10 reasons why your business is losing money

There’s no doubt that getting up and running with a new business can be very exciting. You are your own boss and that can give you a lot of freedom. However, if you are inexperienced with the corporate world, your enthusiasm could soon fade as the costs start stacking up. Many of those costs, you might not even have foreseen. Perhaps what had started as just a trickle of expenses has, unexpectedly quickly, ballooned into something much more serious. How you use vehicles for business purposes could be to blame – so, let’s look more closely at how you can control these costs better.

Inefficient use of fuel

Your vehicles are incapable of running without fuel, making it seem very necessary to spend some of your precious revenue on. However, you might not be maximising the efficiency of that fuel. Alec Lee, operations manager at small-tours firm Rabbie’s, made a major admission to The Guardian.

He said that training in more energy-efficient driving helped his firm to save money on fuel.Workers were “also decreasing the general wear and tear on the vehicle” – which, in the longer term, could help Rabbie’s reduce its necessity of paying for costly repairs.

Failure to regularly audit your vehicles

Spending time carrying out this kind of audit can help you see where cash might be being haemorrhaged, advises Grant Boardman, Fleet Alliance’s regional sales director.

Boardman, whose firm keeps SMEs supplied with fleet management services, explains: “It’s about understanding the whole-life costs of a vehicle”. That means, he adds: “Not just looking at the purchase or hire price, but other consequential factors over the next three or four years.”

Leasing commercial vehicles from a single provider

Does your company routinely hire commercial vehicles, like vans, from the same provider? Then you are making what Boardman has branded a “classic mistake”.

What you should instead do, he says, is look for a combination of providers capable of offering what you need – and all at what adds up to the lowest possible overall price. He also notes that, in doing so, you should especially strongly consider lease costs and fuel consumption.

Not paying attention to company cars’ CO2 emissions

You might often use cars in running your business; cars put to this purpose can be succinctly referred to as company cars. If you indeed utilise cars in this manner, then check, before you decide to buy any such vehicle, how much it will produce in CO2 emissions on the road.

This is crucial as, for discerning how much tax should be payable on different cars, the government puts these cars into different “emission bands”. The less CO2 emissions a car is responsible for, the better its CO2 rating can be and so the less tax you could need to pay on this vehicle.

Improper management of your fleet

If you have an entire fleet of vehicles at your company’s disposal, how is that fleet being managed? If the company is directly handling those affairs, you might want to rethink that strategy.

John Hargreaves, Kia’s head of fleet and remarketing, has noted that a vehicle fleet poses a “significant overhead” for many businesses. That fleet “should be managed professionally, whether by a dedicated person within the company or by outsourcing to a specialist vehicle management company,” headded.

Not taking advantage of telematics for cost-cutting

You might have seen or heard the word “telematics” occasionally popping up in discussions about how money can be saved on corporate vehicles. However, what does it actually mean?

It is commonly used as shorthand for “vehicle tracking systems”, as they are more formally called. Jenny Powley, who has worked at the RAC as a sales director for corporate partnerships, has recommended such systems that “collect data on the vehicle and give business owners a much better picture of wear and tear, enabling them to take cost-effective preventative measures.”

Not using fuel cards

These payment cards are available from various firms, the RAC included, and can help you lower your fuel bills. Furthermore, as Powley points out, when a business owner uses them, they receive “regular reports and can see exactly what is spent, rather than having drivers submit receipts”.

Taking out vehicle insurance for longer than is necessary

Your company’s vehicle needs might actually be very low. For instance, they could be limited to requiring simply a van for use in transporting items to a new office or an even more modest car for occasional times that you want to attend a trade show or team bonding event.

That’s fine, but it doesn’t take away from the need to check that you have insurance for a vehicle before you use it. In the UK, driving without insurance can lead to you incurring a massive fine and other penalties. However, a standard insurance policy lasting a year or more can be much costlier than short term car insurance which you could source through UK broker Call Wiser.

Trying to meet vehicle costs by pricing products too highly

You might reason that you need to price your company’s products at a particular – probably relatively high – level because you have hefty costs to pay in keeping vehicles running.

However, advice posted by Forbes insists on the need to strike a middle ground when pricing products. Set prices excessively high and too many people could be put off. Nonetheless, on the other hand, keeping prices overly low could see you struggling to achieve a profit.

Whatever prices you settle on, consider that trimming those vehicle costs – by, for instance, using remedies listed in this article –could be a better strategy than keeping your prices high.

Reluctance to invest in vehicles necessary for growth

One reason why we are eager to provide advice on how to cut costs of running vehicles is that paying those costs could, ultimately, be necessary for cultivating your company’s growth.

Therefore, if you have so far resisted drawing extensively on automotive assistance for your own company, this could help explain why it is financially struggling. Avoid the false economy!

 

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