New business owners often think they need to establish their status with a smart new vehicle. But while that may seem important to you, does it really matter to your customers?
I can think of a business consultant who firmly believed the latest executive Audi was an essential part of her business persona; in fact she’s yet to have a client where she can park outside their office. Or a dog walker who was convinced that a liveried van would project an image of professionalism, essential to win new business. Most of her customers discovered her online or through recommendations.
Of course, someone may spot your ad on the side of a vehicle and make a call as a result. Effective advertising will pay for itself very quickly. And appearances do matter. If someone turns up to sell you a service looking less than professional, it will affect your opinion of her.
But try this little mental test. Think about the small businesses you turn to for goods or services. Do you know what vehicles they drive? Do you know the age of their vehicles? Do you know the condition of the vehicles? If you don’t you are in the majority.
In reality, your vehicle generally isn’t a key factor for customers. The person most influenced by the car you drive is probably you. The vehicle you drive, like the phone you use or the address you return to in the evening, can be confidence props that you – not your customers – think are necessary for the job.
Confidence props can help us to get out and perform. But they can also lead to unnecessary expenditure while taking our attention away from what really matters.
Take a cold look
Before you invest in a vehicle, it is worth taking a good hard look at the value it will really deliver and what it will really cost over its lifetime. Creating a spread sheet that records and compares the costs of your transport options over each vehicle’s lifetime can be an enlightening exercise. You can find lots of the information you need about cost comparisons online.
Depreciation accounts for about half the running costs of a vehicle – yet people have a tendency to underestimate a vehicle’s loss of value or to ignore it altogether. The second biggest cost factor is fuel. Have you noticed how many mini-cab firms are running hybrid vehicles such as the Toyota Prius these days? They have got the message that fuel costs matter. Then there are vehicle financing costs, vehicle taxes, insurance, servicing, and costs such as parking fees or toll roads. And don’t forget cleaning costs – plus the costs of any advertising you may want to add. There are also tax advantages with an emissions-free vehicle and advantages in congestion charge areas.
The reliability and fuel efficiency of petrol and diesel burning vehicles has improved immensely in recent years, but they still depreciate very rapidly. As a result, buying second hand can be the most economic option, particularly when capital is scarce. There are web sites such as Carshop.co.uk that list second hand cars for sale all over the UK. You can still impress your contacts with that shiny Mercedes, but at a fraction of the cost of buying one new.
Cars you don’t own
There is also car sharing or lift sharing. Liftshare has been running its services for many years now and it has a range of products specifically designed for business. Some surprisingly big businesses are involved. You never know, you may make an additional sale or two in the car on the way to your meeting!
And don’t forget public transport. When you are travelling intercity or within a city, public transport is often the most practical solution. The Uber app has caused a stir and quite a lot of controversy in the UK recently – it looks like a disruptive innovation in the world of taxis. As the taxi firms fight back, consumers will see benefits. Perhaps you should take account of taxis as an option in your planning.
Calculate the price of convenience
Convenience plays a big role in a lot of transport decision-making. It is convenient to have a vehicle standing outside the door ready for use at any time. But what price are you paying for that convenience? Calculating the cost of convenience can be eye-opening.
Buying a vehicle is an emotional decision. The best way to stop emotion from clouding your judgement is to gather the facts and compare them. If you are justifying investment in a new vehicle on the grounds that it will generate new business, you may well be kidding yourself. It may be more sensible to find some customers and a steady cashflow first, and make the vehicle investment later.