DRIVING
Issue 2 Summer 2012 £4.50
Helping you make better decisions
IT’S TIME TO TAKE CONTROL Stop blaming the banks and start generating your own cash. Tough talking from Lord Sugar
CHEAPER FINANCE How the Government is helping small businesses to invest
❚ Smart ways to reduce mileage and cut your fuel bill ❚ Large family cars: which are best for you?
9
steps to a successful tender
BUYING A NEW VAN?
Our feature will ensure you make the right choice
DON’T BE CHAINED TO YOUR DESK
Why flexible working could boost productivity and cut your costs
Contents �
STRATEGY & FUNDING
12 Making the right choices
ISSUE 2 Summer 2012
� 16
Key questions to ask before choosing your next company van
16 How to tender
Selecting a supplier, including 9 steps to a successful tender
�
BROADER VIEW
22 Asset finance
Prepare your application to fund office equipment, plant or cars
�28
28 The DB interview
Lord Sugar on the need to control costs and overheads
32 Flexible working
It can cut your carbon output and travel time and boost productivity
�
HEALTH AND SAFETY
26 ‘Grey driver’ safeguards
Staff members using their own cars for work carries big risks
�
�32
THINK DIFFERENTLY
36 Taking the green option
An environmental policy can be a winwin for companies and employees.
�22
�36
39 Reducing mileage
There are a number of methods to reduce your transport expenditure
�
CARS AND VANS
44 Large hatchbacks/saloons
Find out which of these diesels make the best company vehicles
�26
46 Double-cab pick-up trucks
We compile your shortlist of cost-efficient vehicles
50 Coming soon...
The new car/van models due for launch over the next three months www.mydrivingbusiness.co.uk ❚ Summer 2012 ❚ 3
DRIVING
Helping you make better decisions
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Contact us
Editor’s welcome
Driving Business, Media House, Lynch Wood, Peterborough PE2 6EA. Email editorial@mydrivingbusiness.co.uk
Business development manager Stuart Wakeling 01733 468342
Welcome to the second issue of Driving Business. Packed inside this magazine is advice and guidance to help you take control of your company cars and vans. Our mantra is ‘cheaper and safer’ and we’re here to help you reduce the cost of operating vehicles and ensure your drivers are safer. Our tips and best practice advice are not intended to impact too heavily on your time – we know that vehicles are only a small part of your responsibilities. However, a few tweaks and improvements here and there will have a significant and long-lasting impact on your business efficiency. Driving Business is not all about improving the way you buy, run and sell your company cars and vans, though. Our Broader View section peers above the parapet to shed light on related areas of business. In this issue we focus on alternative sources of finance and flexible working
Account managers Heidi Rogers 01733 468269 Lisa Turner 01733 468345 Lucy Herbert 01733 468800
Contributors
Editorial Editor Stephen Briers stephen.briers@bauermedia.co.uk Deputy editor Simon Harris simon.harris@bauermedia.co.uk News editor Gareth Roberts gareth.roberts@bauermedia.co.uk Senior features writer Sarah Tooze sarah.tooze@bauermedia.co.uk Web producer Debbie Wood debbie.wood@bauermedia.co.uk Contributors Louise Cole, John Maslen, Richard Yarrow, Catherine Chetwynd Production Acting head of publishing Luke Neal Production editors Andrew Ryan Alan Salt Advertising Group sales manager Sarah Crown 01733 468320 Group advertisement manager Sheryl Graham 01733 468256
Project managers Leanne Patterson 01733 468332 Angela Price 01733 468338 Kerry Unwin 01733 468327 Publishing Managing director Tim Lucas 01733 468340 Group marketing manager Bev Mason 01733 468295 Office manager Vicky Meadows 01733 468319 Group managing director Rob Munro-Hall Subscriptions: subscription@mydrivingbusiness.co.uk Printing: Headley Brothers Ltd, Kent © 2012 Bauer Media No part of this magazine may be reproduced without the permission of the publisher. You can purchase words or pictures for your own publications. Phone 01733 465982 or email syndication@bauermedia.co.uk. Driving Business will not accept responsibility for unsolicited material.
practices, although if you listen to the wisdom of Lord Sugar (pages 28-30) you should be more concerned with generating your own cash for investment than turning to the banks. We hope you find these articles as useful as those on the company vehicles. Don’t forget to visit our Driving Business website – www.mydrivingbusiness.co.uk – for more inspiration. Here you will find tools to compare how much it costs to run cars and vans, advice on funding methods and tips on driver safer. And you can register for our monthly bulletin to keep you up-to-date with new legislation and relevant best practice. I’m keen to get your feedback about Driving Business so please email editorial@mydrivingbusiness.co.uk with your comments. You can also let us know how we can make your job easier. The next issue of Driving Business will be out at the end of September. Stephen Briers Editor, Driving Business
Louise Cole Louise runs a media agency, White Rose Media, specialising in fleet and logistics. Although most of her life has been spent writing about haulage fleets, she recognises the same business issues for cars and vans: safety, cost reduction and operational efficiency.
Richard Yarrow Richard is an experienced freelance motoring journalist. A former associate editor of Auto Express, he writes for national newspapers, consumer magazine and trade titles. Richard is equally at home interviewing company executives or driving their latest models.
John Maslen John is widely recognised as one of the most experienced and knowledgeable writers in the company car and van business. He wrote for trade magazine Fleet News for 10 years and is now brand director at motor industry research business Sewells Insight.
Catherine Chetwynd Catherine worked for a number of public relations consultancies before moving to Executive Travel magazine, where she stayed for 12 years. She went freelance in 1995 and has written for The Times, FT, Financial Director, Accounting & Business and The Grocer. mydrivingbusiness.co.uk ❚ Summer 2012 ❚ 5
n F RO N T E N D
6
things you need to know about...
BUDGET 2012
What’s changing and what this means for your business
BENEFIT-IN-KIND THRESHOLDS What is it? BIK is the percentage figure at which a company car driver’s tax liability is calculated. The figures are based on a car’s CO2 emissions. What is changing? From 2014 to 2016, the appropriate percentage of list price subject to tax will increase by 1% for cars emitting more than 75g/km of CO2, to a maximum of 35% in 2014–15, and by 2%, to a maximum of 37%, in both 2015–16 and 2016–17. What does this mean for you? Drivers will be paying more tax for their company car. The tax also impacts on employer’s national insurance contributions, so you will also be paying more per driver per vehicle on a like-for-like basis. The changes are intended to encourage the selection of more environmentallyfriendly cars.
ULTR A-LOW CO 2 VEHICLES What is it? Drivers that have electric vehicles with zero emissions currently pay no company car tax while those with cars that have CO2 emissions between 1-75g/km qualify for a low BIK rate of 5%. What is changing? From April 2015, these exemptions for vehicles will come to an end. The appropriate percentage for zero emission and low carbon vehicles will be 13% from April 2015, increasing to 17% in 2016/17. What does this mean for you? Electric vehicles and ultra-low emissions cars become less attractive to company car drivers because of the increased tax liability from BIK. Critics of the move suggest it could damage sales of electric vehicles.
DIESEL SUPPLEMENT What is it? Company car drivers with a diesel car are currently hit with a 3% supplement compared to petrol cars. This also impacts on employers’ NIC. What is changing? From April 2016, the Government will remove the 3% diesel supplement differential so that diesel cars will be subject to the same level of BIK as petrol cars.
6 ❚ Summer 2012 ❚ www.mydrivingbusiness.co.uk
What does this mean for you? Drivers with diesel company cars will enjoy a reduction in their annual BIK, while employers will also see their NIC reduce.
FUEL DUT Y What is it? The tax added to fuel by the Government What is changing? Nothing – the Government reaffirmed its commitment to increasing duty by 3p per litre in September. What does this mean for you? Higher fuel bills for those on fuel cards and Advisory Fuel Rates are likely to rise accordingly for those on pay-and-reclaim. Either way, it will cost the company more.
C AR FUEL BENEFIT CHARGE What is it? Drivers pay benefit-in-kind tax on fuel for private use that is paid for by their employer. The charge is linked to a set figure called the fuel benefit charge multiplier. What is changing? From April 6, 2012, the fuel benefit charge multiplier for cars increased
from £18,800 to £20,200. It will increase by 2% above the Retail Price Index in 2013/14. What does this mean for you? The cost to employees will increase with the amount dependent on the car’s CO2 emissions. A 40% taxpayer on a car with a 13% BIK would pay £72 more a year, for example.
C APITAL A LLOWANCES What is it? Companies that buy their cars can write down the expenditure against profits at different rates depending on emissions. What is changing? For capital allowances, the thresholds change in April 2013. The 100% level reduces to 95g/km CO2 and the 18% rate applies up to 130g/km. Above 130g/km and the 8% rate applies. Leasing companies can no longer claim at the 100% first year allowance. The threshold above which the lease rental restriction applies will also reduce from 160g/km to 130g/km. What does this mean for you? It’s all about buying cars that emit fewer emissions. The key targets will be 95g/km and 130g/km. Leasing cars up to 95g/km is likely to become more expensive than outright purchase.
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HOW TO...
Survive a recession BJ Cunningham, Death cigarette founder From a ‘brand’ perspective... in good times most people think of brand as an external image, a façade for business. They think about and measure awareness. Brand and business is then about width. In recession, brand will be recognised for what it really is, the manifestation of the soul of an organisation. Brand is then about depth. This stands to reason... depth means deep relationships with real customers; partnerships that see you through. If your message or communication is ‘sophisticated’, it’s almost certainly wrong. If you have to explain your ads in a boardroom with slides then you can be pretty sure they will not work in the market. I think the recession and the future is about simplicity – simple is beautiful. It’s about developing and maintaining long-term mutually trusting and profitable relationships with the people you serve and this means losing the fear about those people and getting real. The biggest mistake made is in pretending to be something you think (or have ‘researched’) other people want you to be. It’s a sure-fire way to paranoia and stress. Mark Palmer Green & Black’s non-executive director In a recession, many businesses fall by the wayside. Some are unlucky, many are badly run or lazy and finally get found out. Most of all, the recession forces businesses to get closer to the numbers and to take action and make changes they may have otherwise avoided. It sharpens everybody up. It does sadly also create a risk averse culture in many cases and fewer people stick their neck on the line for fear of the consequences, whereas in good times they probably could make more mistakes without anybody noticing or indeed caring. On the positive side, the recession provides a great opportunity for consolidation and faster growth for those businesses that are doing things well as they can mop up weaker competitors. Those who can operate successfully in the tough times and are prepared to still invest behind growth and innovation are well placed for fast growth when conditions do improve.
WORDSMITH Don’t be bamboozled by industry terminology BIK Benefit-in-kind is the term used by HMRC to assess the tax liability staff have on their company benefit such as car or fuel allowance. If a company car is provided by an employer the employee is required to pay tax on its value. This is calculated using the P11D value of the vehicle, its CO2 rating and the tax band of the employee.
DISA LLOWABLE / ALLOWABLE VAT Companies can only claim back half the VAT on the rental payment for vehicles funded using contract hire or finance lease and used for personal use. The portion of VAT you can’t claim back is the disallowable VAT. All the VAT can be claimed back on the maintenance of the vehicle.
