Masonry Magazine December 2004 Page. 13
Leasing Equipment
If you think your business will have additional equipment needs, you may want to consider a master lease. A master lease can accommodate changes in your equipment needs, since this type of contract lets you acquire certain additional assets under the same basic terms without negotiating a new contract. Many businesses choose the master lease option for its convenience and flexibility.
7. How Can I Upgrade or Add Equipment Under This Lease?
Unless your agreement is a master lease, more than likely you'll need to negotiate a new lease for additional equipment. Any firm anticipating future growth should negotiate an option to add equipment under original terms and conditions when structuring a lease program.
8. What Are My Options at the End of the Lease?
At the end of a lease, you can return the equipment, buy the equipment at fair market value or a nominal fixed price, or renew the lease. Once you've decided which option you want, be sure that it's specified in the lease documentation. If you choose the buy option at the end of the lease, ask when you will get the title of ownership.
9. What Are the Procedures if I Choose to Return the Equipment?
Find out whether you return the equipment to the leasing company or to another location, and what documentation and packaging materials are required for its return. Ask who pays for shipping and when the equipment needs to arrive at the return destination.
10. Will There be Any Extra Costs at the End of the Lease?
Again, you want to be as diligent as possible in accounting for any unforeseen costs. Ask if there are any other additional costs based on your account activity that you may be charged for at the end of the lease. Also, ask when such payments are due. As in any contract agreement, the more information you have, the better position you will be in to make an informed decision. These 10 questions will help you know what to look for when you lease equipment. You can find additional information about leasing, including a lease versus buy comparison, a glossary of terms, the types of leases available, and a directory of leasing companies, at www.ChooseLeasing.org. Michael J. Fleming, CAE, has served as President of the Equipment Leasing Association (ELA) since 1979. For more information on equipment leasing, an estimated $218 billion industry in 2004, visit www.chooseleasing.org.
CYCLING STRATEGIES
Smart business owners constantly look for ways to ensure their companies are running at peak efficiency by establishing critical goals and objectives. For Powers Products, Inc., based in Denver, advance planning is particularly important when it comes to getting the best return on investment on one of their largest assets-the company fleet.
How and when a company decides to acquire and dispose of vehicles in its fleet depends on many factors, such as time of year, mileage, vehicle type, age and maintenance history. Knowing when to dispose of older vehicles, a systematic process known in the fleet management industry as "cycling," eliminates the guesswork.
According to Enterprise Fleet Services, which specializes in providing fleet management solutions for businesses with 15-125 vehicles, sound planning and effective fleet management can help any size business better control the costs of owning and running a commercial fleet. From the financial benefits of leasing to achieving optimum vehicle performance and resale value by cycling, a tailored management program provides many advantages for businesses with small- to mid-size fleets.
Powers Products, Inc. is a 60-year-old subcontractor serving the commercial construction market in Colorado and Wyoming, including mason contractors, general contractors, architects and building owners. With a fleet of 38 vehicles, comprised mostly of three-quarter-ton pick-ups, the company began cycling vehicles about three years ago to get better control of lease rates, improve vehicle reliability, and lessen the amount of time spent internally on fleet management.
"When we owned our vehicles, we drove them into the ground. The extreme mileage led to high maintenance costs and vehicle downtime," says Steve Huck, Fleet Manager for Powers. "It also took a lot of administrative time to manage all the details. So as our company grew, it became more economically feasible to negotiate lease rates with one company and ensure the reliability of all vehicles by replacing them at appropriate intervals to achieve optimum performance and the best resale value," says Huck.
"Our cycling program with Enterprise looks at things like future trends, the current used vehicle market, warranties, mileage, and the potential wear and tear our business will inflict on each vehicle. Taking a detailed approach ensures we are not wasting our fleet dollars," says Huck. "This kind of in-depth analysis requires professionals who are experienced in fleet management."
The cycling program not only helps ensure Powers' employees are driving vehicles equipped with the latest equipment and safety features, it promotes the company's professional image when customers see modern, well-maintained vehicles. "No one wants to see you show up at a job site in the 'Jed Clampett' truck," Huck says.
He added that, in the construction industry, "where the schedule waits for no one," vehicle reliability is critical. That's why, for Powers Products' cycling program, planning ahead also means trying to predict business trends in the construction industry. "We can save a lot of money by ordering new vehicles direct from the factory, but the longer lead time required for ordering, about eight to 10 weeks, requires the ability to anticipate our business needs," says Huck. "Fortunately, we've been able to do this successfully."
The bottom line is that planning ahead, when it comes to both the makeup of a company's fleet and knowing when to acquire and dispose of vehicles, is an important component in helping companies with small-to mid-size fleets achieve strategic business objectives.
Enterprise Fleet Services, a division of Enterprise Rent-A-Car, is a full-service fleet management company for businesses with fleets between 15-125 vehicles. For more information, call toll-free (877) 23-FLEET or visit the company's web site at www.enterprise.com/fleets.