to buy or not to buy, that is the question
Hello, i recently started a shuttle company for tourists and have yet to see my first day of business. I currently have 1 bus and look to collecting passengers in 2 weeks.
I have been contracted by a large 3rd party tour company to sell my tour for me and am projecting a decent amount of people to use my service due to its low cost, high demand, and uniquness.
Im considering buying a second smaller bus as a back up for the larger bus which is a bit more unreliable due to its mileage. But this would cost a larger invest than previously anticipated. Im left with these following options and was hoping to get someones best opinion on it:
Option 1) Buy a smaller 15 passenger bus to suppliment extra passengers or serve as a back up in case of break down
Option 2) Buy a 25 passenger bus, get my CDL and have a back up bus in the future or newer bus to swap out for old bus later
Option 3) Do not buy any new bus and run operation and hope there is not a break down
Option 2 is the most expensive probably increasing my monthly break even by 1000$ (about 21% increase)
Option 1 is slightly cheaper and would increase my monthly expendature to about 700$ (about 15% increase)
Option 3 costs nothing now but in the event of a full bus breakdown i stand to lose 1000$-2500$ per breakdown not including lost business days and refunds
It sounds like you’re trying to manage your costs (expenses) while reducing your risk. Smart thinking! Here are two other options that you didn’t list.
– Lease instead of buying a 2nd vehicle. Lease payments are much less than purchase payments, even for a new vehicle and will help keep your overhead down. In addition, when you’re further down the road (say 3 years from now) you can always buy out the lease when you have more cash on hand. Leasing a vehicle will allow you to get a nicer vehicle (that will last longer) and still keep your monthly payments low.
– Don’t get a 2nd vehicle at all. Instead, talk with local auto rental places to make a deal with one that they’ll rent you an ’emergency’ vehicle for a fixed rate. That way you have a back up plan without having to pay for a new vehicle now. Your primary vehicle may last. If not, your ‘rental company’ can rent you a vehicle until your primary vehicle is repaired or replaced. (Tip – negotiate the price now, when you’re not in a bind, so that you don’t have to pay top rates in an emergency).
Best of luck to you!