TOP 10 CARS The most popular cars sold in May
MAY 1
1
Vauxhall Corsa
8,413
2
Ford Fiesta
8,337
3
Ford Focus
6,983
4
Volkswagen Golf
5,867
5
Vauxhall Astra
5,433
6
BMW 3 Series
3,520
7
Volkswagen Polo
3,228
8
Nissan Qashqai
3,179
9
Vauxhall Insignia
2,949
10 Fiat 500
2,823
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n FRONT END
BO OK RE VIE WS
Driver Safety: A practical guide to driver risk management n WHY YOU SHOULD RE AD IT n Understand your legal responsibilities as an employer n Discover strategies based on the driver, the journey and the vehicle n Find out how to engage your staff and managers in the process
M
Reviewed by John Maslen ost businesses shy away from tackling driver safety because they think it’s an issue just for larger companies, or they just don’t know where to start. That’s the message in a new book which is designed to tackle the problem by helping small businesses introduce effective risk management programmes that don’t cost too much time or money. ‘Driver Safety: A practical guide to driver risk management’ breaks down what can seem like a complex and costly process into simple sections, using three broad themes. The first deals with misconceptions about driver safety by ‘setting the record straight’ when it comes to employer attitudes. Byrne points to legislation such as the Health and Safety at Work Act that establishes company responsibility for employees and any people affected by their actions, wherever the work is carried out. The second part of the book looks at more ‘technical’ elements of a driver safety programme and offers a variety of strategies for implementing risk management schemes. The critical first element is the risk assessment, Byrne argues, as it provides the evidence on which to establish a strategy and measure the benefits of change. Byrne says: “Risk assessment is about finding problems and dealing with them before they become an issue. There are three key elements to consider – the driver, the journey and the vehicle.” Strategies to tackle these risks may range from simple education to formal programmes, such as licence checks, health assessments, online training and on-road tuition, but every company will need to create a safety formula that meets its own unique needs. The last part of the book examines the vital elements of success, including broad engagement within the business and communication. Byrne adds: “Engagement of drivers, their line managers and the organisation as a whole is absolutely critical.” This can be through simple methods, he points out, such as a company newsletter, the drivers’ handbook or posters within the business. Alternatively, more complex schemes can help, such as a driver safety bonus, safe driver competition and employee forums. Byrne concludes that companies also need to ensure they can measure their progress with good record keeping and a cost-benefit analysis to ensure managers understand the value of investing in safer vehicles and drivers. He says: “It is your organisation and your choice how you manage the risks, but the key thing is to manage them.” Written by Richard Byrne Published by the International Institute of Risk and Safety Management Price £19.99 Website www.iirsm.org Contact info@iirsm.org or 0208 7419100
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Company Car and Van Tax 2012-13 Reviewed by Debbie Wood These two books from Colin Tourick (second review below) can be read separately, but are possibly best as bed-fellows. They aren’t for everyone, but if you really want to take greater control of your company vehicles, they offer a comprehensive overview. Company Car and Van Tax is not for the faint hearted. The intricacies of taxation can fox even the experts. But this book sets out to explain the tax rules, rates and allowances for 2012-13. Each chapter begins with an overview of the topic and an explanation of key terms. Tourick explores tax in great detail, breaking down employers’ and employees’ tax position and delving into the different tax scenarios facing cars and vans. Each topic is divided into digestible sections and includes snapshots of other transport schemes, such as car sharing and employee ownership. At 80-odd pages, there’s plenty to get through, but it is best viewed as a constant companion to dip in and out when needed.
Managing Your Company Cars Reviewed by Stephen Briers This weighty 550-page compendium of company car best practice is an essential guide for professional fleet managers, although some of the terminology will make it more impenetrable for those with less involvement in managing company cars. Nevertheless, with chapters covering everything from financing, funding options and legislation to driver policies, health and safety and admin, taking in environmental considerations and taxation along the way, any question you might ever want answering about running a company car will be found in this book. Written by Colin Tourick Published by Eyelevel Books Price £60 paperback (£72 as PDF e-book) Website www.tourick.com
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n F RON T E N D
OPINION
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Let go to gain control Why outsourcing fleet management makes sense for SMEs
M John Lewis, chief executive, BVRLA
“
Even if you don’t employ a dedicated fleet manager, it’s important to maintain a fleet mindset
”
obility is a vital corporate requirement and when it comes to getting from A to B, most businesses have a preferred option – car or van. More than half the new cars sold this year will go to business users. Whether your vehicles are a tool of your trade, an employee perk, or a mixture – you are part of the fleet market. Even if you don’t employ a fleet manager, it is important to maintain a fleet mindset. They are expensive assets to operate and maintain, with fuel prices in particular soaring by 40% in the past three years. These corporate assets are costing you money with every mile on the odometer, so it is important to dedicate some time to ensure they are used in a cost-efficient and sustainable way.
LEGAL REQUIREMENTS Running a fleet brings ‘duty of care’ responsibilities. You need to make sure you are up-to-date with legal requirements; check your vehicles are maintained properly and regularly; and ensure drivers are eligible and responsible. Most large organisations decided long ago that this was a problem best left to the experts. Already used to the idea of outsourcing their logistics or IT functions to specialists, they use fleet management or leasing companies to take away the hassle associated with running a fleet. They may use one supplier or a whole range to provide vehicle finance, servicing, repairs, remarketing, accident management, pool cars and a host of other vehicular value-adds. One decision that will be made in-house is how you fund vehicles. These choices are best left to your MD or FD, who will need to consider the tax implications and capital requirements of the business.
Leasing is one of the most popular forms of funding because it provides a new vehicle for a set period for a fixed cost, making it easier to budget fleet costs. Contract hire is the most common way of leasing a vehicle. For a fixed monthly payment, companies get the use of a taxed car or van for an agreed time period and mileage. Fleets will then often rely on daily rental to ‘fill in’ additional transport needs as and when needed.
SME LEASING ON THE RISE Despite these advantages, smaller organisations have historically preferred to adopt a more time-intensive ‘handson’ approach to their fleet, buying vehicles outright, taking responsibility for all servicing, maintenance and repair and then disposing of them into the secondhand market. However, whether it is down to greater cost or time pressures, the complexity of fleet taxes and legislation or the increased difficulty in obtaining bank finance, this picture is changing. The SME sector is now the fastest-growing part of the vehicle leasing market. The UK’s largest provider, Lex Autolease, leases 75,000 vehicles to SMEs, to a value of £750m, and expects this to grow by 20% over the next couple of years. n The BVRLA – British Vehicle Rental and Leasing Association – is the trade body for contract hire and rental companies. Any business working with a leasing company or broker should look for the BVRLA logo. The BVRLA regulates its members through quality assurance inspections and a mandatory code of conduct and runs a free conciliation service to help settle any disputes. For more information go to www.bvrla.co.uk
www.mydrivingbusiness.co.uk ❚ Summer 2012 ❚ 11
n STR ATEGY AND FUNDING
MAKING THE RIGHT DECISIONS
CHOOSING A COMPANY VAN? Ask yourself these key questions first says Richard Yarrow WHAT IS THE VAN NEEDED FOR?
WHAT EQUIPMENT DOES IT NEED?
Why is this important? You need to think of a new van as a work tool like any other, so it has to be suitable for the job. Key considerations What it’s going to carry. Different jobs will require different types of payloads. Small but heavy loads will require a shorter wheeelbase vehicle than light but bulky products. Think about how the van is going to be used: frequent multi-drop routes, home-to-site daily commute or mostly motorway miles? Will the load vary or be identical every day? Don’t be tempted to choose a big van because you need to carry large items a few times a year. Better to buy a smaller one then rent something occasionally. How will it be loaded and unloaded? Is it safe and easy for the driver?
Why is this important? New vans come with much of the equipment that cars do so think about what you want. Key considerations Think about safety aids such as traction control and the number of airbags, as well as comfort/convenience features like air-con, cruise control and sat-nav. But vans also have options that cars don’t. Do you need a specialist roof rack, a tow bar, internal ply-lining or bespoke storage and load restraint systems? Do you want to wrap the outside of the vehicle with company information or have it sign-written? It’s also worth considering the driver. Is the van a pleasant place to spend time and does it have features he or she will appreciate?
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PETROL, DIESEL OR SOMETHING ELSE? Why is this important? The vast majority of commercial vehicles are diesel, but certainly not all. Key considerations Consider whether petrol might be better (diesel particulate filters can clog if your journeys are short urban trips). The type of driving, mileage and power/torque requirements will form part of the equation. An alternative fuel source may in some cases be suitable. More manufacturers offer hybrid or electric vans and these should be considered for lower-mileage urban operations. Such a choice makes a great statement about your company.
HOW SHOULD THE VAN BE FUNDED? Why is this important? Some companies will purchase all new vehicles, but there are drawbacks. It exposes them to the risks associated with the second-hand market and also means valuable business capital is tied up. Key considerations Finance is one alternative and the most popular type is a contract hire where you lease the vehicle. There’s no need to find the full cost up front and it provides the stability of fixed monthly costs, means guaranteed driver mobility. One thing worth asking is how easily it would be to swap to a bigger van if business takes off.
WHAT ARE THE ‘WHOLELIFE’ COSTS? Why is this important? The finance company will want a monthly fee to cover the van lease, but that’s not the only money you will be shelling out. Key considerations You need to factor in the depreciation in its value over the time you’re using it, the price of maintenance, road tax, insurance and the fuel it’s going to use. It’s only with all this information that you can make right decision on how best to pay for your new van. With your input, specialist commercial vehicle lease companies can provide all this data, and work out the best package.
Why is this important? National Insurance contributions and the vehicle’s road tax are weighted on CO2 emissions, so if you run greener vehicles you will be paying less. If you’re operating in and around central London you can save on the Congestion Charge too. Some clients will ask about your vehicles’ green credentials, because it’s important to them that they only use people with the cleanest fleets. Key considerations Generally it pays to always consider buying the most eco-friendly vehicle because low CO2 tends to mean better fuel consumption. With forecourt pump prices representing a sizeable chunk of the total cost of running a van, significant savings can be made if you have a green machine.
n CO 2 VAN COMPARISONS 16% 12% 8% 4% 0% sub-100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300
Why is this important? Commercial vehicles do get targeted and some insurance policies will require a minimum level of security installed on the vehicle. Key considerations The level of security will depend on the load. It could need dead-locking doors, an alarm/immobiliser and even a tracking system. Check with your insurer before choosing the van. Think about where it’s going to be left overnight. If it’s in a CCTVprotected compound it will need less security kit than if it’s outside the driver’s home. If it’s the latter, also consider parking options.
HOW IMP ORTANT IS THE VAN’S ENVIRONMENTA L PERFORMANCE ?
Market share
HOW SECURE D OES IT NEED TO BE ?
g/km
In 2011 30.6% of vans sold had CO2 emissions below 175g/km, and 16.4% below 147g/km, according to the SMMT. The average was 188.8g/km (210g/km in 2009), athough only 65% of vans were assigned a CO2 figure by vanmakers. Heavier vans dominate – 82.5% of the market is above two tonnes (67.2% in 2000).
DOES THE VAN REFLEC T THE RIGHT IMAGE FOR THE COMPANY ? Why is this important? Image is a tricky thing to quantify and can be hard to appreciate when you’re very close to the subject. Key considerations Ask yourself what does the van you’re choosing say about you, your company and its values? Would you be better with a basic white van to show you’re a no-nonsense professional operator? Or do you need something more stylish that makes a statement? Does it matter if the vehicle type and brand doesn’t send out any particular message to customers? Only you can decide that, but talk to other people to get their opinions.
n WANT TO KNOW MORE ? HOW IS IT GOING TO BE SERVICED? Why is this important? Your van is likely to be a work tool, so how it’s maintained is a vital consideration. Key considerations Who is going to service it, and where are they in relation to where the van is going to be every day? Can they work out-of-hours so there’s minimum interruption? Investigate the manufacturer’s standard warranty and the cost of extending it. Will modifications you make to the van – such as fitting ancillary storage inside and out – invalidate that warranty? How readily available are spare parts and what do they cost?
www.bvrla.co.uk
INFORMATION ON VAN LEASING AND RENTAL OPTIONS
www.fta.co.uk
VAN TRADE BODY PROVIDING IMPARTIAL ADVICE
www.mydrivingbusiness.co.uk
FOR THE KEY QUESTIONS TO ASK BEFORE CHOOSING YOUR (AND YOUR EMPLOYEES’) NEXT COMPANY CAR
p46-47 CHOOSE THE BEST PICK-UP FOR YOUR BUSINESS
n Thanks to the Freight Transport Association, and leasing companies Arval and Hitachi Capital Vehicle Solutions, for their help with this article. www.mydrivingbusiness.co.uk ❚ Summer 2012 ❚ 13
n ST RAT EGY A ND F UND ING
H OW TO TE N DE R
SELECTING A SUPPLIER Make the tender process work for you says John Charles n WHAT THIS ME ANS FOR YOU Choosing which companies you wish to have a relationship with is a vital part of business. A partnership that delivers value for money is crucial, but don’t place too much emphasis on price – service is also key. Finding the right suppliers starts with drawing up the right invitation to tender. Tenders are expensive and time consuming for suppliers to prepare and time consuming for you to sort through – so making sure you lay out the right criteria from the start is essential.
