5 Ways to Cut Your Largest Expenses (That Actually Work)
This one’s a wallet vacuum. For a service company, it’ll easily make it into your top 5 expenses.
As an unapologetic numbers nerd, I spent most of my time chipping away at the big five.
Vehicle expense was fun.
But I’ve learned a thing or two (or five) from my metaphorical fist fight with this multifaceted SOB, and lucky you, here they are.
(WARNING – Number 5 can be somewhat addicting.)
1. Choose Your Best Fuel Cards
I changed from Wix to a local chain Quicktrip because I got better rebates. Also, Quicktrip had the cheapest gas in the area. Was it a tough decision? Sure.
I had to make sure there were enough Quicktrips in our service area, so my guys could get gas there and near their homes, for one. But the rebates and price turned out to be more than worth it.
2. Get a Fleet Tracking System
Yep, it cuts insurance costs. That’s cool. But here’s the real perk. Most of them hook up to the vehicle and tell you things like when a vehicle drives out of the service area, its idle time, and MPG. I found out after hooking these up that my dig crews were running their trucks on idle for hours at the end of each day. For hours.
So they could put their boots over the exhaust and dry them out. Seriously. So anyway, the monthly expense can be tough to swallow, but if you actually use the data, you’ll make all that money back and then some.
3. Watch the Preventative Maintenance
Regular oil changes are a must, but guess what. When the technicians get to decide on the extras, vehicle expenses skyrocket. Along with your blood pressure when you see what it’s costing you.
Stuff like windshield wipers, wiper fluid, air filters, etc. — these are things a technician, plumber, or electrician can handle on their own. Does it seem lame to nickel and dime those kinds of expenses? Oh well. Dimes and nickels add up to thousands of dollars over time. And besides, it’s a mindset you’re instilling. Getting them to treat their work vehicle like their own, and to take ownership of the little things? It’ll go a long way.
4. Shop around for Repairs
We’re a big deal for the repair shops that get our business. So it’s easy to build a longterm relationship and forget about the business end. I had to make some hard decisions whilst switching from shop to shop. I rotated between 3-5 repair shops at any given time.
Anything that costed more than $1500 to replace got at least 3 bids. If you don’t want to travel all over the place, here’s what you do. Have one shop bid you, then send it to your other vendors to see what they’d charge. Sometimes you can just go to the place where the vehicle’s first bid is still sitting, and have them match the best bid.
Moral of the story: Repairs add up. Fast. If you apply the same intestinal fortitude and pitbullish tunnel vision in weighing your overhead costs as you do when you cost out labor and material to your revenue producing jobs, guess what? You’ll make a heck-of-a-lot more Net. That’s how it is.
5. Become a Dealership
This is the fun part.
We bought a lot of vehicles while I managed my company. It gets expensive. So we started a dealership. We bought all of our new vans, transits, some truck chassis, and parts trucks at auctions. Trust me, it’s addicting.
It’s relatively cheap to become a dealership, and not too difficult. Jump through some hoops, fill out some paperwork, get a bond, slap up a sign, and get zoned (we got lucky – our property was already zoned for used cars). Easy peasy. We sanctioned off a piece of our lot for the cars and took the 10-question test to get a sales license. No problemo.
Each week you can go online to one of the local auction sites and see what’s available. You can either bid from your computer or go to the auction and bid. It’s more fun to go in person. You’ve bought enough vans at this juncture to pick the good deals out of the lemons. Then sell them to your company at cost and save money on buying new fleet vehicles. Also, it allows you to buy personal vehicles for yourself, your kids, and your friends (which quickly makes you the most popular person around).
Vehicle expenses are an important piece of the business to watch. They can seem overwhelming because there’s a lot of moving pieces (literally). But they require procedures just like any other part of the business.
Know your fuel costs. Know your repairs. Know when to retire a vehicle, and how to acquire new vehicles. That’s how you keep vehicle expenses low, and ultimately, end up with a fatter wallet.