I spend a lot of time discussing pricing as the biggest lever for increasing your revenue and profit.

But there are plenty of smaller dials that need constant attention when it comes to fighting the operating expense battles.

Now, there are several expenses that we cannot change or optimize.

Bank Charges – There is little we can do to bring that down.

Same with workers’ comp.

But vehicle and fuel expenses are different.

Yes, we can’t alter the $1.72/litre at the pump, but Fuel and Vehicles expenses are undermanaged expenses for most contractors and builders.

Let’s dive into fuel expenses first.

1. Inefficient or Redundant Trips

First, a checklist for consumables in your trucks or vans is absolutely necessary.

Before the guys leave the yard or their place, they must review their consumables.

A checklist stops the unnecessary trip to grab more PVC glue in the middle of a job.

A simple Jotform form helps employees complete the list and informs the office that the checklist is being completed.

Sure, it’s only a 22km round trip to grab the glue, but if a van does that twice a week for 50 weeks, it adds up:

1 Van x 15L/100Km x $1.45 x 22km x 2/week x 50 weeks = $478.50 (this doesn’t include the labour cost)

2. Optimize Routes for Efficiency and Time

There are great (and free) tools out there to use for every trip.

Google Maps: 100% free, but its optimization is limited to 10 stops.

Jobber: Built for service businesses and it’s part of their scheduling tool. So once you’ve scheduled your guys, Jobber will know who needs to go where and calculate the best route.

Route4Me: This is best for high travel vehicles with lots of stops. Priced in USD.

OptimoRoute: This is a comprehensive tool for larger operations that have increased complexity. Priced in USD.

You might know the city like the back of your hand, but your guys may not.

Plus, you don’t know where delays and construction might pop up.

Let the bots handle it.

3. Manage your Service Area

Minimizing the area you work in can save massive amounts of fuel (and not to mention travel time for your crews).

Sometimes, you can’t control where customers are calling from.

But you can control your mailer postal codes, your door-to-door marketing, and your areas for paid ads and SEO.

For customers further from your HQ, consider baking a charge for fuel into your price.

As your business grows, it is likely that your service area will increase. Monitoring the postal codes of your jobs (and creating a heat map) will help you plan and manage strategic moves in your service area.

4. Accurate Shop Inventory Management for Future Demand   

Managing your inventory for materials and consumables goes a long way to ensure you have everything you need for each job.

When you know your safety inventory levels, you’ll make orders that optimize time and ensure reasonable shipping and freight rates, and the unnecessary side trips to suppliers will be eliminated.

Alright, now on to vehicle expenses

5. Track Vehicle Repairs by Vehicle

Many contractors shy away from new vehicles, citing the cost.

But in many instances, if the vehicle is over 5 years old and is hauling and driving on rough construction site roads, I would wager that you are spending about the same on repairs as you would on a new vehicle.

Tracking repairs by vehicle is as simple as setting up sub-accounts within your vehicle account in your Chart of Accounts.

And then on the repair receipt down what vehicle was repaired.

Repeat that process for 12 months, and then you’ll have good data to financially justify a new vehicle.

Sidenote: It’s not lost on me that most of you can repair your vehicles.

But don’t get caught spending 8 hours on a Saturday repairing a vehicle to save $600 in mechanic costs.

Those same hours can be invested in marketing and networking for better leverage.

6. Buy The Same Type of Vehicle Repeatedly

If you have a fleet of vehicles (that can be as few as two vehicles), you want to minimize the difference between the vehicles.

I know that doesn’t sound sexy, but profitable businesses are boring.

Truck Caps, winter tires, and accessories are cheaper when you can buy them in bulk and easily switch them between vehicles.

Similar vehicles also allow for faster self-repairs: I’m talking about bulbs, oil changes, wiper blades, and filters. For everything else, see point 5.

7. Don’t Set and Forget about Vehicle Insurance

I get that vehicle insurance is a nuisance on many levels.

And that you might be happy with your broker. Maybe you have a long-term relationship with them.

But get in the habit of shopping around for better insurance rates every year.

Premiums creep up annually, even if you don’t have any claims.

Compare quotes of 3-5 commercial insurers about 2 months before renewal time.

Brokers are hungry for clients, so put most of the work on them to get those quotes done.

Ways to lower your insurance rates include:

1. Install GPS or Telematic trackers
2. Limit off-hours or personal use
3. Bundle vehicles and larger tools for lower combined rates
4. Monitor employee driving history to help maintain a clean, corporate driving record.

Hope this has sparked a few ideas to tame your fuel and vehicle costs.