Are you buying or financing?
Are you losing money by not having another truck / Are you at full capacity?
Can you increase capacity without the new truck right now? Perhaps by running it 7 days a week?
Is there any seasonality for your business and what is it?
What is the cost variation between what you can afford now and what you ideally want?
How much do you hate repairs, downtime, etc. How much does it impact you and the business?
Answer these, then I can help.
We would be looking to put a cash down payment down and then make payments for the remainder of the amount.
During our busy and regular seasons , we lose money by not having a second truck (Spring and Summer). During the fall and winter, we can fit our workload onto a single route.
We only run the truck 6 days a week and could increase capacity by working on Sundays.
We could buy a used truck cash now for 20-30k or we could wait for a truck worth 40-60k.
Repairs are extremely costly for us and impact us regularly. Our first truck was bought used, and spends several days a month in the shop. We have to rent a truck during these downtimes, which eats up our margins
Sounds good. Yes, downtime is extremely costly - still have to pay employees, potential for upset customers, headaches galore! Lots of lost money and lots of lost mental capacity.
It sounds like you have some room to increase capacity and with the fall/winter coming up, you don't need the extra truck - so best to wait and/or be extremely picky with your next deal on a truck. Maybe you'll find a good deal in the offseason but you have time to be picky.
A good way to look at it, is a vehicle/equipment that doesn't have downtime.. is a fairly fixed expense. And we all love that predictability. Something always needing attention has a variable expense. Not only that but it's extremely stressful.
Sounds like saving up might be the best but again, just an opinion. We still buy used stuff once in a while but have moved to purchasing new with maintenance plans. We had to raise prices slightly to cover it but it was less than we expected. The lack of worry, downtime, etc... is well worth it to us and the price increase didn't impact the closing rate. If you go this route, don't forget to factor in insurance cost. Especially with financing, you'll sometimes be required to carry higher insurance coverage. You just want to make sure your profits are healthy and stay healthy. Too many people eat into profits to buy new stuff and that's just a bad idea.
Thank you for your thoughts on the situation. There are definitely a lot of factors to consider. In the meantime, we will continue to focus on increasing the capacity of the truck that we have already!
Do you have steady business coming in? How much more, per hour, per job.. however you price.. would you need to increase your pricing to cover the cost of a new truck and subsequent insurance, to make it work? Or maybe get one that is just 2-3 years old after the biggest depreciation hit has taken place. How much would you need to raise your prices to meet that and would that increase be accepted by the customer base? Likely, so.
