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Issues to consider when producing your 2018 business plan

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University of Buckingham Business School's Colin Tourick gives advice on how to set out your 2018 business strategy with a cunning SWOT analysis plan.

Many fleet management and leasing company managers will be busy now preparing their business plans for 2018 and many of those plans will include a consideration of strengths, weaknesses, opportunities and threats (a SWOT analysis).

The SWOT analysis first appeared around 55 years ago when a project team at Stanford Research Institute was looking for a better way for large corporations to produce business plans.

They felt business planning was a haphazard affair and clearly their approach worked because SWOT analyses are now commonplace.

In a SWOT analysis, a company sets out how it will capitalise on its strengths, minimise its weaknesses, embrace new opportunities and tackle threats.

Strengths and weaknesses therefore involve an internal focus, while opportunities and threats relate to the market.

Here we look at some issues you might like to consider when producing your 2018 business plan.


This is where you list the things that give your organisation a competitive advantage.

That great IT system?

Your highly-motivated people?

That unique product your clients seem to love?

Low cost of funds? A route to market for used vehicles that delivers high prices?

Your proprietary credit scoring system that allows you to underwrite an applicant in seconds?

The industry’s great strength, from which everyone benefits, is the enduring demand for vehicle finance and management solutions from businesses and – increasingly – private individuals.

There is no reason to think this will not continue to be a strength.

Another great strength is stability. Most leasing and fleet management companies have been around a long time, have tried-and-tested systems, good experience in managing risk, lots of expertise in delivering solutions, good staff knowledge and a proven ability to deliver what they promise.


You don’t have weaknesses? Every business has weaknesses! Those things that go wrong and cost you money.

High staff turnover?

Vulnerability to cyber attack?

Poor return on equity?

A low conversion of quotes into orders?

Customer complaints?

Difficulty collecting excess mileage or damage recharge charges?

This is the place to be honest and list your company’s weaknesses, so you can commit to dealing with them and obtain the budget to do so.

Next let’s consider innovation. How innovative is your business?

Lack of innovation is a perennial problem in our industry. For too many leasing companies, ‘innovation’ involves catching up with things their competitors are already doing.

How will you drive innovation into your business? One option is to look at the financial technology (fintech) world.

Skilled graduates are pouring out of universities and business schools, full of good ideas but without the resources or contacts to develop these into fully-fledged solutions. Could you tap into some of that creative energy?

Staff knowledge can be a weakness, too. This is a complex, multifaceted industry and people in one part of a leasing company may know little about what happens elsewhere.

There can also be an over-reliance on key individuals and problems arise in their absence.


There is a temptation to list here all the things you will do to correct your weaknesses.

However, that’s not how to use this section. Opportunities should be strategic: outward-looking, big steps that will make a marked difference to your operational effectiveness, turnover or bottom line profit (or preferably all three).

Move into new markets? Discontinue unprofitable activities?

Incidentally, the Stanford team recommended that you should canvass staff opinion on the changes they think you should effect, because small changes can deliver big results.

Your plan should say how you will improve customer satisfaction. Your competitors have great product portfolios and service standards.

How will you keep ahead? IT enhancements with better customer self-service?

Faster credit underwriting of SMEs? Fully integrating mobility services into your core product offering? Becoming multi-national – or at least setting out to meet the needs of your multi-national clients? Using data from connected vehicles more effectively?

You should also say how you plan to improve the return on your shareholders’ investment.

You might look at using resources more effectively (e.g. boosting the number of vehicles without adding to headcount); putting as much online as possible to encourage customers to make requests and produce reports without your intervention; reorganising your back office processes so they are best of breed; making sure your quality management system identifies process shortcomings and highlights where improvements must be made; improving your pricing so more of your quotes convert into orders (while not giving away margin unnecessarily); outsourcing (partnering with others who can deliver services more effectively than you can); looking for alternative sources of funding (securitisation or quasisecuritisation may not have the best reputation when it comes to sub-prime mortgages but they certainly have a role to play in reducing money costs for leasing companies); in fact, the list is endless.

The key thing is to approach this section as if you were the shareholder. You would of course like to see a rapid upturn in return on equity (ROE), so what should the management be doing to make that happen?


It seems there was a golden period when there was no need to have teams of people beavering away ensuring everything was compliant; demand for contract hire just grew and grew; setting residual values (RVs) and service, maintenance and repair (SMR) budgets were a straightforward affair and the economy was buoyant and faced no major uncertainties. Those days have gone. Uncertainties abound.

Top of the list must be Brexit. Will it be hard or soft? What impact will it have on the economy – GDP, employment, unemployment, interest rates, Sterling, inflation, new and used vehicle prices – and how will this affect your clients and your business?

Next, we need to consider the growing demand for mobility services. Fleet managers and finance directors know these are being developed and are keen to reap the benefits.

If you’re in the vanguard of companies that will be offering integrated mobility solutions you’ll have a great opportunity.

But if you are simply waiting to see what happens you could well be left behind, losing existing clients as a result. So mobility could be a threat for those who don’t embrace it as an opportunity.

Regulation offers significant uncertainties. The Government is under pressure to clean up the air we breathe, particularly in cities.

They will encourage local authorities to act on air quality but this is unlikely to produce the rapid change that could be delivered by, say, a change in the taxation system.

Here we could be talking about changes in vehicle excise duty (VED), benefit-in-kind (BIK) tax, national insurance (NI), capital allowances or even VAT.

If the Government acts to clamp down on the purchase of diesel-engined vehicles what would this do to the value of used vehicles coming off lease, and how could leasing companies mitigate any adverse effects?

The other regulatory uncertainty relates to the reviews commissioned by the Bank of England into point of sale motor finance and the resilience of funders to sharp downturns.

Much of that work relates to dealer-introduced motor finance transactions but there is a possibility (probability?) that any recommendations will affect leasing and fleet management companies (and brokers).

There are also longer-term threats. Will you have access to data emanating from manufacturer-installed systems in connected cars? Will you be able to project the RVs of the plethora of new electric vehicle (EV) models planned in the next few years?

Take up of EVs by fleets to date has been slow, so any RV and SMR budgeting errors have been modest. But, once new electric vehicle sales have reached 20%, 30%, 40% of the total – with each car coming to the market with a different engine and a different projected battery life – how will you manage the RV and SMR cost risks?

And, further in the future, how will the advent of fully autonomous vehicles affect the sector generally and your company in particular?

The landscape for fleet leasing companies has never been so fascinating. The annual planning cycle offers the perfect opportunity to reflect on how to shape your business to meet the challenges of an uncertain future.

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