Generating a healthy profit, while reducing costs, are the two primary challenges that are faced by small businesses. They accounted for 99.7% of businesses in the US, and provide employment to around 66% of the population. But as numerous as they are in number, and as great as their contribution to our society, many of them are struggling to stay afloat.
Only 50% of small business will last through the next five years, while the other half will be shut down by a number of factors like economic uncertainty, decline customer spending, regulatory burdens and rising costs of operation. As a small business owner, your responsibility is to find a way to increase the amount of revenue you bring in while reducing the costs that will see your doors bolted and shut while growing your brand.
If your business specializes in transportation, commercial fleet rental is a cost-effective solution that will allow you to extend your products across the country, while avoiding the headaches and pitfalls of owning. Renting a commercial fleet will allow you to greatly expand your business horizons, while the prospect of leasing it holds great cost-reduction potential. Is commercial fleet rental a cost-effective solution for your business? Consider the following:
Taxes and Depreciating Assets
Leasing a commercial fleet gives you leeway for taxes. When you enter into an agreement with your commercial fleet rental agency, then you do not have to put your fleet in your balance sheet as an asset, lessening the amount of taxes you’ll be obligated to pay.
Automobiles of any kind, commercial and personal, lose their value quickly, and from the moment you first buy a vehicle, it is considered a depreciating asset. That means, your “investment” loses money every time it is used. The cash you handed out to purchase that vehicle, that will never be worth as much again, could have been used to support a different aspect of your business.
Commercial fleet rental offers a steady cash flow, and predictable cost, because of its fixed term and monthly pricing payment. Remember that economic uncertainty is one major killer of small businesses. A rental agreement with a fleet provider you trust will help you achieve a more balanced budget, and help you to keep cash reserves to overcome any unforeseen financial setbacks.
Leasing your commercial fleet prevents you from undergoing the financial stress brought by maintenance, repairs and tire changes since such needs are covered by the rental contract.
You are free from the responsibility of consistently up keeping your purchased fleet.
With commercial fleet rental, when a unit breaks down or is in the queue for routine maintenance, your rental agency is obligated to provide a substitute vehicle, so you don’t suffer a reduced capacity to distribute, which are all but unavoidable if you own your fleet and don’t have a surplus of maintained substitute vehicles. Loss of revenue due to failure to deliver and time-consuming fleet management are avoided
Rental companies assist in driver’s training, assessment, and license requirements. This will help you as a business owner save money in terms of employee management. In addition, leasing a commercial fleet ensure vehicles are insured, minimizing the risk of financial loss due to unforeseen events.
Another saving grace from choosing commercial fleet rental is the flexibility of its terms. There are two rental terms available: the closed-end and open-end lease. Closed-end is known as a ‘walk-away lease,’ because it gives you the choice to just walk away from the fleet upon the completion of your contract without any catches, obligation or any other responsibility. An open-end lease, also known as a ‘finance lease,’ allows you to determine the fleet’s service life after a certain term.
Overall, commercial fleet rental offers substantial benefits that are hard to resist. It gives leeway in taxation, helps assess your budget, helps you predict your final costs, minimum management burden, assist in staffing issues and offers great flexibility. It allows you to focus on the more important aspects of your business.
The choice to own a fleet is a big business decision that can make or break your trade. A commercial fleet affects your time, finances and operations. If you want to have the liberty from the commitment of managing you’re then maybe you would like to consider renting instead.