As a small or mid-sized business owner, the idea of having a fleet of company cars may be at once appealing and intimidating. The idea that your company is successful enough to afford a fleet of vehicles for key employees is decidedly attractive, but worrying about the cost of acquiring and maintaining the fleet may be enough to dissuade many of you from taking the plunge.

“It’s a costs vs. benefits question, like almost every other decision facing a business owner,” says Daniel Egan, a Boston-based business consultant. “Company cars offer specific benefits, but those benefits don’t apply equally to all businesses.” The first step, Egan notes, is to become educated about the benefits. “Too many business owners are just too scared of the costs they think will be involved,” he explains. That fear keeps them from even exploring the idea. “It’s unfortunate because car manufacturers and dealers are very eager to tap into the small business market,” Egan says. That eagerness has translated into a wide variety of special pricing deals available for leasing and purchase of vehicles. “There’s not a major manufacturer who doesn’t have some sort of lower-cost plan for smaller businesses,” Egan says.

Employee Retention

Any business that relies on “star” employees, who possess critical skills or exhibit high performance, should consider offering a company car as a bonus to those employees. “Attracting a superstar employee can be a real challenge. Keeping one can be even harder,” Egan says, noting that the market for skilled employees in some industries—like information technology, medicine, sales, and engineering—is so intense that competitors are apt to start wooing your best employee the first day he or she starts working at your firm. Offering a job perk like a company car may cost money in the short term, but if it keeps a valued employee at your firm, it may pay for itself many times over.

Image/Advertising

Company cars not only provide transportation for your employees, they act as mobile billboards promoting your business. Witness the black, white and orange VW Beetles favored by Geek Squad, the computer support and repair division of electronics retailer Best Buy. Every time one of these vehicles speeds down the highway, it reminds other drivers of the service— and by extension, of Best Buy. It’s mobile marketing. H

Having your business’s name, logo, and phone number (or website) emblazoned on a van or company car can often be more effective than an ad in the newspaper or yellow pages, since the sight of your company’s vehicles will familiarize potential customers or clients with your business while they go about their daily activities. For instance, a homeowner that has a plumbing problem is likely to recall the name of the plumbing business whose vehicles he or she has seen recently in the neighborhood.

If your company relies on projecting a certain image, company vehicles can often justify their expense by underscoring that image with your customers. If your employees often visit your customers at their homes or places of business, this can be critical. Upscale cars promote an image of success that would otherwise be undermined by older, low-cost models. Professional vans or trucks promote an image of stability and competence. Maintaining your company’s image can dramatically affect your bottom line.

Obviously the vehicles you choose will have a significant impact on the cost of building a fleet. But before you dismiss the idea out of hand, make sure you’ve researched the available deals and carefully considered the benefits. You may find that company cars make more sense than you thought.