K
eep tenders simple with the process objective clearly in the spotlight and adopt a collegiate approach by utilising skills and expertise from across the business. These are among the key principles of tendering; yet too often organisations have little idea of what the ultimate aim of the tender is, make the process too complex, and fail to ask key questions – particularly in relation to operational delivery – thus wasting significant time and money and, perhaps, ultimately appointing the ‘wrong’ supplier. Nigel Trotman, head of strategic consulting at leading contract hire and leasing provider Alphabet, says: “A good tender document will focus on what’s important to you, your operation and your organisation. Whatever process you follow and whatever documents you issue, it must be appropriate to the business.” Unnecessary questions generate unnecessary information that has to be sifted through to find the answers needed. It is in both sides’ best interest to focus on quality rather than quantity. Companies must decide their aim and what is to be achieved by going out to tender. A critical step in evaluating the need to go out to bid is to define opportunities for improvement. The key is to determine if these issues can be rectified with the current supplier, or if there is a quantifiable benefit to switching. Stewart Whyte, managing director of consultancy Fleet Audits, says: “The best forms of tender are output based – you define the problem, what you want to achieve and let the bidders offer their overall solutions.” To avoid messy scenarios – information and data obtained but not required and vital information and data missing – experts recommend a collegiate approach to tender compilation and a pre-qualification stage. This means bringing together all stakeholders where applicable: from finance to health and safety, legal to environmental. It is also vital that potential suppliers tendering for your business have knowledge of the organisation; understand the vehicle set-up; and what is required. That is why a pre-qualification stage embracing a ‘request for information’ from potential suppliers is essential. Trotman: “Ultimately, the tender shortlist should consist of six to eight contenders that you’re comfortable can do the job they say they can do. Then it becomes a discussion about pricing and culture.”
PRICE VERSUS SERVICE Price versus service is a conundrum as old as the hills, but it remains one that organisations frequently fail to get right when going out to tender. Too often, the emphasis in the final decision-making is given to price when a greater focus should be on issues such as value added service delivery, account management and product innovation. 16 ❚ Summer 2012 ❚ www.mydrivingbusiness.co.uk
As leasing provider Venson’s Carl Stephens says: “Bad procurement people will talk about price; good procurement people will talk about value for money.” A tender response scorecard should have price between 25-50% of the total. Anyone placing it at more than 50% – unless for a very simple commodity – is making price too important and risks ignoring other important elements key to the supplier relationships. Never is this truer than when it comes to tendering for vehicles. A Fleet Audits’ assessment of tender responses will typically include about 60 separate lines for analysis, all weighted and scored in agreement with the client. “In general price should seldom be more than 50% of the total weightings in the scoring,” says Whyte. “For services like contract hire or accident management the quality of delivered service is very important and needs to be factored in. Do not underestimate the ongoing need to monitor contract performance against measurable standards. The account management aspects of the contract are a critical part of the whole deal.” It is always worth investigating how a supplier may be able to deliver value for money compared to its competitors. For instance, says, Steve Whitmarsh, managing director of RunYourFleet.com, an organisation for smaller businesses which uses its collective buying power to secure best terms while also taking account of service: “Technology may be employed to reduce overheads thus passing savings on to customers.” Fleet Operations’ founder and managing director Ross Jackson calculates that savings of up to 10% over a three or four-year vehicle operating cycle are typical through the delivery of managed multisupplier fleet solutions.
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CRE ATING A PARTNERSHIP A tender process is about selecting suppliers that will help a company achieve its aim. It must be a partnership and one that is adaptable to meeting specific challenges. If the relationship is not right then the whole tender process will have proven to be a waste of time and money. That’s why it is vital for pre-qualification meetings to occur and a dialogue to be in place with potential suppliers that enable them to ‘get under the skin’ of the organisation and truly understand its goals and not simply deliver an off-the-shelf response. Companies should be looking at value for money, service levels, innovative ideas and expertise when deciding if a supplier is suitable. Trotman believes it is vital to visit the shortlisted companies. He says: “Meet them and talk to the people that your organisation will be interacting with to make sure you are comfortable they are the calibre of person that will fit in with your culture. “You can also get a feel for the company itself, and how its culture will fit with your own.” At the end of final presentations by the handful of shortlisted suppliers, those leading the tender process should know each suppliers’ capabilities, pricing and their ability to be a ‘good fit’ culturally. Using a ‘full balanced score card approach’, appropriately weighted and measuring key criteria, including capability, risk, financial stability, corporate social responsibility issues as well as price, the organisation with the highest score should win the contract. n Nine steps to a successful tender – page 19
n KE Y ISSUES n n n n n n n n n n
n TOP TIPS
Project organisation Contract background Relevant legislation Trade union consultation Commercial competition The evaluation process Evaluation findings Financial issues Contract management Audit trail
n n n n
Do your research and make sure you have an idea of the market prices Take a wholelife costing approach Consider the whole service package Take recommendations, reviews and customer testimonials into account
Source: Chartered Institute of Purchasing and Supply
n WANT TO KNOW MORE ? www.cips.org
INSTITUTE OF PURCHASING AND SUPPLY FOR TENDERING
www.fleetnews.co.uk
WHERE COMPANY CAR/VAN PROFESSIONALS GET ADVICE
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n ST RAT EGY A ND F UND ING
9 1
A SUCCESSFUL TENDER Drawing up proper guidance and efficiently managing the selection can pay dividends.
KNOW WHAT YOU WANT
PUT VA LUE BEFORE PRICE
If price is the most important element for you, say so upfront; but usually it’s best value rather than price alone that matters. Companies should also be looking at service levels, value for money, innovative ideas and expertise when deciding if a supplier is suitable.
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steps to...
Do you need to go through a tender process? If the service you require is very specific or you only have a few vehicles, you could contact suppliers directly. However, the thought process before you start must be the same either way; knowing what you want is crucial.
4
H OW TO TE N DE R
WATCH L ATEST TECHNOLOGY
Future proof. If you need a supplier that can offer continual improvement or contract enhancement as technologies change, say so. You need a supplier that understands the latest market developments, including the emergence of new technology.
2
QUESTION COLLE AGUES
Start by examining your current provision. Speak to key stakeholders – such as other directors and staff – to identify what is important. Taking a collegiate approach means you can utilise the skills and expertise from across your business.
5
DON’T FA LL FOR FREEBIES
Look at the whole package and not just the free extras. Free extra services will save some money, but your company will save a lot more if you focus on ensuring the structure is right in the first place.
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FIND SOMEONE YOU TRUST
Meet face to face – even before the suppliers have put in their tenders. This is the first step in a relationship – make sure you shake hands with someone you like, can trust and can work with. Ask whether their business culture fits with your own ideologies.
3
DR AW UP A PRIORIT Y LIST
Prioritise. Everything on your wish list will come with a cost, and not just financially. If time is critical, broaden the definition of vehicle you will accept. If product is critical then longer lead times may be necessary. You need to think what you are willing to pay for each element.
6
RESE ARCH THE MARKE T
Make sure you are aware of all the key companies in the marketplace. Ask for testimonials from those you decide to select for the tender process – and ensure you follow them up. Check their financial security as well – you need suppliers that have a strong balance sheet.
9
LOOK BE YOND THE FIGURES
Identify those elements which are not vehicle related such as corporate and social responsibility, company ethos, a supplier’s financial stability and reporting capabilities. Explain clearly what kind of company you are looking to deal with.
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n B ROA D E R V IEW
ASS ET F INANCE
A SECURE MEANS OF FUNDING Asset finance is growing in popularity, but you have to prepare a robust application, says Catherine Chetwynd
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sset finance is the third most common source of finance for businesses, coming after bank overdrafts and loans. It is used by around four in 10 small to medium sized companies and provides an affordable, secure means of finance for investments such as office equipment, plant and vehicles. Funds are secured wholly or largely on the asset being financed, reducing the need for additional collateral, and because it cannot be recalled during the lifetime of the agreement, it is secure for the user. “Asset finance provides finance to businesses so that they are able to buy, rent or lease equipment through hire purchasing or leasing, rather than using up precious working capital to buy tangible assets that depreciate over time,” says Nick Tabiner, sales director for Lombard and head of Lombard Business Direct. Lombard is looking for double-digit growth this year in asset finance, with small to medium businesses a primary target. Asset finance, it says, is increasingly replacing cash and bank lending/overdrafts. There are three ways to secure asset finance: from a bank; through the dealer from whom you obtain the equipment (vendor finance), who may have a captive finance house; and through a broker. Go directly to the funder and you gain their expertise and a quicker decision. A broker generally takes commission from the finance house and can spend time going to different funders – but it might result in a better deal or a deal spread across several providers.
There can be an advantage in vendor finance because it is in the manufacturer’s interest to get its product to market, so it may offer discounted financing terms to encourage people to buy the equipment. It may also have an outlet/dealership for secondhand equipment and therefore have an insight into – and confidence in – its residual value, further contributing to good financing terms. Asset finance comes in a number of guises. Factoring is a classic way of raising cash for new companies, according to Tom Macdonald, a partner in the corporate finance team of Deloitte. The company sells its debts to a factoring company, which advances a percentage of them back to the company and collects the debts. It charges a one-off service fee and interest on the advance. Larger entities may choose invoice discounting, which operates on the same principle, but the company retains control of the debt collection. Contract hire is common for company car fleets, with payment based on the cost price of the car, less the residual value after, an agreed period. Another option for cars and other assets is sale and leaseback, where a company releases cash tied up in assets by selling them to the bank or other funder, who leases them back to the vendor. Hire purchase acquired a bad name in the 1980s as a way for consumers to spend money they did not have. These days, however, it is a valuable way for companies to fund their business.
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n WHAT THIS ME ANS FOR YOU Companies have a range of options when it comes to funding investments such as office equipment, plant and cars. Cash-rich companies tend to pay outright, but others choose bank loans or overdrafts. There are other options, however, including asset finance. It is growing in popularity with smaller businesses and might offer you a cheaper, quicker and more secure way to source funding for big purchases. This feature reveals how you go about it.
The cost of asset finance varies according to the period of funding, the advance and the type of equipment. “Traditionally, customers pay a bit more for technology, for example,” says Graeme Allan, hire purchase sales and services director for Lloyds TSB Commercial Finance. Generally, Lloyds charges a fixed fee of £200 at the beginning and £80 at the end for an option to purchase. Other lenders suggest a 5-10% interest rate, depending on the size of the asset. The very largest assets, e.g. a bulk order of company vehicles, printing presses, could be below 5%. Decisions can be taken very quickly – funds can be transferred across within 24 hours for assets like cars and up to a week for larger items like printing presses. Lombard will typically lend up to 80% of the asset’s value. Larger proportions are available for standardised equipment that can be easily sold in the open market if a business collapsed; specialised equipment will be offered a smaller percentage, as will new companies which do not have a proven track record. Preparation is key to a successful application for asset finance. “A lender will look at the quality of the financial information that
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n C A SE STUDY: CIRRUS L A SER Laser cutting and water jet cutting job shop Cirrus Laser contacted Lombard for help with investment in a new laser machining centre. Lombard provided an operating lease worth £545,000 for a Trumpf 5030Fiber. It allows for increased production, larger scale materials and a wider variety of materials to be produced. “We created a funding package that maximised the benefits of residual based lending. “The operating lease allowed
Cirrus Laser to make use of the machining centre, while managing its cash flow in a way that a standard hire purchase agreement couldn’t,” says Lombard senior relationship manager David Greenough. The new laser machining centre has helped increase the firm’s profit margins and production. It requires less servicing and the operating lease includes a warranty and service for the full lease term, so that the customer knows what the machining centre will cost per month.
n WANT TO KNOW MORE ? www.lombard.co.uk/finance/compare-typesfinance.aspx
SUMMARY AND COMPARISON OF ASSET FINANCE TYPES
www.smallbusinessfinancedirectory.org.uk
NATIONAL DIRECTORY OF ASSET FINANCE BROKERS AND PROVIDERS
www.fla.org.uk
LENDERS ASSOCIATION OFFERS EXCELLENT ADVICE
www.hm-treasury.gov.uk/nlgs.htm
DETAILS ABOUT THE NATIONAL LOAN GUARANTEE SCHEME AND WHY IT MEANS CHEAPER LOANS
www.lombard.com
ASSET FINANCE PROVIDER HAS CASH TO LEND
www.lloydstsbbusiness.com
DEALS AVAILABLE FROM MAJOR BANK
underpins the lending decision,” says Macdonald. “A credible business plan does not have to be complicated, but it should be well thought through and should include contingencies for everything not going to plan, plans for repaying the debt, accurate management reporting and a sensible forecast. A good credit history is relevant.” In addition, the company’s business plans, aspirations, why you are buying the asset and what returns there will be will all give a funder more reason to part with their money: anyone entering into an asset finance deal is entering into a partnership so it has to be right for both parties. The more information a company supplies, the quicker the bank can make a decision. They may also consider a broader range of solutions. Finally, avoid telling your funder what contract you want. It may not be the best solution and then there is a risk you may miss out.
