3 Reasons Small Businesses With Vehicle Fleets Should Use Telematics
Many small companies own and operate vehicle fleets as part of their business – examples include landscaping, plumbing and electrical companies.
Because transportation for these companies is incidental and not their core competency, business owners don’t often think about optimizing their fleets. But the fact is, optimizing fleet operations is very simple, and can save a small business hundreds of dollars per vehicle, per year – more than paying for the cost of the system.
The technology is called telematics, and simply put, it involves installing a small hardware device in each vehicle that allows managers to collect data, in real time. Telematics for small business is more than GPS fleet tracking – in addition to vehicle location, it can collect data on speed and driver behavior such as excessive idling and harsh acceleration. This data in turn can benefit companies in a number of ways, including improving efficiency and safety.
Frisch & Sons, a California-based excavation and landscaping company, implemented telematics in 2019. The 13-person operation runs eight vehicles, ranging from pickups to dump trucks. As owner Bobby Frisch says, “We wanted visibility into where our staff and vehicles were – how long they were on job sites, and if they were where they were supposed to be.” Frisch also wanted to track driver behavior such as speed, hard accelerations and harsh decelerations.
Within the first week, Frisch & Son’s telematics solution identified a longstanding time calculation error for Frisch that resulted in 50+ hours of unnecessary overtime each week. This alone saved Frisch & Sons almost $1,000 a week. Telematics has also helped the company save about $300 a month in fuel, primarily from helping to ensure that drivers use gas cards only for company vehicles (rather than personal ones) and from routing changes to minimize travel time and ensure staff are fueling up at the company’s preferred gas stations. Fuel savings have brought Frisch & Sons’ weekly savings up well over $1,000 – far exceeding the cost of the telematics solution.
Small Business Telematics Benefits
Here are the top three ways small businesses like Frisch & Sons are making the business case for investing in telematics.
- It’s a deductible business expense. Many small business owners don’t realize that outfitting their vehicles with telematics is a qualified business expense. Speak with your accountant for details, but generally the hardware devices in vehicles are a capital expense, and the monthly software subscription is an operating expense. Both are deductible, so will help reduce your taxable income, which reduces your overall tax bill.
- You’ll save on fuel. There are several elements at play here. First, by monitoring driver behavior, you can help eliminate fuel-wasting practices such as excessive idling, harsh acceleration and out-of-route driving. You can also ensure that vehicles are fueling up only at your preferred gas stations, and that drivers are only filling your vehicles, and not their own personal ones.
- Better vehicle and people management. Telematics allows you to know, in real time, exactly where every vehicle and person are. You’ll know when they arrived at a location, when they left, and when they arrived back at your office, to more accurately record working hours. You’ll know if they made a stop, and where and for how long. If equipment or particular expertise is required at a particular job site, you can easily determine the location of the closest crew and vehicle that has the equipment or expertise, cutting down on travel time.
There’s a reason why telematics is required by law in heavy-duty vehicles: the technology have been proven to improve safety, efficiency and compliance. These same benefits accrue when telematics is used in smaller vehicles and in smaller fleets.
Small business telematics solutions begin at less than $20/month, and provide very quick return – usually within the first month. With a little electrical knowledge, you can install the hardware yourself in about 15 minutes, or take advantage of the low-cost, local installation most vendors offer. There is generally no minimum number of vehicles, and fleets with as few as three vehicles can reap benefits.
For small companies looking for ways to cut costs without affecting service, telematics for small business is a very attractive option.
By Jonathan Bates, Executive Vice President, MiX Telematics
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