Fleet maintenance can help an automotive service company keep its cash flow steady. Whether you’re looking to start a business that’s specifically for servicing businesses with automotive fleets or considering adding that option to your service menu, it’s an option that can certainly be profitable.
However, working with these large accounts can also be tricky, and lead to a lot of risk if not handled correctly. Small Business Trends recently spoke with some automotive industry experts to gather essential tips for those looking to offer fleet maintenance service.
Tips for Starting a Fleet Maintenance Business
Consider Your ROI
Before you actually get started, you need to do some major financial analysis so you understand exactly how much money it’s going to require up front and what the potential market is for growth in your area. Then you need to keep those financial terms in mind while negotiating, while still being flexible on the specifics.
Greg Marchand, an automotive consultant and host of Repair Shop Rescue, said in an email to Small Business Trends, “Gross profits can be challenging with fleet accounts though, and the initial negotiation regarding pricing must be well thought through. Depending on the account, different fleet maintenance administrators have different requirements regarding which parts can be used, how much labor will be paid, and what labor rate they will pay – all of these affect gross profit.”
Create a Specific Pricing Menu
You might already have set prices for the rest of your shop. But you’ll likely need to make adjustments when working with fleets. Consider what you can afford to discount, taking into account that the larger amount of work will lead to stronger cash flow overall.
Mike Anderson, an automotive consultant specializing in helping collision shops, said in a phone interview with Small Business Trends, “Unfortunately, a lot of fleet companies don’t want to pay what many would consider to be retail price.”
Make Terms Clear Up Front
With larger accounts, it’s more important than ever for you to make sure both parties understand what is expected of them. A delayed payment or misunderstanding that causes the client to leave can make an even greater impact on your business than it would with a normal client.
Anderson says, “Make sure you have documentation that you provide to them and make it clear what your expectations are from the very beginning, and understand clearly what’s important to them as well.”
Focus on Relationships — Even More Than You Normally Would
In addition, the relationships you form with fleet clients — everyone from the decision maker to the individual driver — becomes more important.
Marchand says, “Fleet maintenance is a very different animal when it comes to service. Relationships are critical and must be maintained – regular conversations with key individuals regarding how the shop can provide a higher level of service, regular check in’s with clients just to say hello or to drop off lunch or breakfast, and positive relationships with vehicle drivers will help to keep contracts.”
Be Able to Work Quickly
Fleet maintenance requires a lot of work. So it’s well suited for businesses that team members who can work efficiently in order to get all of the vehicles up and running in a timely manner.
Treat Vehicles with Respect
Since relationships are so important to fleet maintenance work, you have to be respectful even when you think no one’s watching. Some vehicles, like those for police stations or municipalities, might even have cameras installed. So just assume that the client is always present as your team works.
Make Sure It Doesn’t Mess Up Your Flow
If you’re considering adding fleet maintenance to your existing menu of services, you need to consider not only how it will impact your profits, but also how it could change the way your team works. If you have a team that’s already busy with other repair work and can’t afford to bring on additional help, then adding a fleet job could ultimately have a negative impact on your bottom line.
Designate Employees to Fleet Jobs
In some cases, Anderson suggests it may even be beneficial to designate specific employees to fleet maintenance work. That way, there will always be other employees at your shop available to work on jobs for new customers who come in.
Create a Convenient Experience
Businesses with fleets are like any other type of business — they hate wasting time unnecessarily. So in order to make the process as efficient for them as possible, find out what would be their ideal situation in terms of things like drop-off and pick-up.
Marchand says, “Anything that can be done to make it easy for fleets to drop off and pick up vehicles will help to ensure acquiring and keeping fleet contracts (just be very aware of the amount of time some processes can take and account for it in pricing).”
Offer Specials to Employees of Fleet Businesses
Since fleet service is something that usually comes with discounted pricing, it can make an impact on your profit margins in the short term. But Marchand says you could also use the opportunity to increase the customer base for the rest of your shop as well.
He explains, “Providing a “special” fleet employee program where fleet employees receive a benefit from bringing personal vehicles to the shop for work can offset some of the reduced gross profit fleet accounts may bring – this is essentially marketing that will make you money now.”
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I have a friend that has been in trucking for many years and wants to pivot to fleet management. He has a lot of contacts in the industry and thinks he could have a successful fleet management company. As you said, relationships are very important in fleet management, I’ll have to give him your advice to focus on key people.
The information provided in the article is helpful but would like to know more ways to include transparency in the business. In fleet maintenance business, the most critical part is ensuring that all the team members are on the same page, equipped with the right tools, and are consistent in delivering good quality services.
thanks for writing this great article for staring a business.