3 Essential Considerations When Investing in a Business Vehicle
Investing in a vehicle for your business is a great way to “streamline your processes and expand your opportunities for growth,” according to The Zebra. Whether you’re a florist, realtor, or construction worker, investing in a business vehicle can bring a variety of benefits to the table — including bringing a newfound convenience to both your employees and your customer base. However, for those looking to invest in a company vehicle for the first time, doing so can be stressful. From your purchase options to how to choose the right vehicle for your business, here’s what you should keep in mind before jumping in.
Buying vs. leasing — which is better?
When planning to invest in a vehicle for your business, knowing your purchase options (and the pros and cons to each) is essential in making the right decision for your needs. That said, considering your plans for the vehicle can play a role in your decision — for instance, making customizations or even going above a certain mileage may not be allowed with leased vehicles, while leasing may make more sense for those who only occasionally need a dedicated company vehicle. Financial considerations can also play a major factor in buying vs. leasing. An article for The Balance, for instance, notes that “Purchasing a car takes up short-term cash flow and could affect your ability to take out additional loans for the business. Yet this translates into long-term value as you have a stable asset on your balance sheet.” In terms of leasing and the potential financial benefits involved, The Balance goes on to further say “Leasing a car can mean lower monthly payments to free up your immediate cash flow.”
Choosing the right vehicle for your needs
When it comes to finding the perfect vehicle for your business, evaluating your needs for the vehicle itself can be a great place to start, particularly when deciding what type of vehicle to invest in. For example, while businesses that simply need a vehicle in order for employees to travel may be better suited for a car, those that require a vehicle in order to transport equipment or make deliveries should consider larger vehicle options. The Total Entrepreneurs note that checking the size of the vehicle before investing by calculating the weight that it can handle (in addition to crew size to carry and fuel efficiency) is an important consideration, as you may not need a heavy duty vehicle should you only be looking to transport employees or lighter loads. For businesses who need heavy-duty trucks to haul supplies, equipment, or make large-scale deliveries, considering options like a dually truck may make more sense when meeting your needs. A dually truck is defined as a dual-rear-wheel truck (DRW), and is a heavy duty pickup truck with two rear wheels on each side. With that in mind, a truck built like this allows for more road contact and width, making for greater stability when driving (thus making it better suited for heavy loads).
The importance of a good insurance plan
There were over 2.1 million emergency department visits for injuries from motor vehicle crashes in 2020, highlighting just one reason why a good insurance plan is essential when investing in any type of vehicle for business purposes. No matter how you plan on investing in a company vehicle, ensuring that a good and comprehensive commercial/business auto insurance plan is in place is imperative. Business Partner Magazine notes that when choosing a company to provide transport for your business, ensuring that good vehicle insurance coverage is in place is essential in protecting your business in case of an accident. With the magazine going on to mention the importance of good safety ratings for such a company as well as the value of getting a written contract that details the company’s liability (in addition to your rights/responsibilities should an accident occur).
Investing in a company vehicle for the first time can be a stressful event, especially if you don’t know where to start. By carefully considering your business’ needs for a vehicle beforehand, realizing the importance of comprehensive business auto insurance, and considering your buying vs. leasing options, you can ensure you’re choosing the right path for your business needs.
Ingrid Maldine is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Ingrid’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Ingrid has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Ingrid has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.