BENEFITS OF A SSE T FINANCE n Secured wholly or largely on the asset being financed, reducing the requirement for additional collateral n Secure for the user – finance cannot be recalled during the life of the agreement n Sustainable – businesses have the option to replace or update equipment at the end of the lease period n Widely available through a network of around 5,000 equipment dealers and 400 brokers, as well as direct from finance companies. n Flexible – payments can be tailored to the business type. For example, a seasonal business might only pay for the equipment when it is active www.mydrivingbusiness.co.uk ❚ Summer 2012 ❚ 23
n BROADER VIE W
ALTERNATIVE FUNDING
CHEAPER O FINANCE New Government cash to support small companies looking for investment capital n WHAT THIS ME ANS FOR YOU The Government has been criticised for focusing on austerity measures but it has also put in place policies to help stimulate growth, particularly among smaller businesses. Two initiatives – the National Loan Guarantee Scheme and Regional Growth Fund – are detailed here. They offer small firms an opportunity to access cheaper finance in order to help them grow their business in the hope that this will see them employ more people and reduce the unemployment rate.
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By Catherine Chetwynd n March 20 the Government set up the National Loan Guarantee Scheme (NLGS), which will provide up to £20 billion worth of guarantees to help businesses access cheaper finance by reducing the cost of bank loans under the scheme by 1%. It is available to businesses with a turnover of no more than £50 million. The transaction size needs to be greater than £5,000 and the term for a minimum of one year. The money may not be applied to revolving credit facilities, refinancing, business credit facilities or overdrafts. Benefiting businesses must be making a material contribution to economy activity in the UK. Barclays, Bank of Scotland, Lloyds TSB, Lombard, NatWest, RBS, Santander and Aldermore are providing the money in different forms. For example, Lombard is offering the money as cash back, paid 50 calendar days after the deal is booked. “We feel anything we can do to get cash back into the business is a good thing,” says sales director for Lombard and head of Lombard Business Direct Nick Tabiner. In contrast, Lloyds Banking Group is discounting the rate at the beginning of the agreement. Interest rates on NLGS loans may vary because each bank operates a different pricing model. Loans are not guaranteed and the usual lending criteria apply. In addition, the Government has opened round three of the Regional Growth Fund for England to the tune of £1 billion. The main criteria for potential beneficiaries are: grants must only be awarded to support the purchase of new capital assets, where the beneficiary agrees to create employment or safeguard employment the grant will be lost without the investment; the business must be based in an area that is adversely affected by private sector cuts and must already be supported by private sector investment. Some banks such as HSBC and RBS have badged the scheme with their own name. The funds are made available to borrowers who fall short of the banks’ normal credit criteria and are only awarded alongside a bank loan. In other words, the grant puts the company in a position to qualify for a loan. Certain conditions are attached. Because the minimum amount a company can bid for under the Regional Growth Fund is £1 million, some small businesses club together. Plymouth University and Western Morning News secured £1 million funding from round one of the fund to create the Plymouth Aspire Fund, from which they are allocating grants of between £10,000 and £100,00. These will go to businesses in the south-west that are operating in clean technology, biotechnology and medical, creative and advanced engineering industries.
n HE A LTH & SAFE T Y
PRIVATE C ARS
SAFEGUARDS TO PROTECT YOU AGAINST ‘GREY DRIVER’ RISKS Allowing staff members to use their own cars for work carries hidden costs and big risks
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By John Maslen housands of companies are relying on employees to resolve their corporate travel demands by asking them to use private cars on company business – but the strategy carries significant costs and risks. Industry analysis suggests there are millions of so-called ‘grey’ drivers, whose journeys range from occasional ad-hoc use through to staff covering thousands of miles every year in their own cars to keep company appointments. For many firms it is seen as a simple solution to a potentially costly transport problem. Most people have their own car, so why should the company pay for another one? Employees can just use their own car for business and private journeys. Employers may believe they just have to pay a pence per mile rate to cover the cost of running the vehicle for any business mileage covered and as a result all management headaches linked to corporate cars will miraculously disappear. However, this isn’t actually the case. A company has a duty to effectively manage drivers on the road – and their vehicles – no matter who owns them. There is copious legislation to support this argument, based around the company’s duty of care to employees. The Health and Safety at Work Act 1974 states that employers have a ‘duty of care’ for the safety of employees at work, regardless of
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the type or size of the business. There is also a duty of care to others who may be affected by their business activities, which means all other road users. If a company has grey drivers then they still need managing to ensure the business knows the type of vehicles being used and how they are being used, so that risks can be controlled. Questions a company must be able to answer include whether the vehicle has been serviced, whether it is legal and roadworthy and whether it has an up-to-date tax disc. Most critically, companies need to confirm if the vehicle is properly insured for business use. Standard private car insurance doesn’t tend to cover business use, so employees that use their own vehicle on company journeys need to obtain additional cover from their insurer.
DRIVING UNINSURED Without the right cover, if an employee has an accident while driving on business, they are effectively uninsured. As they are on a business journey, then the employer is likely to be deemed liable, but their insurance provider is likely to reject any claim too. This leaves the business to bear the entire cost of the accident, including any personal injury claims. To control this risk, a company needs to have effective management policies in place. A central source of data on the grey fleet should include information such as vehicle details,
n WHAT THIS ME ANS FOR YOU If your employees travel on company business in private cars, there could be hidden risks and costs involved. Do you know what vehicles they are driving, how much they are claiming, how far they are driving and whether they are insured or properly licensed? Can your business identify whether it would be cheaper to provide company cars or rental vehicles instead? Review your costs and the potential savings from more effective management could run into thousands of pounds.
driver details, proof of insurance, proof of MOT where applicable and even confirmation of the employee’s licence details. Effectively, the data requirements are similar to those for a company car. Companies may also need to consider introducing a policy for the type of private vehicle that can be used on company business, covering body type, age and mileage. Once a company has managed the human risks involved in grey fleet, there are still substantial financial risks to consider. Employers are able to reimburse employees for business journeys in private cars with payments of up to 45p per mile for the first 10,000 miles per annum and 25p per mile for any additional mileage without any benefit-inkind tax implications for the employee or Class 1A National Insurance costs for the employer. Companies can choose to pay less than the 45p per mile figure: staff can reclaim the difference from HMRC to ensure they are not out of pocket. In many companies, mileage claims are signed off by individual managers through expenses with little control or monitoring. It leaves the door open for employee abuse, through overclaiming mileage or claiming for phantom journeys that never happened. Many companies are ‘flying blind’ when it comes to business travel costs; they do not have an overview of the business journeys. Detailed research carried out by automotive research company Sewells revealed that nearly
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one-third (31%) of grey driver vehicles cover more than 7,000 miles a year on business and that 24% cover more than 10,000 miles a year. But many companies surveyed were unable to confirm how may grey drivers they had or the mileage vehicles covered – often because this information is handled by other departments.
INADEQUATE HR SYSTEMS The reporting capabilities of expenses systems are variable at best, which allows issues to continue unchecked by management. In one case identified by leasing firm Alphabet, a driver was found to be travelling more than 35,000 business miles in his own car, costing the business far more than if he was in a company car where the reimbursement at Advisory Fuel Rates would be just 15p per mile. The company tackled the issue by putting high mileage drivers into company cars and stating that daily rental had to be used if a return journey exceeded 80-100 miles. In addition to cost, companies need to consider what impact grey drivers have on any environmental commitments they may have made. Privately-owned vehicles tend to be older and create higher emissions than company vehicles or daily rental vehicles. This, combined with mileage rates that create an incentive for travel, means that companies should look carefully at the impact grey drivers have on total emissions and overall travel costs.
n C A SE STUDY: ST EDMUNDSBURY BOROUGH COUNCIL St Edmundsbury Borough Council includes grey drivers in a wide-ranging transport strategy. For business journeys, employees and managers follow a seven-step process to consider the cleanest transport options first, including video conferencing or using one of the council’s pool bicycles, before opting for a vehicle, with the first choice being the subsidised bus service. As a result, grey mileage fell from 42,000 to 27,000 in the first year, saving £2,500.
n C A SE STUDY: BE THELL CONSTRUC TION Bethell Construction operates 30 company cars while 20 private vehicles are used for business purposes. It has clear policy and procedures to check grey drivers’ cars against its company car standards. There is a particular focus on updating insurance details and other statutory requirements. This is part of a driver checking process which also allows driving licences to be checked against DVLA records.
n WANT TO KNOW MORE ? www.drivingforbetterbusiness.co.uk
BUSINESS CASE INFORMATION, LEGAL GUIDANCE AND CASE STUDIES RELATED TO MORE COST EFFECTIVE COMPANY CAR/VAN OPERATIONS
http://www.fleetsafe.org/
RESOURCE FOR SAFE MANAGEMENT OF COMPANY CARS AND VANS
www.fleetnews.co.uk/fleet-management/grey-fleet/ EXTENSIVE ADVICE ON GREY DRIVER MANAGEMENT
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n BROADER VIE W
THE DRIVING BUSINESS INTERVIE W
‘STOP BLAM TAKE CHA LORD SUGAR ON THE NEED TO CONTROL COSTS AND OVERHEADS – ’THE BASIC PRINCIPLES’, AS SIMON HARRIS FINDS OUT
Alan Sugar – a business timeline 1965 1963 Leaves school at 16 and works briefly for the civil service as a statistician at the Ministry of Education. Starts selling car aerials and electrical goods out of a van bought
1970 1968 Founded Amstrad –the name is an acronym taken from Alan Michael Sugar Trading
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1975 1970s Amstrad expands from electronics into home hi-fi equipment imported from the Far East
1980 Amstrad listed on the London Stock Exchange
1985 1984 Amstrad launches the CPC 464 home computer
n Amstrad launches PCW 8256 word processor n Launches real estate business Amsprop
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MING THE BANKS AND ARGE OF BUSINESS’
A 1990
1986 Amstrad buys the rights to Sinclair computer products
1991 Buys Tottenham Hotspur Football Club and becomes chairman
1995 1993 Launches Amsair Executive Aviation, which is run by Lord Sugar’s son
Government’s ‘enterprise champion’ under Gordon Brown in 2009 to see if the banks were making life too difficult for businesses. “We’ve got this culture that the banks are going to provide the money,” he said. “They are not going to do that. If you haven’t got a good history or seem like a risk then they’re not going to lend money. When we read about banks failing to lend businesses money in the press, the journalists who write about it wouldn’t lend them anything either.” Although he was ennobled by the last Labour Government and he has donated money to the Labour Party, Lord Sugar saw his appointment to the Department of Business, Innovations and Skills as a non-political one and he says he didn’t join the Government as a result of him taking up the position (see panel, page 28). Indeed, he recently courted controversy by tweeting that Londoners should not vote for the Labour candidate to be Mayor of London, Ken Livingstone. Lord Sugar, who began in business selling aerials and equipment from the back of a van bought with less than £100 in savings, believes in starting small and with your own money. Then to retain focus on objectives, there should be a weekly review of targets and achievements. “Starting a business from scratch with a small amount of money – your own money – is the right thing to do, “ he said. “People need to start with something small. They need to have a weekly review of what the business is doing. Not everybody sells items that you can take account of what’s being sold. “Look at what targets you are trying to set yourself whether its £500 or a £1,000 or a couple of thousand pounds a week. People get carried away with spreadsheets and business plans and Powerpoint presentations that they forget the basic principles.” He added that when he started in business, keeping a firm grip on the basics was one of the highest priorities. “I remember saying to myself when starting my own business, I’ve got to keep control of costs and overheads. You need to keep focus on what you want to make in that week and don’t give up until you do. “Stop dreaming about something else coming up because that’s not going to happen.”
