rusted, noisy car with your logo slapped on its side, advertising your business all over town?

“Many of our employees cannot afford good vehicles,” says Peter Belloli, fleet manager for UNICCO Service Co. in Newton, Mass. “And we want a consistent image. If they provide their own car, it might be old. A 13-year-old pickup truck might not make it to work the next morning. We need quality and reliability.”

UNICCO is an enormous operation with 19,000 employees and a fleet of vehicles approaching 700. But it doesn’t take a small army to qualify as a “fleet.” Diversified Maintenance Services in South Pasadena, Calif. has fewer than 150 vehicles and, of those, only 30 are dedicated to its janitorial staff.

“Those 18 trucks you have is really a fleet,” says Tom Chelew, vice president of fleet services for Enterprise Rent-A-Car, which specializes in working with small businesses with 15 to 100 vehicles. “Most of our customers haven’t really heard of a comprehensive fleet program for a company that has 15 to 22 vehicles.”

On the road
Ready to roll out your fleet? Getting started can be confusing with so many decisions to make, papers to sign, and legal issues to address. Take things slow. The first choice you’ll need to make is a tricky one — lease or buy?

The answer is different for each company — it depends on your business requirements and goals.

When you buy a vehicle, you own it and can keep it for as long as you choose, and you can use any residual value for another purchase. Leasing, on the other hand, is more complicated.

There are two basic types of lease available to businesses — closed-end and open-end leases. The first is the typical dealership offer to individuals needing a personal vehicle. It requires you to make a pre-determined number of payments for a specified period of time and return the vehicle at the end of the term with a maximum mileage count. An open-end lease, on the other hand, offers more flexibility and combines the advantages of a lease with those of a purchase. It is a conditional sale in which the business assumes the responsibility for the residual value of the vehicle (and the leasing agent usually sells the vehicle for you at the end of the lease).

Both UNICCO and Diversified Maintenance Services lease their vehicles using open-end leases. They say leasing improves cash flow — less working capital tied up in fleet assets leaves more capital for business investments.
“Leasing is a question of tying up capital in what we consider a disposable asset,” says Dick Dotts, Diversified’s president. “We choose to use the capital in other parts of the company, like funding payroll.”

The key to a successful lease is to structure it properly from the start, addressing how the unit will be used and how much mileage will be needed.

“The dangerous thing is the lease itself and making sure the person that’s writing the lease understands what it is they are trying to accomplish,” Dotts says.

A good leasing company should be able to get the vehicle you want. And because of their collective buying power, they often have access to manufacturer incentives and rebates that might not be available to you.

At the wheel
Once you acquire a fleet of vehicles, there are a host of ongoing issues that must be managed — keeping vehicle license and registration current, testing and training drivers, coordinating the fuel program, and more.

Depending on the size of your company and fleet, the job can be handled internally or hired out. Diversified Maintenance leaves it up to each area manager to handle his or her fleet.

“Each has to identify their own best way to get things serviced and how they want to gas their units,” Dotts says. ‘What I orchestrate from a central point is who we are going to use, what the time periods are, and the assignment of the vehicle numbers.”

At some point, however, a fleet grows so large it requires a full-time manager. This is another reason to consider leasing, Belloli says. Because the leasing company is the owner of record, it is responsible for property taxes and registration renewals. It also offers many ancillary programs, from maintenance to risk management.

“We act as a fleet manager, but we’re not on the payroll,” says Chelew. “In smaller companies, it’s common that the owner is very involved in the fleet. They have 20 different hats they wear and the fleet is just one of them. It can be a pain for them trying to manage it and outsourcing makes sense for them.”

Licensed to drive
Vehicles are an advantage for your business — allowing employees and equipment to get to your customers—but they can also be a liability.

“I think it’s the biggest risk we have,” Dotts says of providing employees with vehicles.

There are many things that can go wrong with corporate vehicles — they can get stolen, employees can trash them, or they can be the cause of an expensive accident. To manage risk (and prevent sky-high insurance premiums and increased worker’s compensation claims), it is critical to take the fleet seriously.

“Pre-qualifying is the best defense,” Belloli says. “Make sure that everyone has a clean record.”

Do background checks on all drivers. Create an approved and rejected driver list. Conduct regular driver safety training. Establish rules regarding vehicle use (no cell phone use while driving, for example), then educate and test employees on them.

“Whether you own, lease, or reimburse your drivers, you have an employee out on company time representing your company,” Chelew says. “It’s a real concern but you can’t get away from liability issues. The best you can do is to have some good controls in place and manage the fleet as best you can.”

Becky Mollenkamp is a business writer based in Des Moines, Iowa. She is a frequent contributor to Contracting Profits.

BOOK REVIEW

Four Things You Should Know About Brian Tracy’s Book

By Stacie H. Whitacre, Editor

The 100 Absolutely Unbreakable Laws of Business Success (Berrett-Koehler Publishers Inc., 2000. $15.95 hardcover, available on cassette)

Brian Tracy likes lists. Most of his books and cassettes include lists: 21 ways to stop procrastinating; 12 critical factors of unlimited success; 10 keys to personal power.

In this book, there are not just 100 laws, but hundreds of corollaries and suggestions, each broken out in their own lists within each law description. This format is ideal for those who enjoy a clear, itemized structure, but could become tiresome for readers who prefer a more narrative style.

All of these lists make for quick reading. The 100 laws of business average less than three pages in length, so contractors stretched for time can sneak a law or two in each day.

This book gets right to the point. The mostly solid business advice isn’t hidden under window dressing (with one exception – more on that later). There are no charts, graphs or illustrations. You will find very few sports metaphors, literary quotes or parables about mice and change. Tracy does occasionally cite other business books, as well as relay anecdotes from his own experience, but the bulk of the book explains, in plain language, what to do in order to succeed.

Some of these laws are self-contradictory. For instance, he lists the Law of Accident: "Life is just a series of random occurrences and things just happen by accident" (p. 35). He explains that this isn’t really true, but it’s something we accept as true, so therefore it has become a law. He then goes on to explain why the Law of Accident doesn’t work, and how to free oneself from the Law of Accident — in other words, he demonstrates how to break the unbreakable.

The "meat" of the book is in the descriptions and action items, not in the laws themselves. Indeed, the one example of window dressing is that many of the laws read more like motivational posters: "The Law of Determination: How high you climb is determined by how high you want to climb" (p. 197). "The Law of Creativity: Every advance in human life begins with an idea in the mind of a single person" (p. 64). These platitudes seem more at home captioning pictures of soaring eagles and mountain climbers, so don’t be tempted to just skim the headings.

Instead, look to the end of each law, under the heading "How you can apply this law immediately." Here, you will find two action items, most of which will require you to put pen to paper and outline what you’ve done right, what you’ve done wrong, what you want, and how you’re going to get there.

Brian Tracy will be delivering the opening keynote address, as well as signing copies of his works, at the BSCAI convention on March 23.




POSTED ON: 2/1/2004