New, Used, or Lease? And WHEN?
As a small business owner it has been nothing short of challenging to build a business from nothing. I came from nothing and have built this thing from the ground up. I didn't have a lot of money.
When I first started I couldn't afford company vehicles. I eventually bought used vehicles in the $20K-$30K range and financed them and that was fine until I unexpectedly slowed down and had to sell off my trucks just to survive.
Once I rebuilt from the slow down I decided to buy used vans around $9K to $10K cash. Right now I have 6 vehicles. One of those vehicles needs major work done. And the others are all 100K miles or more and I feel like they are just ticking time bombs.
I want the reliability of newer, or leased vehicles but the risk intimidates me after my struggles in 2022. Is there a formula for when you should go from paying cash for used, to financing newer/new, and to finally leasing? Is there a revenue metric, a number of vehicles in your fleet, or some other sign that going one route over the other is more advantageous or less risky?
Thanks for taking the time to read this and share feedback!
This seems to be a cashflow question as much as it is a vehicle question. Are you able to set aside some $ every month for vehicles? You may not be able to upgrade all the vehicles at once, but maybe set it as a goal over the next 1-2 years. A little about us: We are a husband and wife owner team of a plumbing and hvac company. We started in our garage and bought our first vehicle. For the first few years we had subs and they used their own trucks. Then we shifted to employees and started buying vehicles 1-2/year. We have sold some and this year bought our first late model trucks. We now have 8 - 4 of those are between '21-'23. The others are older. We had 2 down last week for a day )=. Over the next several months, 1-2 years we hope to upgrade the rest. None of them are wrapped, but that is an idea on the horizon once we can fine-tune design ideas. The idea is to save $x/month/vehicle and when needed or the right time comes to pay cash for a replacement truck. I used to set $500/truck/month in a truck replacement fund. Now in our area $700/truck/ month is likely better. The other thought I have is about when you said about your higher mileage vehicles " I feel like they are just ticking time bombs." Your other trucks could need major maintenance soon or be ok for awhile. Try not to let fear or anxiety push you into financing or hasty purchases if that is not your plan (= Best of luck and hope you guys have great vehicles soon.