2000 1994 Acquires Viglen Ltd which provides IT products and services
2001 Sells majority stake in Spurs
2005 First series of The Apprentice starts
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lan Sugar has been a well-known part of the British business landscape for more than 30 years, but is arguably more famous now for his role in a primetime TV show than any of his earlier achievements. He has been the figurehead of the BBC’s The Apprentice since 2005, and although the format has changed slightly since contestants competed to be employed by him, to now becoming a business partner, the programme is still one of the most talked about on TV. And as intimidating as it might be to work with one of the biggest names in business, Baron Sugar of Clapton – a title he has held since 2009 – is quick to acknowledge that in business everyone usually starts small. We caught up with him taking part in a Q&A session with a group of business people and entrepreneurs attending the Business 2012 conference in London. Although questions surrounding The Apprentice and other lightweight subjects were discouraged, Lord Sugar was surprisingly candid about how difficult it can be to get a good start in business. He has little time for people seeking to start the next Facebook or Twitter, particularly if inspired by some fanciful ideal that people can achieve what they want if their belief is strong enough. He says getting the fundamentals of business correct is the most secure foundation. “I’m sick and tired of those people who want to come up with a new social media idea,” said Lord Sugar. “They need to wake up and realise the environment in the US is completely different from here. The Facebook story is one in a trillion. So many people aspire to that and hang around waiting for something to fly across their minds while sipping from their cups at McDonald’s or something and it’ll take off.” During the recession, which began in the so-called “credit crunch” of 2008, banks have come under attack for failing to lend enough money to allow businesses to invest, and measures have been taken to make lending more attractive. But Lord Sugar denies the banks are the root of the problem and blames people with business ideas that seem too risky. He said he conducted an investigation after being appointed the
2010 2007 BskyB buys Amstrad
2009 Becomes Baron Sugar of Clapton
First series of Young Apprentice starts
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n BROADER VIE W
THE DRIVING BUSINESS INTERVIE W
“ ”
You have to give something a chance to grow, but you also need to know when enough is enough
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Part of his certainty in business, he says, can be put down to him being closely involved in every product his company has been responsible for. “I have always designed, made and sold my own stuff,” he said. “When you design a product then you have your own confidence in it.” Although any business venture is fraught with risk, and confidence is part of ensuring it is successful, it also pays to know when something isn’t going to work. “In business there is a fire and a nervousness that we’re going to gamble and risk something that could go wrong so you have to weigh up and have confidence in what you need to do and go for it. But you really don’t know whether it’s going to work until you try. “You have to give something a chance to grow, but you also need to know when enough is enough. Stop the blaming the economic climate, take charge and stop looking for excuses. Focus on why it didn’t work and learn from it.” Lord Sugar says he has only ever become involved in businesses that he understands, and it is too much of a risk to try something in unfamiliar territory. As well as claiming to have make computers affordable, there is one other significant deal that Lord Sugar says he would like to be remembered for and it is one that ultimately had a dramatic impact on the TV viewing habits of the country. “Sky television was brought about by a deal that was done just down the road from here [the O2 Arena] in 1987,” he said. “They wanted to launch a satellite television business and no one wanted to manufacture the equipment at what would ultimately be an affordable price for customers. “They had been to Sony and just about everybody else. I said we’ll do it and we did a deal almost on the back of a fag packet. There was no contract and no lawyers. “I would make the kit and we’d sell it for £199 and they would put 16 channels up to view on it. Not many people realise this was how we did the deal.” Although Lord Sugar has reduced his direct involvement in businesses over the years he shows no signs of slowing down. His appetite for work and the satisfaction in doing a deal is still strong. “I like the deal. I like to see something happen. I like to see an idea or concept get off the ground. When I made my first bunch of money, why didn’t I stop? I wanted to get out and do something and I still do.”
More advice from Lord Sugar in his three books 30 ❚ Summer 2012 ❚ www.mydrivingbusiness.co.uk
Why politicians need to stay out of business Although Lord Sugar has supported the Labour Party and was made a peer under the Labour Government, he didn’t see his appointment as political and he has been critical of politicians meddling in business. He believes that the majority of any new initiatives for business by any government are introduced to try to win favour with the wider electorate. As well as his recent outburst on Twitter urging voters in the London Mayoral election not to choose Ken Livingstone, he also has criticism for the Conservative-Lib Dem Coalition doubting the credentials of those currently responsible for business policy, and the idea of governments getting involved in business. He said: “We don’t need the Government interfering in business because they don’t know what they’re doing – we currently have a Business Secretary who has never been in business. “But we need to get them to create a level playing field and create a good business environment. “There is too much interference and we want the politicians to stop electioneering and seeking support from the public by making decisions and introducing policies that might actually be damaging to business.” Lord Sugar says there is something missing from the attitude of businesses today, and the impact of the recession could
be lessened even by merely talking up prospects where the media so often seems to be talking down the recovery of the economy. And there could be benefits in taking a leaf out of the book of the US and how it has managed its recovery, although he warned against empty rhetoric. “We need to create a culture of entrepreneurism,” said Lord Sugar. “The US suffered incredibly during 2007-08, [before the UK’s recession started]. They did a good job of talking themselves out of the recession, in creating a ‘feel-good factor’ – although some were talking a load of rubbish. “We need to be in that position. When I was an adviser to the last Government there were allegations about banks failing to lend money that I investigated. “I found that a lot of companies just wanted to borrow money without any interest in expansion, and there were those moaning that banks weren’t giving them money. When we took a closer look at those companies you just wouldn’t lend them a penny. “We need to create more of a feel-good factor in the market place that we can succeed, and our starting point is don’t read the Daily Mail.”
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FLEXIBLE WORKING
FLEXIBLE A WORKING Flexible working can cut your carbon output, travel time and boost productivity. So what’s the best way to introduce it to your workforce? Louise Cole finds out. 32 ❚ Summer 2012 ❚ www.mydrivingbusiness.co.uk
Microsoft-commissioned survey has shown huge support for the concept of flexible working in European businesses, with an average of 82% of companies allowing it. But, although both employers and employees are enthusiastic about the benefits of flexible working – which can include higher productivity, better work-life balance, improved staff retention and greatly reduced travel – there is a gap between perception and actuality. Far fewer employees are aware of flexible working options than there are companies who say they are available. Anywhere Working is a network created by Microsoft and interested businesses which aims to share best practice on flexible working. It initially grew out of discussions with the Department for Transport about congestion, rising fuel costs and, in particular, transport issues around the Olympics. It isn’t just about home working, although the ability to work at home is a key component. It is about equipping employees to be productive wherever they may find themselves, thereby allowing their work time to fit around life and circumstances. According to a recent Microsoft seminar, 87% of people have worked from home, 37% have worked from the car and 26% in a hotel. It claims that one-third of the world’s workforce will be mobile by 2013.
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CHA LLENGES FOR MANAGEMENT Flexible working does bring challenges, particularly for line managers. Trust is crucial: employees need to trust that their performance will be judged fairly and managers and colleagues need to trust that home workers will remain conscientious. Tony Crabbe, business psychologist, says: “One of the biggest barriers to flexible working is relationships with managers. Managers must judge by output not hours worked or presence. That leads to useful conversations such as: how do we judge quality and output?” Dr Wilson Wong, senior researcher at the work effectiveness centre at the Work Foundation, adds: “If you have a flexible system, it helps with business continuity despite disruption. You also empower your workforce to think flexibly – and not begrudge extra hours when they are needed.” Crabbe says it is best to phase in flexible working. “Stage and sequence it, listening to feedback and adapting at every stage,” he says.
BENEFITS OF WORKING FLEXIBLY A number of companies have already moved to greater flexibility, often driven by cost concerns. South Ayrshire Council had offices spread across four dialling codes, which necessitated a lot of travel and expensive telecoms costs. It switched to the Microsoft model, Prism, and says that in 2010-12 it has saved £110,000 in total, even though it has not yet calculated the ‘softer’ benefits of higher productivity, mileage savings or lower absentee rates. You’ll only save money on office space if you adapt the way you use it. Tony Grace, chief operating officer at Virgin Media Business, says: “We see the office of the future being a lot smaller, set-up for hot-desking and a workforce that can easily interchange from working in the office to working at home or at a satellite office.”
n C A SE STUDY: W WF WWF employs 280 people. “We think nothing of flexible working here – it’s just part of who we are,” says Jean Leston, senior transport policy advisor. WWF has laid down aggressive goals for transport, leading to 39% fewer flights, £4,000 less spent on road travel in 2011 and £59,000 more on rail. “We have always encouraged people to work flexibly because it promotes a better work-life balance and it recognises that people are all at different stages [with families etc],” says Leston. “Most work at home on an ad-hoc basis and others have flexible working contracts.” Employees can remotely access the server via Citrix and they are given Blackberrys. “We can use our own equipment or pool laptops,” says Leston. “I suspect we will
INFR A STRUC TURE IS KE Y REQUIREMENT
If you want to enable employees to work productively wherever they are, you need to give them the tools to do so. Laptops, internet connection, smartphones and remote access to server-based resources (such as customer accounts or documents) is the minimum they will require. Employees can use their own devices, but standardisation and a thought-through approach about the technology necessary to work well, and any security issues surrounding data, is preferable. Microsoft recommends its cloud-based computing model, where all company resources are held securely online, with email, SharePoint (document collaboration) and Link (its video conferencing technology) available to workers wherever they are. There are, of course, other providers of such technology, and some companies will prefer to keep company data on their own servers and allow remote log-in. Microsoft says that the security of the cloud is not a problem, but companies should be careful about security at the device end by ensuring their laptops are password protected.
n VIRGIN MEDIA BUSINESS’S TOP TIPS FOR FLE XIBLE WORKING 1 2
3 use cloud-based working and drop boxes more in future.” WWF will soon move to a new premises in Woking designed entirely around hot-desking. “Each person will have a little trolley to keep their belongings in. Employees will be expected to work more flexibly than ever.” It won’t have an employee car park to discourage private car use. “Employees who want to drive will have to pay commercial rates in a public car park,” says Leston.
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Get the management on board Make sure training is in place and everyone is clear about the rules Security isn’t just about buildings, but information – virtual private networks can ring fence your data Keep in touch with one another Provide fibre optic networks; and a benefits package to help staff access fast internet at home (a taxable benefit)
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Make it easy for employees to stay in touch using unified communication and onenumber dialling Use video conferencing through laptops Use office space more intelligently – eg hot desking Build it into business continuity plans Don’t be a slave to your commute – 2012 will see record tourism and therefore congestion
n WANT TO KNOW MORE ? www.anywhereworking.org
NETWORK THAT SHARES FLEXIBLE WORKING KNOWLEDGE
www.theworkfoundation.com
ANALYSIS AND ADVICE ABOUT WORK AND ITS FUTURE
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n T H IN K DIFFER ENTLY
ENVIRO NME NT
TAKING GREEN OPTION Your company and staff can both benefit, writes John Charles n WHAT THIS ME ANS FOR YOU ‘Going green’ was the buzz phrase on everyone’s lips a few years ago. Then the recession happened and attention switched to reducing costs, minimising overheads and reducing headcount. However, setting up an environmental policy doesn’t have to cost money: it might actually contribute to your bottom line. And it can improve your company image. Here’s how to do it.
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ndustry research suggests small businesses are lagging behind larger organisations when it comes to reducing their fleet carbon footprints. Whether through adding low emission vehicles on to company car choice lists, introducing alternatives to vehicle use or encouraging employees to drive in a more eco-friendly manner, there is plenty of advice available to small businesses to help do it better. The Energy Saving Trust (EST) has calculated that if all businesses in the UK collectively switched to greener company cars, they could save almost £3 billion a year through reduced tax and fuel bills.
COMMUNIC ATIONS KE Y TO SUCCESS A company running 20 vehicles can expect to save almost £20,000 a year by adopted a range of best practice measures, the EST says. Communication with employees is vital to get them on-side and the recession provides the ideal opportunity to engage with staff and explain to them why cost efficiency is key. Going green is a mechanism to help companies stay in the black as
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they grapple with the impact of the recession. However, too many organisations believe that a greener company car policy will cost them money, not save it. The reality is that a commitment to the environment is no longer an optional part of the business agenda. ‘Going green’ not only displays strong corporate social responsibility, but will cut costs.
REDUCED TA X BILL S FOR E VERYONE Drivers will also benefit through lower benefit-in-kind tax bills. With consumer and business spending being cut as the recession continues, many employees will appreciate lower company car tax bills, which can invariably be achieved through careful choice list compilation with no impact on vehicle status. All vehicle-related taxes – benefit-in-kind tax, Vehicle Excise Duty and corporation tax as well as Class 1A National Insurance contributions – are linked to CO2 emissions. As a result, companies should be reviewing their car choice lists to ensure they offer drivers low emission vehicles. Additionally, the lower a vehicle’s CO2, the better its fuel consumption. Therefore savings increase the moment a vehicle takes to the road. Making a structured and considered re-evaluation of the choice process is vital to saving money. Crucially, the reasons for change must be explained to employees, and not least the emphasis placed on the operation of lower emission vehicles putting more cash in their pockets due to lower benefit-in-kind tax bills. Simon Carr, general manager, sales, at Fleetline, the specialist small business arm of leasing giant LeasePlan, reports that small businesses are beginning to favour greener vehicles. The move, he says, is driven by a combination of the attractiveness of reduced driver and corporate tax bills, lower running costs and, if leasing, savings on monthly rentals compared with higher emission models. However, a survey by the Arval-backed Corporate Vehicle Observatory (CVO) suggests that many small businesses are failing to utilise the most efficient vehicles available. While 71% of large companies include at least one ‘green’ vehicle on choice lists, the same is true of only 19% of businesses with fewer than 100 employees. Additionally, the survey reveals that more than half of large firms highlight manufacturers’ most fuel-efficient brands to their staff, compared with just 5% of small businesses. Finally, hybrid vehicles are almost non-existent in small businesses (7%) compared with 40% of large company fleets. Mike Waters, director – market insight at fleet management and leasing specialist Arval, said: “There is a big discrepancy between the attitude and actions of large companies in this important area and the small business community. Smaller companies are missing out on the benefits that environmental policies can bring.” However, the good news is that some small businesses plan to turn their intention increasingly to ‘green’ vehicles over the next three years: n 60% of companies with fewer than 100 employees plan to have at least one green
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CAN SAVE YOU MONEY n 10 TOP FUEL SAVING TIPS Accelerate gently and brake sensibly. 2 Monitor fuel consumption. Make it the aim to get more miles per tank. Change gear at the most 3 economical point: around 2,500rpm in petrol cars and 2,000rpm in diesels. Anticipate conditions and 4 plan each journey. Avoid peak times and congestion. Check tyre pressures 5 regularly. Incorrectly inflated tyres can increase fuel consumption by up to 10%.
