Originally published by Automotive Fleet, May 2022. Authored by Brent Pietrowski, director of client partnerships - Mike Albert Fleet Solutions.
If you're a fleet manager at a company that operates on a December to January fiscal year, it’s crunch time for finalizing your 2023 budgets. Before submitting yours for review and approval, here are five questions to ponder to help ensure your numbers set you and your company up for success.
1. What are your company’s overall goals in the coming year?
Is your company looking to increase its employee count, maintain the current level, or trim back? Is there a focus on winning new territories or business segments? Perhaps there’s a growth-through-acquisition strategy in play. These factors impact vehicle count—and more. Opening new locations, for instance, may necessitate new vehicle types better suited to the terrain and climate in those areas.
2. Are you incorporating ways to reduce costs?
You're more likely to get your fleet budget greenlit if you identify ways to save money or make operations more efficient. For instance, fuel card services can reduce your costs and eliminate the need for your drivers to carry cash and submit expense reports for reimbursement.
Another example is toll management services. These allow drivers to access high-speed, cashless lanes, which increases their overall productivity and prevents the risk of costly toll violations.
3. Might your fleet become a profit center?
If your company uses job costing, you can potentially turn your fleet into a profit center. But first, you must have a strong understanding of your current expenses, down to the average cost per mile (CPM). To be effective, this calculation must include everything — from rent or leasing expenses to maintenance, fuel, and insurance costs. Once you know your CPM, you can factor it into the pricing of your services, allowing you to at least cover your expenses, if not earn a profit.
4. Are you prepared to defend your fleet budget?
Fleet costs are often a top 10 business expense. Their magnitude, understandably, begets scrutiny, especially if your company is seeking the funds necessary for new hires, enhanced marketing, and the like. You can reduce the odds that your proposed budget will be trimmed significantly, or even at all, by providing fleet data such as CPM, total cost of ownership, etc. to contextualize your recommendations.
In addition, be prepared to remind those who hold the purse strings that a newer, well-managed fleet can enhance recruitment, retention, and brand-building. In other words, your fleet budget can help reduce other company expenses.
5. Have you thought of everything?
Once you have addressed the four questions above and believe your budget is in a good place, it’s time to blue-sky it. Ask yourself, "If money were no object, what else would I like to see in my budget?" Money is always an object, of course, but this experiment will free your mind to think of things you might have otherwise not considered.
For instance, what would your budget require to initiate the electrification of your fleet? Is it time to ask for those additional funds now? Or maybe it's time to advance to more robust telematics solutions. There are often good — and financially sound — reasons to make such investments. When you request the extra dollars for enhancements like these, which fulfill more than immediate needs, specify their benefits — and the data to back them up.
About the Author:
Brent Pietroski, director of client partnerships at Mike Albert Fleet Solutions, helps fleet owners develop and implement long-term strategies that leverage benchmarking data and key industry insights. Brent received his Bachelor of Business Administration/International Business from Miami University in Oxford, Ohio.
Brent Pietrowski, authored this article for Automotive Fleet. Original publication can be found here.
Did you enjoy this class?
Share it with your organization and colleagues.