Top Vendors for Transportation Equipment

Business Guide to Evaluating Transportation Equipment

Transportation equipment makes it possible for business owners to better serve customers and transport equipment, products, demonstration supplies and employees to job sites, product showcases, career fairs and other events. Common types of transportation equipment include airplanes, buses, trucks, automobiles, boats and trains. You have three major options when it comes to buying this type of equipment: purchasing new, purchasing used and leasing.

Purchasing new helps you avoid problems associated with wear and tear on used equipment, but new items have a higher cost. Purchasing used equipment reduces your initial expenses, but it may cost more to repair and maintain a used item once you make the purchase. Leasing allows you to upgrade your equipment regularly and reduces repair and maintenance costs.

Benefits

Increased Work Capacity

Buying or leasing transportation equipment increases the work capacity of businesses that rely on the transportation of construction equipment, project materials and employees to generate revenue. Using a personal vehicle for business severely limits the amount of equipment and materials you can transport at one time, creating the need for multiple trips to job sites. Personal vehicles also carry a limited number of employees, making it necessary to use several vehicles for the same job. International car manufacturers produce 19,240,607 commercial vehicles each year, according to the European Automobile Manufacturers’ Association. This makes it possible to find just the right transportation equipment at the right price.

Reduced Expenses

Not having the right transportation equipment for your business can increase expenses and reduces profits. You may have to decline a job if you do not have the right equipment for it. This results in a loss of income for your business. If you take the job, you may have to rent equipment or pay someone who has the necessary equipment to help you, which increases your business expenses. Having the right transportation equipment on hand helps you complete jobs at the lowest cost possible.

Increased Revenue

Owning or leasing high-capacity transportation equipment makes it possible to expand your business and take on more lucrative jobs. Airplanes, boats and trains make it possible to expand into foreign markets. This makes it possible to increase your business revenue.

Tax Benefits

Internal Revenue Service publication 334 explains that business owners may be able to deduct the costs of operating and maintaining transportation equipment from yearly taxes. If you purchase an environmentally friendly vehicle, you may qualify for additional deductions.

Pitfalls

Purchasing Timeframe

The cost of purchasing transportation equipment changes with the economy, making it difficult to decide when to buy or lease new equipment. The U.S. Bureau of Labor Statistics shows that transportation equipment prices change by as much as 0.4 percent in just one month. If you make a purchase at the right time, you could save money. If you make the purchase and prices fall a short time later, you end up spending more money than necessary.

Cost

Creating a commercial transportation fleet has significant costs. In addition to the cost of purchasing or leasing equipment, you also have to pay to store, insure and maintain the equipment. If a piece of equipment breaks, you have to pay for parts and labor to get it back in working order. Fueling commercial vehicles also makes the cost of operating construction equipment prohibitive for some business owners.

Legal Liability

Buying or leasing transportation equipment increases your liability, especially if you allow employees to use the equipment. Should your equipment damage property or injure a person, you face significant costs and possible penalties.

Credit Issues

Not every business owner qualifies for financing on a transportation equipment purchase or lease. If you do not qualify for a loan, you must find a cosigner or pay cash for the equipment. If you do not have someone willing to act as a cosigner, you may not be able to get financing.

Pricing

You should consider several pricing factors when determining whether to buy or lease transportation equipment. Buying used equipment reduces your initial costs, but used equipment sometimes needs maintenance and repair to get it working properly. Used equipment may also cost more to repair and maintain due to the reduced availability of needed parts. New equipment helps you maintain a professional image with customers and reduces the risk of having to repair it shortly after the purchase. Buying new equipment takes a lot of capital, however, leaving you with less cash for investments and emergencies. Leasing a fleet requires less of an investment, allowing you to use your working capital for business development activities.

The price you pay for transportation equipment also has a lot to do with your credit history. If you have a history of paying your bills on time, you should qualify for reasonable loan terms. Those with no credit history or a history of defaulting on business or personal debts may have to pay additional fees and interest to secure a loan. Those with poor credit may also have difficulty qualifying for equipment leases. Transportation equipment prices vary greatly, with a used commercial truck costing as little as a few thousand dollars and a high-performance airplane costing millions of dollars. Jacksonville State University estimates the cost of operating a company plane is approximately three to four times greater than the cost of a commercial flight. However, operating a company plane gives you greater scheduling flexibility, allowing you to control when you make deliveries.

When shopping for transportation equipment, examine several models to determine which one best meets your needs. The selected equipment should have the features you desire and the capacity needed for your business. Talk to your accountant to determine if leasing or buying the equipment is the best choice. Ask vendors questions about features, pricing, contract terms and financing before buying transportation equipment.