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In stationary traffic, always switch off the car’s engine. Remove unnecessary 7 weight from the car. Use optional equipment 8 sparingly. Turn the air conditioning off if you don’t need it to improve fuel consumption. Service the car regularly. 9 Missing a service is a false economy. Think about alternatives 10 to your car such as public transport and walking.
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vehicle on their fleet by the end of the year. n 56% of companies with fewer than 100 employees plan to use fuelefficient brands. n 31% of smaller companies plan to introduce hybrid vehicles. While car CO2 emissions data is widely available, it is only recently that the figures for light commercial vehicles have been published. Data can be accessed at www.vca.gov.uk/vandata/vehicles Encouraging employees to adopt eco-driving – or smarter driving – techniques will also cut emissions and save money.
ECO-DRIVING CAN CUT FUEL USE BY 15% Eco-driving is now part of the driving test and smarter driving courses are offered by a number of driver training companies as well as the EST. Tests carried out by the Driving Standards Agency suggest that by adopting an eco-safe style of driving, an experienced driver can cut fuel bills by 6%, a driver with just a few years’ experience can cut fuel bills by 9% and a newly-qualified driver by 15%. The EST has calculated that by adopting smarter driving techniques motorists could individually save £200-£250 by cutting fuel use by an average 15% a year and collectively save more than £5 billion per year. In compiling a green vehicle strategy, issues to be considered are: n Stopping employees using their own cars on business trips – so-called grey fleet vehicles typically emit 10% more CO2 than the average company car, according to an EST estimate. n Considering the use of rental cars as an alternative to own vehicle use as well as car sharing. n Withdrawing the funding of fuel used privately by staff. In most cases, from both the corporate and driver perspective, it will be cheaper for employees to pay for the fuel. The practice is also believed to encourage employees to clock up unnecessary miles at their employer’s expense. n Using fuel cards to aid fuel and mileage management. n Introduce telematics to aid mileage management as well as journey scheduling and fuel savings. Finally, the greenest mile is the one that isn’t travelled, but that doesn’t mean ditching the company car. Instead, staff should be encouraged to consider whether public transport would be a better option. Also, in many companies, video or web conferencing (see Driving Business issue one) now plays a key role in carbon footprint reduction.
n C A SE STUDY: COMMERCIAL GROUP Two radical environmental initiatives – on-site biodiesel bunkering and a dynamic mileage management routing system – are contributing to major money and emission savings for the Cheltenhambased Commercial Group. Helped by the Energy Saving Trust, the independent office services company, has developed a programme that saw it win the Best Small Fleet Award in the EST’s 2008 Fleet Hero Awards. In 2006, the company calculated its CO2 emissions at 1,047 tonnes, of which 85% were from its cars and vans. It launched a strategy that saw emissions drop by 75% within three years despite increasing its company cars from 45 to 67 and vans from 12 to 15. The transformation was masterminded by logistics manager Rob Paddock, who said: “Too often companies think environmental initiatives cost money. But we can prove that by implementing best practice, significant amounts of money can be saved through
carbon footprint reduction.” To ensure consistent biodiesel availability and quality, the company has invested in its own on-site tank and blending system. Now running its fleet of 12 head office-based Ford Transit vans on a 50-50 mix of biodiesel and traditional diesel, the company is saving 2p to 3p a litre on fuel against local forecourt prices which is cutting fuel bills by more than £4,000 a year. Return on investment was less than three years. Further boosting fuel and cost savings has been a new dynamic routing system. Commercial uses a combination of trackers, computer mapping software and local knowledge to ensure each van route is optimised, which reduces travel between deliveries to customers. Other emission-cutting initiatives include: � Business managers and engineers working from home. � Use of teleconferencing. � Ex-company cars reallocated as pool cars to reduce private car use.
n WANT TO KNOW MORE ? www.energysavingtrust.org.uk/fleet
CUT-PRICE TRAINING AND ADVICE TO HELP YOU ‘GO GREEN’
www.actonco2.direct.gov.uk
GOVERNMENT ADVICE TO PROTECT THE ENVIRONMENT
www.mydrivingbusiness.co.uk ❚ Summer 2012 ❚ 37
n THINK DIFFERENTLY
REDUCING MILE AGE
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CUTTING THE MILES IS THE WAY TO CUT FUEL BILLS There are many methods businesses can adopt to help them reduce their expenditure on transport n WHAT THIS ME ANS FOR YOU Fuel pump prices are at or close to record levels and with no likelihood of a price cut and a 3p a litre duty rise scheduled for August 1, fuel bills will continue to soar. Fuel is typically the second biggest vehiclerelated cost after acquisition/depreciation and potentially accounts for up to a third of expenditure. With corporate budgets under the microscope, reducing the cost of running business vehicles makes sense and reducing mileage is the obvious place to start.
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CONDUC T A MINI-MOBILIT Y AUDIT What is it? A mobility audit, advises Gary Killeen, fleet services commercial leader for GE Capital UK, allows detailed analysis of how vehicle use sits alongside other transport methods used by a company, ranging from private cars and taxis to planes and trains to motorcycles. For shorter journeys, walking or cycling may be an option. How will it help? The outcome could be as simple as putting in place guidelines to ask drivers to justify each car journey and show that they have thought about planning their work diaries in detail. The results can be subtle, but worthwhile. For example, if members of the sales team start to plan car use on a more geographical basis without it having an impact on their sales performance, then a mobility audit may have achieved quite an important shift in mentality.
DON’T DRIVE – WORK SMART What is it? It can be difficult to tackle company culture, where ‘pressing the flesh’ in face-to-face meetings is considered the most important aspect of securing and keeping business contracts. But that assumption is being challenged by an increasing number of companies realising that the greenest mile is the one that isn’t travelled. How will it help? There will always be a place for face-to-face meetings, but that meeting could also be used to secure support for an environmental approach in the future. Such an approach is known as ‘smart working’ and encourages employers to reduce in-work journeys. This may mean promoting alternative modes of travel to the car, but it also means embracing home working and technology alternatives.
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By John Charles ritain’s workers collectively drive millions of miles on business and use millions of pounds worth of fuel annually – but can they honestly say every mile was necessary? The simplest way to reduce fuel bills and emissions is to reduce mileage. And this also has additional benefits: fewer miles mean lower maintenance bills and it could also improve employee productivity, while aiding corporate social responsibility commitments by reducing at-work driving. It makes sense to manage exactly how many miles employees are travelling for their business with the aim of reducing mileage and thus containing costs as much as possible. The first step is to differentiate between ‘necessary’ and ‘unnecessary’ journeys. So what mileage-reduction methods should you consider?
Advertisement feature
Changing your driving behaviour can reduce your fuel usage and save you money
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arlier this year, Shell teamed up with the Royal Society for the encouragement of Arts, Manufacturers and Commerce (RSA) and The AA to challenge 18 cab drivers across 10 cities in the UK to see if they could become more fuel efficient and save money by changing the way they drive. The goal was to reduce their fuel consumption by 10% over four weeks. “Eighteen of us were invited to London to learn about eco-driving and saving fuel,” explains competition winner, Bernie Searle from Norfolk. Bernie is a self-employed taxi driver and has been operating for 20 years. Before the
“I’m saving about £150-£200 a month on my fuel bill”
The fuel saving facts at a glance ● The cab drivers reduced their fuel consumption by an average of 20% during the competition ● If they maintain these driving techniques, they could save up to £1,552 a year ● Based on these results, an average driver could save £544
a year in fuel costs ● If all of the UK’s 34.1 million drivers applied these techniques, they could collectively save up to £18.5 billion ● Fuel efficiency and economy are on the top of every motorist’s agenda, and rightly so. At Shell, we are always
looking at ways to help our customers save on their fuel costs. With 50 years’ experience of fuel cards in the UK, and with a high quality fuels portfolio, we are armed with the best tools to help you manage your fleet effectively and efficiently.
competition, Bernie was spending about £1,000 a month on fuel and driving 1,000 miles a week. On the course, Bernie learnt tips such as checking tyre pressure and removing any excess weight. Throughout the competition, the drivers were measured on their performance and efficiency improvement. Bernie managed to stick to the new driving rules he’d learnt and had the highest reduction in fuel consumption. “I was interested to take part, but quite sceptical at first. They told us we could save 15-20% on our fuel, which is pretty much what I achieved. They gave us various tips, but I wasn’t sure it would make any difference. It’s not one thing on its own, but add them all together they make a difference. “Things like having your tyres at the correct pressure can reduce your fuel usage by 3%. I didn’t know that before. I also took the golf clubs out of my car to reduce the weight. And I’ve found that the cheaper fuel isn’t always the best – I’ve switched to a more expensive grade, but I get more miles to the gallon.” Bernie’s impressed with the amount he’s saved and says he’ll share the tips with his wife and other drivers, so they can save fuel too. “I’m hooked now; I wouldn’t go back to how I was driving before. I’m saving about £150-£200 a month on my fuel bill. It just goes to show that anyone can learn more about their driving and change their behaviour”.
To find out more about the euroShell fuelcard, visit www.shell.co.uk/euroshell or call 0800 7313131
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n THINK DIFFERENTLY
REDUCING MILE AGE
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SMART PHONE APPLIC ATION
IN-VEHICLE TECHNOLO GY
What is it? Much can be achieved by ensuring drivers are aware of the issue of high mileage and its cost to the business, according to William Townsend, national sales manager of multi marque leasing and fleet management company Alphabet.
What is it? Many drivers use technology to find the shortest route or avoid getting lost and driving unnecessary extra miles. The most widely used is satellite navigation with systems already fitted to vehicles or a portable aftermarket device acquired.
How will it help? He explained how one client business with fewer than 10 vehicles undertook a simple exercise using an iPhone app. The cheap and simple tool monitored the routes and mileages of all the drivers in the business over a given month, in a bid to raise awareness of the issue of excessive mileage. Townsend said: “This simple step ended up with the business reducing its monthly mileage figure by more than 10%.”
How will it help? The next stage is to fit a ‘black box’ telematics solution to a vehicle, which can deliver a host of benefits embracing driver, vehicle and journey management information. The data is relayed back to an office PC enabling online data management and therefore driver management. One telematics provider, Quartix, calculates that its technology is capable of saving a business operating 20 vehicles as much as £20,000 a year. Providers typically offer a variety of contract terms and some offer a non-contract pay-as-you-go service.
FUEL C ARDS What is it? Issuing fuel cards to drivers may not be the most obvious mechanism to aid mileage reduction. After all, fuel cards at their most basic level are a mechanism for buying fuel instead of a driver using cash or a credit/debit card.
JOURNE Y PL ANNING What is it? It sounds basic, but one way to cut out mileage is to encourage employees to plan journeys in advance using online route finders, mobile phone applications as well as the ‘old fashioned’ map. How will it help? Many drivers don’t spend time on this, but a few minutes can help to not only pick out the best and shortest route, but also avoid congestion hotspots and build in a refuelling opportunity. ACFO, whose members include businesses of all sizes, last year published ‘From A to B: The ACFO guide to UK journey planning’. It says: “Travelling to a face-to-face meeting may or may not be vital, but it is important that employers have assessed alternative forms of business mobility and communication. The car may not always be the optimum option in terms of cost, time, reducing risk exposure or carbon-cutting.”
