Miya Bholat
June 15, 2021
6 Essential Steps to Create Your Fleet Budget With Fleet Management Software
For any business or industry, your fleet needs to create and adhere to a budget that will set spending expectations and how it relates to generating revenue and profits. If your budget is created with the future in mind, it can be a powerful tool to understand where your business is currently and what needs to be done throughout the year to reach your goals.
Creating a fleet budget can be tricky. You need to consider the average expenses per vehicle over the last year or two and determine the likelihood of expenses given the total size of your fleet by year end. For many, it starts with a blank Excel spreadsheet, but investing in fleet management software that reports on all your fleet expenses is worthwhile.
Instead of having to manually record previous invoices, bills and work orders to tally the total annual expenses for each vehicle, you can quickly export and reference annual expenses for each vehicle and an aggregated total fleet cost.
Whether you’re a new fleet manager or looking to revamp your outdated budgeting process, there are several essential steps to creating an annual budget.
6 steps to create an annual fleet budget
1. Set achievable goals
When it comes to creating a budget, the first thing you need to do before you can start is to gather the previous year’s total expenses, then you can look to set goals for your business. Whether it be weekly, monthly, quarterly, or yearly goals, you must determine what is most important to your business right now and set goals or milestones to reach those goals.
Once you have a goal, it’ll be easier to create a budget and stick to it. When you are working on setting your goals, you want to set achievable goals that are: specific, measurable, achievable, realistic, and timely.
2. Use historical vehicle and fleet data
Setting a budget involves looking a lot at your past performance and using that data to find patterns from year to year. Knowing how much your fleet costs each year for the last few years is important. When creating a budget for your fleet, we always recommend looking back on the last few years and comparing each year to see if you notice growth, loss, or any patterns from year to year. This will help you determine what worked, what didn’t, what was worth the investment, and so on going forward so you can make better business decisions.
Variable Fleet Costs
When creating your fleet budget, you’ll want to factor in both your variable costs and your fixed costs. Your variable costs are the costs that will increase or decrease based on your usage. These are things like gas, maintenance costs, part replacements, parking, tolls, cleaning, etc.
Fixed Fleet Costs
Your fixed costs are costs that are already established and don’t change (too much) from year to year. These costs don’t change no matter what your usage was. These are costs like your taxes, insurances, licenses and permits, loan or lease payments, etc. These costs will never change so you can use those to create your budget.
4. Incremental budget change
This method uses prior periods to create your starting point for forecasting using your standards and including inflation adjustments. You essentially are determining what your baseline revenue level is, and seeing how it changes throughout the year.
One benefit to an incremental increase or decrease is that it is simple and across the board. Since you have your baselines determined, you can easily repeat the process of adding in additional revenue to help forecast for the future.
The only issue we have with this method is that it doesn’t include any market or industry changes you may experience throughout the year. Sometimes, it is useful to do an incremental budget change across expenses and then go back to determine which might need more attention to dial in.
5. Try Zero-based budgeting
This type of method is when you essentially get to ‘start over’ with your fleet each year. This method allows you to build your budget by adding all of the expenses you expect are going to come about in that specific time period.
This method is a lot more work than incremental but can be beneficial for companies that have gone through a drastic change compared to the previous year. However, sometimes it can be a bit redundant and take far too long to produce before it is already considered inaccurate.
6. Track expenses with a fleet management system
When it comes to creating your fleet budget, you’ll want to invest in the best fleet maintenance software so you can easily enter your budget information and track and measure everything that goes into making your business successful. This software will also help you to see if you are on track to reach the goals you set.
AUTOsist has a long list of features that help you track, measure, and maintain your business. Ranging from service history to custom reports, you can track and measure every aspect of your business in one place.
Here at AUTOsist, we make achieving your business goals easy! With an all-in-one online platform to help you track every aspect of your business, you can easily create your fleet budget to ensure success year after year. We offer a simple and affordable way to manage your fleet of vehicles, equipment, and everything else.