Successful SME Market Makes Demand for Vans

Demand for vans in the UK has been driven up by buoyant SMEs that are looking to expand as market conditions improve. There are a number of factors currently affecting SMEs that are making it an ideal time to either buy or rent vans for their business operations.

Firstly, small UK based businesses are finding it easier to launch with less starting capital than ever before thanks to the benefits of leasing key goods and equipment such as office space and communications hardware as well as vans and cars. According to a study recently published by O2 Business, on average small businesses founded in the last three years only needed £17,000 in working capital during their first year of trading.

"Small businesses still struggle to grow due to a lack of funding, but the good news is that many looking to start up have a number of alternative options open to explore - such as leasing - which can work out far more cost-effective in the long run," said Paul Lawton, general manager of SMB at O2.

O2's research found that of the SMEs surveyed, 18% said that vans or cars were their primary consideration for renting.

SMEs are also finding it easier to secure financial assistance in order to refit their vans or hire/purchase new ones. Various autolease firms have been steadily pumping several billion pounds of financial muscle into the SME market over the course of the last two years and many have pledged to increase their assistance for these businesses going forward.

This is a significant boost for SMEs considering that according to the Federation of Small Businesses (FSB), the number of small businesses that have used a bank overdraft or loan has fallen in the past two years. It is unclear whether the chief factor responsible for this downturn is an unwillingness of banking groups to take risks on smaller enterprises or simply that more SMEs are trying to avoid taking out bank loans at uncompetitive interest rates. Regardless, the alternative financial assistance is proving to be massively helpful in fuelling the demand for vans used for commercial purposes.

Another factor that is making van hire/purchases a more attractive prospect is the fact that Chancellor George Osborne decided to cancel his proposed 3p hike in fuel duty for the most recently announced budget. After sustained lobbying and pressure from various motor groups and public figures, he decided that fuel duty would remain frozen once again.

For SMEs this was a decision with serious consequences. For a small firm with around 20 transit vans the proposed fuel hike would have increased their annual fuel bills by an estimated £4,000 per year.

Chris Chandler, principal consultant at Lex Autolease, said: "Small businesses throughout the country rely upon their vehicles to carry out their day to day activities. A three pence rise in fuel duty would have delivered a significant blow to small businesses, many of which are already facing challenging economic conditions and rising costs."

"While it is important to keep an eye on the prices at the pump, companies need to focus on factors that they can control in order to minimise costs and offset the rise in fuel duty, such as carefully monitoring driver behaviour.

These factors combined mean that it's an excellent time for SMEs to consider what their current and future transport needs are and whether an expansion of their vehicle pool is not only possible, but necessary.

Jamie writes for

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