How will it help? Fuel cards make costs visible. By taking note of the ‘fuel triangle’ – miles driven, the volume of fuel purchased and the cost of fuel – underpinned by a disciplined fuel card regime, financial savings of 15-20% can be achieved. As cards can be linked to drivers and/or vehicles with odometer readings given at each fill, management reports available online from fuel card companies mean businesses can accurately track mileage and drivers, if necessary, can be challenged to justify journeys. Companies can also stipulate where fuel is purchased, thereby eliminating the use of high-price outlets. It is also essential to select a card that can be used at a broad network of fuel sites so that drivers don’t have to travel out of their way to find somewhere where they can refuel.
MILE AGE C AP TURE SYSTEMS What is it? Companies on average see business mileage fall by almost 25% when they introduced an audited online mileage capture system, according to business mileage specialist TMC.
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How will it help? The annual saving on fuel alone from reducing mileage by 25% on a 25-car fleet – 20 diesel cars (53mpg average and diesel costing 147p per litre) and five petrol cars (36mpg average and petrol costing 139p per litre), averaging 10,000 annual business miles – is £8,500, the equivalent of paying 36p less per litre of fuel or obtaining an extra 13 mpg from every car. This contrasts with a £700 annual saving from a 3p per litre reduction on fuel prices and a £3,249 saving as a result of improving economy by 5mpg. TMC managing director Paul Jackson said: “Lowering mileage is 10 times more effective at cutting fuel costs than trying to buy petrol more cheaply. It also offers around three times the potential saving you could make by encouraging drivers to drive more economically.”
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n THINK DIFFERENTLY
REDUCING MILE AGE
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C AR SHARING
C AR HIRE
What is it? It is not always practical, but where possible car (or lift) sharing is a good way to cut mileage. If several employees are heading to the same place at the same time, there should be no reason why they can’t travel together. There are two main types of car sharing: n ‘Open’ car sharing, where anyone in a defined geographical area can join a sharing scheme. This involves no input from the employer and is likely to be most appropriate to micro-businesses where their few staff do not live close to each other. n ‘Closed’ car sharing – setting up an in-company car-matching scheme. The best developed schemes are targeted at the daily commute, but those aimed at sharing vehicle travel to business meetings are rising in popularity. Such schemes may operate within a single company or across a number of different employers in the same area.
What is it? Daily rental can be a cost-effective alternative to employees driving their own cars on business. It can also remove the temptation to make ‘unnecessary’ journeys and claim mileage at their employer’s expense.
How will it help? The most popular method of encouraging car sharing in the workplace is to facilitate journey matches via web pages on an internet or intranet site. Liftshare, the UK’s largest car share organisation, says payback can occur within two months and sometimes even faster with car sharing which is much cheaper to introduce than other travel plan alternatives such as cycle schemes, where infrastructure costs can be expensive. As an incentive for employees to travel together, HMRC has in place a 5p per passenger business mile allowance which drivers can claim free of tax and National Insurance contributions.
SOF T WARE What is it? Investing in software specifically designed to manage vehicles can pay significant financial dividends for SMEs. Jaama offers FleetAssistant, an online solution tailored to manage cars and vans on behalf of SMEs. Sales director Martin Evans said: “Once SMEs experience the technology they value the benefits it offers in terms of the return on investment by reducing costs and that includes journey and fuel management, which results in mileage reduction.” How will it help? Software – as opposed to a spreadsheet – is important to enable straightforward checking of which drivers are covering the most miles and to try and work out ways of reducing expenses they are incurring as a result. Neville Briggs, managing director at CFC Solutions, said: “We know of fleets which have reduced the mileage of their busiest drivers by as much as 20% through adopting a proactive approach.”
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How will it help? There is a tendency for employees to hire a vehicle for longer than needed – staff may only need a car for a day, but have it delivered the day before and collected the day after – so it is important to undertake a cost/benefit analysis embracing all factors: day rate, out of hours/late delivery cost, delivery cost to home/ office, administration charges if not refuelled, etc.
n C A SE STUDY: DOORS OF DORSE T Privately owned Doors of Dorset has cut vehicle mileage by an average 100 miles a week – delivering significant fuel bill savings – while sales have increased after fitting Quartix vehicle tracking to three vans. The company carries out 24-hour door and window repair/replacement services across Dorset and company owner Graham Bird said: “Our figures show the same workforce and vehicles have increased average monthly sales from £4,000 to £6,000. The telematics technology was fitted to the vehicles, said Bird, not because employees
were not trusted, but to improve work scheduling and journey management. He added: “Work allocation has completely changed and the ability to know where each vehicle is in real-time means allocation can be done fairly and efficiently, not only to produce fuel savings, but also to provide an improved service. “Staff morale has improved as everyone is being allocated work fairly and productivity is equal across all employees. Moreover, every day it is amazing to see the increased control we have over the vehicles as a result of installing the system.”
n WANT TO KNOW MORE ? www.shell.co.uk/euroshell
MANAGING DOWN MILEAGE USING FUELCARDS
www.energysavingtrust.org.uk
TOP TIPS FOR REDUCING MILEAGE PLUS CASE STUDIES
www.flexibility.co.uk
INVALUABLE IDEAS FOR SMARTER WORKING
http://ways2work.bitc.org.uk/
IMPROVE WAYS OF WORKING AND TRAVELLING
mydrivingbusiness.co.uk The Driving Business website is packed with information to help you choose, manage and sell your company cars and vans Choose the right cars and vans. Unsure which vehicle you want? Head to the Find a Car/Van tool. Want to compare car or van running costs? Our tool provides the calculation based on price, resale value, fuel costs and service, maintenance and repair costs. Here, you can also find out how much tax your drivers will pay and you can read reviews of every key car and van from our experienced road testers. Managing the cost of your vehicles. With myriad funding options to choose from, this section will help you decide which is best for your business. You can also get tips to help you reduce your fuel bill while our maintenance advice will ensure your vehicles stay on the road. Safety & Compliance. Running company cars and vans isn’t simply about choosing which vehicle you want. You have legal obligations to keep staff safe and you can find out what those are in this section – and what the implications are if you fail to comply. Here, we also advise you on how to reduce accident costs and provide details of vehicle safety ratings, as well as offering tips on your drivers’ responsibilities. Cool Stuff & Business Surgery. Business Surgery is where you can ask questions of our experts and find best practice case studies on improving safety or reducing cost. It also contains the ‘Broader View’ articles which explore related areas of business management, such as funding and IT. Cool Stuff contains future launches, crazy concepts and things that we think will excite or surprise you from the business world. mydrivingbusiness.co.uk ❚ Summer 2012 ❚ 43
n C ARS
BEST IN CLASS Helping you to choose the best cars for your business n L ARGE HATCHBACKS/SALOONS
Ford Mondeo 1.6 TDCi 115 Zetec Business Edition
Hyundai i40 1.7 CRDi 136 BlueDrive Style
Peugeot 508 1.6 HDi 115 SR
LEASING PRICE £313 PURCHASE PRICE £21,240 DRIVER APPEAL ✪✪✪ FUEL ECONOMY 61.4mpg REPAIR COSTS £2,208 RUNNING COSTS £22,650
LEASING PRICE £331 PURCHASE PRICE £20,495 DRIVER APPEAL ✪✪✪✪ FUEL ECONOMY 61.4mpg REPAIR COSTS £2,028 RUNNING COSTS £23,172
KEY REASON TO BUY: Huge dealer network and added standard specification
KEY REASON TO BUY: Five-year, unlimited mileage warranty gives peace of mind
KEY REASON TO BUY: High standard equipment for the purchase price
BEST FOR: Despite just 115bhp, the Mondeo is a great car to drive
BEST FOR: This 136bhp variant stands out as most powerful
BEST FOR: This 508 variant has the lowest P11D value in the group selected
DRIVING BUSINESS SAYS
DRIVING BUSINESS SAYS
DRIVING BUSINESS SAYS
The Mondeo has evolved since this version was launched in 2007, with a major update in 2010 and this new 1.6-litre diesel engine introduced in spring 2011. The engine is used a number of other models, including the Peugeot 508 also on this page, and is smooth and responsive despite its small size. The Mondeo is often touted as one of the best cars to drive in this class, and it’s a reputation is well deserved with an excellent combination of responsive handling and a composed ride. The Business Edition includes touch-screen navigation, larger alloy wheels, USB port for iPod connectivity, and proximity sensors all round to aid bump-free parking.
Hyundai has been a fringe player in the past when it comes to business cars, but it now offers a highly competitive line-up, including the i40 which is available as a saloon or a Tourer estate. The i40 is available with two versions of an efficient new 1.7-litre diesel engine, offering either 115bhp or 136bhp. Pricing is competitive, so this 136bhp looks attractive alongside these less powerful rivals, while there is only a small reduction in efficiency compared with the lower power variant. Hyundai’s fuel-saving technology is called Blue Drive, and like the rivals selected here, switches off the engine when idling to help maximise fuel economy.
The Peugeot 508 is a far more elegant car than the 407 that went before it, and it also addresses some of the criticisms regarding rear seat space and the 407’s relatively small boot. Using the same 1.6-litre diesel engine as found in the Ford Mondeo, it achieves excellent efficiency, although it is possible to select an even more efficient 508 – the e-HDi – which also uses an electronic self-shifting manual gearbox to help optimise fuel economy. The 508 is also unique in this class, at the top end of the range, with a diesel-electric hybrid variant offering 78.5mpg and 95g/km, but at a price of around £32,000 it’s more a greener high-end alternative to a premium-badge car.
LEASING PRICE £344 PURCHASE PRICE £21,740 DRIVER APPEAL ✪✪✪✪✪ FUEL ECONOMY 65.7mpg REPAIR COSTS £2,094 RUNNING COSTS £23,712
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* Source: www.comparecontract hire.com * * Source: www.fleetnews.co.uk * * * Source: KeeResources
To read reviews of these models visit: w w w.mydrivingbusiness.co.uk
Why is this important? Every company has different requirements from its cars and vans, whether the priority is lowest costs, best reliability, or driver appeal. Best in class helps you to choose the vehicles most appropriate for your needs. Best performers in each category Any box that is shaded green means that this car or vans has the best value or top rating in that category. Key reasons to buy We have also highlighted key reasons to buy each model and the type of business need each model is best suited to fulfil. Want to know more? Full driver impressions about each car and van is available on the mydrivingbusiness.co.uk website. You can also calculate your running costs.
Skoda Superb 1.6 TDI 105 Greenline II SE
n TERMS EXPL AINED Leasing price* The best price at 3yr/60k miles – with maintenance
Fuel economy The lowest mpg car will also have the lowest CO2
Purchase price The P11D price on which driver’s BIK and employer’s NIC is based
Repair costs Includes servicing and maintenance based on 3yr/ 60k miles ownership
Driver appeal** A car rating based on how good it is to drive and be seen in
Running costs*** Repair and fuel costs and residual value over 3yr/60k miles
Vauxhall Insignia 2.0 CDTi 130 Ecoflex Tech Line
Volkswagen Passat 1.6 TDI 105 SE
LEASING PRICE £365 PURCHASE PRICE £20,490 DRIVER APPEAL ✪✪✪✪ FUEL ECONOMY 64.2mpg REPAIR COSTS £1,830 RUNNING COSTS £22,662
LEASING PRICE £371 PURCHASE PRICE £21,090 DRIVER APPEAL ✪✪✪✪ FUEL ECONOMY 65.7mpg REPAIR COSTS £1,728 RUNNING COSTS £21,930
KEY REASON TO BUY: Low CO2 Greenline II priced keenly against standard rivals
KEY REASON TO BUY: Includes sat-nav and Bluetooth as standard
KEY REASON TO BUY: Passat image is what other car manufacturers aspire to
BEST FOR: Easily the most spacious and comfortable car in its class
BEST FOR: Lowest P11D value and maybe also greatest scope for discount
BEST FOR: Best quoted fuel consumption figure and joint-lowest CO2
DRIVING BUSINESS SAYS
DRIVING BUSINESS SAYS
DRIVING BUSINESS SAYS
Skoda has now cemented a reputation for offering high-quality and high-value alternatives to established mainstream cars, and the Superb is one of its most compelling models. With more space than any rival in the rear compartment, but sharing many components (including engines and gearboxes) with the Volkswagen Passat, the Superb has its more upmarket relative beaten in many areas. One of the interesting quirks of the Superb is its dual-hinged tailgate which means the boot can either be opened as in a saloon, or another button opens the rear as a hatchback-style tailgate, improving versatility. The car has many other thoughtful touches.
