Contract hire for new startup

[biglepton]

With my business partner (and a chunk of the banks money) I am starting up a new software company. We need to lease/contract hire one car pretty much immediately, another in a few months and then another after that.

Can anyone suggest a good leasing company who are happy to supply new startups without too much fuss or any tips on how to go about this? Any advice greatly received!

[Olf]

YHM

[khushy]

surely a personal car is more tax efficient!!!!

khushy

[Eric Mc]

Why do you want to spend money on company cars so early in the business startup? Sounds rather rash to me.

[biglepton]

khushy said:

surely a personal car is more tax efficient!!!!

khushy

It is, but the user prefers a company car for several personal reasons.

[biglepton]

Eric Mc said:

Why do you want to spend money on company cars so early in the business startup? Sounds rather rash to me.

The salesman we are employing may object to catching the bus to his meetings. . . . .

[Eric Mc]

He could use his/her own car.

[biglepton]

Eric Mc said:

He could use his/her own car.

Thanks for that Captain Obvious!

We are poaching him from a large and well-established competitor who currently provide him with a company car so there is already an element of risk in the move for him - asking him to expose himself to personal liabilty for a two or three year contract for a car when he is also having to relocate home to work for us was a step too far. His personal preference was to retain a company car rather than self-provide, even though it is not the most efficient way to do things ultimately.

[Eric Mc]

He must be good.

I hope it all works out for you (really).

I have seen what can happen though. Company decides to lure someone they really want away from another employer. As bait they dangle a top end car as part of the package. They buy/lease the car over a three/five year period only to find that the new employer isn't quite what they thought or that they just don't get on with the individual. The individual leaves after a relatively short while but the business is left paying for an expensive car that no one remaining in the company wants or needs.

Just be careful.

[japhilip]

As a new startup you'll find it harder to be approved for the finance than if you have 3 years history.

It's not impossible, but the finance companies will ask for a lot more supporting information, and may well require personal guarantees from the Directors. Also, you'll have to pay 6 months as the first payment, rather than the normal 3 (Very unlikely to be any different).

You'll need to supply things like a comprehensive business plan, forcasts, history (if any), possibly CV's of the Directors.

Each finance company's requirements is slightly different, but if you like, I could give you a list of the likely requirements. PM me if that's the case.

[lanan]

Eric Mc said:

He must be good.

I hope it all works out for you (really).

I have seen what can happen though. Company decides to lure someone they really want away from another employer. As bait they dangle a top end car as part of the package. They buy/lease the car over a three/five year period only to find that the new employer isn't quite what they thought or that they just don't get on with the individual. The individual leaves after a relatively short while but the business is left paying for an expensive car that no one remaining in the company wants or needs.

Just be careful.

This happened to me 10 yrs ago. the Chap concerned pledged allegiance and stated that he had no interest in leaving my employ.
I leased him a new estate car of his choice and colour....two months later he quit...!
I then had almost three years lease on a car I had no use for, Now I only buy vehicles and then can sell them if circumstances change.
Graham

[biglepton]

Eric Mc said:

Just be careful.

I can understand your caution but this is my seventh new startup and the other six are doing pretty well! I will probably end up doing a three month rental while he proves himself and then maybe a 12 or 24 month CH. If he leaves I'll have to replace him or if all else fails I can pass the car onto someone else, so I shouldn't end up stuck with it.

I'm familiar with conventional contract hire on businesses that are not new startups but I have noticed a lot of companies popping who say they specialise in new startups or non-status CH and I just wondered if anyone on here had any experience of them.

[japhilip]

biglepton said:

Eric Mc said:

Just be careful.

I can understand your caution but this is my seventh new startup and the other six are doing pretty well! I will probably end up doing a three month rental while he proves himself and then maybe a 12 or 24 month CH. If he leaves I'll have to replace him or if all else fails I can pass the car onto someone else, so I shouldn't end up stuck with it.

I'm familiar with conventional contract hire on businesses that are not new startups but I have noticed a lot of companies popping who say they specialise in new startups or non-status CH and I just wondered if anyone on here had any experience of them.

Ah, ok. I'd hazard a guess that they're more expensive if they're specialising in that area. (It's kind of like sub-prime, except it's not poor history, just lack of it). COnventional CH companies would do it, if you have someone you've used before and are happy with, I'm sure they'll be more than willing to advise/quote. I've had dealings with a company called 'Short Lease' (I think, I'd have to dig out the details) who specialise in a limited range up to terms of 12 months. They're OK, and are less stringent as the lease is short term. Monthly rentals are high (relatively), but that's the price you pay for a short term lease.

[biglepton]

japhilip said:

Ah, ok. I'd hazard a guess that they're more expensive if they're specialising in that area. (It's kind of like sub-prime, except it's not poor history, just lack of it). COnventional CH companies would do it, if you have someone you've used before and are happy with, I'm sure they'll be more than willing to advise/quote. I've had dealings with a company called 'Short Lease' (I think, I'd have to dig out the details) who specialise in a limited range up to terms of 12 months. They're OK, and are less stringent as the lease is short term. Monthly rentals are high (relatively), but that's the price you pay for a short term lease.

For the reasons pointed out in other posts, I don't mind a higher monthly payment for less exposure. I'll try my current supplier and a couple of others and see how they compare.

[khushy]

biglepton said:

khushy said:

surely a personal car is more tax efficient!!!!

khushy

It is, but the user prefers a company car for several personal reasons.

So the "user" prefers to pay more tax to Mr Brown - errrrrrrrrrrr I dont think so - either he/she is a numpty (LOL) or they dont actually understand the tax implications!!!

No offence meant by the way!!!

Khushy

[Carsie]

I can understand where you're coming from and hear Eric's comments. Why not suggest to the prospective employee a car allowance? PCP contracts are very popular and its not unusual to apply for a PCP because of a new job.

The benefit to you would be off balance sheet funding, a variable cost if he/she leaves and of course no credit application on your new company record with all the attendant PG's

Benefit to the prospective employee would be to drive what he wants, you could make it conditional e.g no Hyundai Lantras

Good business is risk carried both ways.

[biglepton]

khushy said:

So the "user" prefers to pay more tax to Mr Brown - errrrrrrrrrrr I dont think so - either he/she is a numpty (LOL) or they dont actually understand the tax implications!!!

No offence meant by the way!!!

Khushy

None taken. The user prefers to pay more tax in return for no personal liability on a debt of £20k when joining a new startup company which he has no guarantee will be there in three months leaving him with the rest of the car contract to be paid off by him. If he joins and we go bump, he doesn't want to be paying for a car he doesn't need.

[biglepton]

Carsie said:

Good business is risk carried both ways.

I agree - our risk is signing up to a company car contract for him, his risk is leaving a big safe blue-chip for a new startup. He's not keen to join a new startup and make himself personally liable for the payments on a £20k contract. If he leaves I can pass on the spare car to another business of mine.