The Insignia is king of the large car players in the company car market, and Vauxhall is more capable than most of playing the discount game with those companies buying in bulk. There’s also good news for smaller businesses this year with the introduction of Tech Line variants, which come attractively priced and include satellite navigation and Bluetooth integration as standard. The Insignia was launched at the start of 2009 and underwent a minor update last year. It has a broad range of Ecoflex engines, which includes a brace of fuel-saving measures, such as engine idling stop-start, improved aerodynamics, and energy recuperation.
The Volkswagen Passat probably has the most upmaket image of any mainstream large saloon, and despite sometimes seeming a little more expensive than rivals, it has always worked out more competitively in overall running costs, thanks to strong residual values and fuel-efficient engines. The 1.6-litre engine in this model is a similar specification to the one used in the Skoda Superb, while the Passat’s SE equipment grade is very well equipped for the money. It has the best quoted fuel consumption on the combined cycle at 65.7mpg – remarkable for a large car – while its competitive pricing also means it scores well for BIK tax liability and employers’ NIC.
LEASING PRICE £349 PURCHASE PRICE £20,820 DRIVER APPEAL ✪✪✪ FUEL ECONOMY 64.2mpg REPAIR COSTS £1,458 RUNNING COSTS £21,540
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n VANS
BEST IN CLASS Helping you choose the best commercial vehicles for your business n DOUBLE-C AB PICK-UP TRUCKS
Ford Ranger 2.2 TDCi 150 XLT 4x4
Land Rover Defender 2.2 TD4 Pick-up
Mitsubishi L200 2.5 DI-D 175 LB Warrior
LEASING PRICE £401 PURCHASE PRICE £21,533 PAYLOAD 1,030kg FUEL ECONOMY 25.5mpg REPAIR COSTS £3,426 RUNNING COSTS £29,268
LEASING PRICE £388 PURCHASE PRICE £19,675 PAYLOAD 1,045kg FUEL ECONOMY 35.8mpg REPAIR COSTS £3,888 RUNNING COSTS £26,694
KEY REASON TO BUY: Newest vehicle in the sector with latest hi-tech features
KEY REASON TO BUY: Unrivalled off-road ability, and permanent four-wheel drive
KEY REASON TO BUY: Market leader and unlimited mileage warranty
BEST FOR: Good value specification and equipment compared to rivals
BEST FOR: Most capable of tackling serious off-road terrain
BEST FOR: All-round appeal has made the L200 a sales leader in the sector
DRIVING BUSINESS SAYS
DRIVING BUSINESS SAYS
DRIVING BUSINESS SAYS
The Ranger is the new kid on the block in this sector, arriving as an all-new model early in 2012. Although the Ranger pick-up has been on sale for years it has struggled to compete with Japanese rivals for sales. The latest model comes in a full range of single-, exended- and double-cab variants with three engine choices and three equipment grades. This XLT comes with a range of safety equipment as standard, as well as Ford’s Quickclear heated windscreen and Bluetooth integration. Four-wheel drive versions come with a best-in-class maximum braked towing capacity of 3,350kg, boosting the vehicles credentials as a proper workhorse.
Land Rover has become one of the best known British car brands worldwide and offers a range of Defender vehicles in the pick-up sector. However, the Defender – which has its roots in the original Land Rover of 1948, is cramped and the load bay of the standard 110 wheelbase variant is rather small (the more expensive 130-inch wheelbase brings more space). Land Rover has also seen fit not to invest in incorporating airbags in the Defender’s equipment list. Hard to imagine a vehicle that doesn’t even come with a driver’s airbag on the options list. It does offer great ability in difficult terrain and strong residual values, but falls short in many other areas.
The Mitsubishi L200 still looks remarkably fresh, despite being one of the longest-serving pick-up trucks on the market. It has also spent much of that time as a best-seller, making its mark as a sturdy and reliable workhorse. But while the L200’s appetite for work is unstinting, it has also appealed to those who like their vehicles to stand out. It is a confident performer away from the main highways and its sophisticated (for a pick-up truck) 4WD selector, with the ability to run in high-range four-wheel drive without diff locks made traversing rutted tracks an easy job. Like all trucks, you become aware of its size in busy areas such as towns and car parks.
LEASING PRICE £400 PURCHASE PRICE £19,858 PAYLOAD 1,152kg FUEL ECONOMY 33.2mpg REPAIR COSTS £2,736 RUNNING COSTS £26,868
46 ❚ Summer 2012 ❚ www.mydrivingbusiness.co.uk
* Source: www.comparecontract hire.com * * Source: www.fleetnews.co.uk * * * Source: KeeResources
To read reviews of these models visit: w w w.mydrivingbusiness.co.uk
Why is this important? Every company has different requirements from its vehicles, whether the priority is lowest costs, reliability, or driver appeal. Best in class helps you to choose the vehicles most appropriate for your needs.
n TERMS EXPL AINED
Best performers in each category Any box that is shaded green means that this car or vans has the best value or top rating in that category.
Leasing price* The best price at 3yr/60k miles – with maintenance
Key reasons to buy We have also highlighted key reasons to buy each model and the type of business need each model is best suited to fulfil.
Purchase price The P11D price on which driver’s BIK (if applicable) and employer’s NIC is based
Want to know more? Full driver impressions about each car and van is available on the mydrivingbusiness.co.uk website. You can also calculate your running costs.
Payload** The mass in kg the vehicle is permitted to carry
Nissan Navara 2.5 dCi 190 Acenta
Fuel economy Lowest mpg also means the lowest CO2 Repair costs Includes servicing and maintenance based on 3yr/ 60k miles ownership Running costs***Repair costs, fuel costs and residual value over 3yr/60k miles
Toyota Hilux 3.0 D4-D 171 Invincible
Volkswagen Amarok 2.0 BiTDI 163 Trendline S
LEASING PRICE £404 PURCHASE PRICE £20,904 PAYLOAD 1,060kg FUEL ECONOMY 36.7mpg REPAIR COSTS £2,874 RUNNING COSTS £25,426
LEASING PRICE £420 PURCHASE PRICE £20,580 PAYLOAD 1,105kg FUEL ECONOMY 35.8mpg REPAIR COSTS £2,454 RUNNING COSTS £25,158
KEY REASON TO BUY: Combined rugged looks with good all-round ability
KEY REASON TO BUY: Reputation as a dauntless and reliable workhorse
KEY REASON TO BUY: Volkswagen Commercial Vehicles quality now in a pick-up
BEST FOR: Delivers the most power and payload per pound than any rival
BEST FOR: Revisions in 2012 give the Hilux best-in-class fuel consumption
BEST FOR: Best residual value contributes to lowest overall running costs
DRIVING BUSINESS SAYS
DRIVING BUSINESS SAYS
DRIVING BUSINESS SAYS
When the Nissan Navara arrived on the pickup truck market it set new benchmarks for power, performance, and refinement. The vehicle was developed alongside the Pathfinder SUV and could rightly claim to offer the least compromise for people used to driving a car. The rivals have since made up ground on the Nissan, but the Navara still has a few aces up its sleeve: revisions in 2010 ensured it was still the most powerful fourcylinder pick-up trucks on sale, while its payload of 1,125kg is still among the best, beaten only by the new Ford Ranger. Its leasing rates are also very keen, and running costs are still competitive.
The Toyota Hilux seems to have been part of the commercial vehicle scene for longer than many of us have been around. The current Hilux is the sixth-generation model, introduced in 2006, and thoroughly refreshed for 2012 with a new look and revised engines. The Invincible is the highest specification model and Toyota began using this name after an episode of Top Gear where an old Hilux was subjected to a range of damaging stunts and the engine still managed to start. It might not have the kerbside appeal of some rivals, but the latest Hilux has a solid feel and recent revisions to the engine give it bestin-class fuel consumption.
Volkswagen commercial vehicles have a strong reputation for quality and low running costs, thanks in part to often class-leading residual values. When it launched the Amarok, there seemed to be a great deal of pent-up demand for the product – many organisations running commercial vehicles seemed to have been waiting for Volkswagen to launch a pick-up truck. The result, with a relatively small allocation of vehicles for the UK, has been long waiting times, but this has now improved. The Amarok has gone straight to the top of the class when it comes to ability, and using a smaller engine than rivals, it also offers excellent fuel consumption.
LEASING PRICE £374 PURCHASE PRICE £19,142 PAYLOAD 1,125kg FUEL ECONOMY 33.6mpg REPAIR COSTS £2,604 RUNNING COSTS £26,502
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n C ARS AND VANS
NE W MODEL S
COMING SOON...
The new models you need to know about for the next 3 months BMW has finally hopped on to the luxury four-door coupé bandwagon with the 6 Series Gran Coupé, parking alongside the pioneering Mercedes-Benz CLS, Audi A7 Sportback and, arguably, the slightly more upmarket Porsche Panamera. Based on the 6 Series Coupé, the Gran Coupé is slightly longer and taller so that a
pair of usable rear seats can be liberated; with a rear bench in place. Occupants sit a little higher than in the two-door 6 Series for improved visibility, although the Gran Coupé’s dashboard architecture remains. Its positioning as a luxury model means that no Gran Coupé gets fewer than six cylinders, with the least powerful 640i
powered by a 320bhp 3.0-litre turbo straight six. However, the diesel, which most will buy, delivers a family hatchback-matching 50.4mpg and 148g/km. Despite that, it covers 0-62mph in 5.4 seconds and is limited to 155mph. A high list price (£63,900 for the 640D) means it’s hardly fleet-friendly, but in fuel cost terms that’s almost miraculous.
BMW 6 SERIES GRAN COUPÉ On sale: July
V O LV O V4 0
On sale: Summer
The Volvo V40 hatchback marks a departure for the company’s small cars. The current crop of C30, S40 and V50 will gradually disappear (first to go is the S40), while the V40 arrives this summer offering CO2 emissions from 95g/km, which is currently best in class. An estate version will follow, while the current C30 coupé will continue until 2013. Early reports suggest the V40 is a worthy rival to the new Audi A3 and the BMW 1 Series, and is ready for the arrival of a new Mercedes-Benz A-Class (see opposite) at the end of the year.
50 ❚ Summer 2012 ❚ www.mydrivingbusiness.co.uk
AUDI A3
On sale: Autumn
With a lighter body, more frugal engines, bolder styling, improved quality and more space, the A3 is about to become a far better fleet prospect. A raft of body styles are planned: three- and five-door hatchbacks, a convertible and a four-door saloon. The most frugal A3, the TDIe, will use the A1’s 1.6-litre diesel engine, and will scrape under the 100g/km CO2 mark.
w w w.mydrivingbusiness.co.uk
The new A-Class, inspired by the Concept A-Class (pictured), will be a lower, more conventional hatch-back – a rival for the BMW 1 Series. Expect body styles including two-, three-, five-door and coupé. The A-Class will offer a host of powerful, yet efficient engines: for the first time a Mercedes-Benz will produce emissions of less than 100g/km with a low of just 98g of CO2 expected from the best performing A-Class, along with fuel consumption of around 75mpg on the combined cycle. At the same time the new model underlines that for Mercedes-Benz safety comes as standard and includes, amongst other things, the radar-based Collision Prevention Assist system. Diesel engines range from the 109bhp A180 CDI, to the 136bhp A200 CDI and the 170bhp A220 CDI at the top of the
SKODA CITIGO
On sale: Summer
FLUENCE Z.E On sale: Summer
MERCEDES A-CLASS On sale: Winter
range. Petrol engines all use fuel-efficient direct injection and are also turbo-charged. Customers will be able to choose variants with AMG styling, ensuring the car will stand out even more, although there is no information yet on a high-performance AMG version.
As the budget third of a triptych with the VW Up and Seat Mii, the Skoda Citigo already has a small price advantage model for model than the identical Up and comes with the crashpreventing City Safety automatic braking function and the removable touchscreen infotainment unit.
When the electric Fluence ZE comes to market it will become the Nissan Leaf’s first proper rival, but considerably cheaper. Priced from £17,850 after the £5,000 Government grant is taken into account, the zero emissions Fluence will be £8,000 cheaper than the Leaf. Renault leases the battery to buyers, from £75 per month. The Fluence’s main disadvantage is that it’s a saloon, whereas the Leaf is, of course, a hatchback. The actual boot capacity of the two are around the same, though the Fluence’s practicality is hindered somewhat by a battery pack sandwiched behind the rear seats. On the road it is as ‘conventional’ as could be, driving like any other automatic.
HONDA JAZZ On sale: Now
Honda is catching up with some of its small car rivals by introducing idling stop-start on 1.2-litre versions of the Jazz SE from June 2012. It helps reduce CO2 emissions from 123g/km to 120g/km meaning this version of the Jazz now qualifies for annual road tax at £30 after its first year.
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