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How to start a delivery business
Customer service and time management are key if you want to deliver the goods in this fast-paced industry.
Delivery services are in demand now more than ever and will likely continue to expand into the future. But even as this industry grows, established brands dominate the market. Personalized customer service and on-time deliveries are vital to competing with the titans of delivery.
6 steps for getting started with your delivery business
With low startup costs and high market demand, creating a delivery service can be a viable option for the budding entrepreneur. To get started:
- Choose your niche
- Determine your equipment needs
- Create your business plan
- Develop your branding
- Register your business
- Grow your customer base
1. Choose your niche
Within the delivery service industry, there are several niches to choose from. Each one involves different clients, products, equipment and qualifications for your company.
Some examples include:
- Local courier. Typically involves same-day deliveries within the same city or nearby counties.
- Restaurants, groceries and online food orders. On-demand food delivery apps are mostly tied to cities, so you may be able to carve out a niche delivering in areas outside of their current markets.
- Amazon delivery service partner. Serve as the go-between for this online titan and its customers by becoming an independent delivery contractor.
- Freight courier. Heavy extra or oversized items are often shipped this way and usually require specialized equipment and vehicles.
- Medical. Can include delivering prescriptions and supplies to patients or transfering lab specimens between facilities and may involve specific training, vehicles and certifications.
2. Determine the equipment you need
Different delivery services require unique equipment. If you’re moving oversized or heavy items, you may need to invest in equipment such as dollys or pallet jacks, for example. Local delivery of regular- or smaller-sized items tends to be the cheapest as a startup since it involves purchasing less equipment up front.
Your mode of transportation may depend on your location. If you live in a major metropolitan area, you might be able to deliver by foot or on bike. In less populated areas or where the travel is greater, you may need to invest in a vehicle if you don’t own one already — preferably a cargo van, pickup truck or another vehicle with lots of interior room.
- Tip: To cut down on costs, you can use your personal smartphone as a GPS unit and business phone line.
3. Create your business plan
Identifying gaps in the current market and how you’ll fill it is the foundation of a solid business plan. For your delivery business, it should include your competition and how you’re different, your marketing strategy and your financial forecasts.
A business plan can be especially important if you’ll need to borrow money for startup costs or as your business expands. Most lenders and investors will ask to see one up front. Plus, planning out your business’s first-year goals will help you understand your targets and how much profit your company is generating.
- Tip: To help you get started, download our business plan checklist.
4. Develop your branding
A creative and unique name will help get your company noticed — and remembered. Same with your logo. The best logos are instantly recognizable and show people what your company is all about at a glance. For example, if your delivery company is environmentally friendly, go green with your branding.
If you’re using a personal vehicle as part of your courier service, consider investing in a full vehicle wrap or magnetic decals featuring your logo. Not only will your customers recognize you, but you’ll also get free marketing while making your deliveries.
5. Register your business
The first thing you’ll need to decide on is your business structure. Many startup delivery services are either LLCs or sole proprietorships. Establishing a legal entity for your business helps prevent you from being personally liable if your company is sued.
The process and associated fees for licensing your delivery service will vary by state. Also check with your local county clerk for any business license requirements in your area. Once your business is registered, don’t forget to apply for a tax ID number from the IRS.
6. Grow your client base
Your target audience will depend on your chosen niche. If you’re delivering food, your primary customer is the general public, while a medical courier will need to pinpoint office managers in the healthcare industry.
No matter your audience, most of your customers will be local to your community. Social media is a great way to get the word out, as well as attending events with large crowds or even business conventions.
The important thing is to explain to people how you will save them time or money — or both. By using a local deliverer over the established brands, you can offer customized service that the bigger companies can’t.
Pros and cons of starting a delivery business
A few potential benefits and drawbacks to consider before starting your delivery business:
- Low startup costs compared to many other businesses
- Highly scalable with consistent and growing demand
- Simple business model
- Daily physical activity
- Steep competition from established brands such as FedEx, UPS and DHL
- Risk of injury from lifting and carrying heavy objects, including back strain, hernia or pinched nerve
- Costly vehicle insurance for higher liabilities
What costs should I budget for?
When starting a delivery business, you might need to budget for some or all of these expenses:
- Mobile phones or two-way radios
- Appropriate footwear
- Dollies for lifting
- Pallet jacks if delivering heavy items
- Ratchet straps for securing cargo
- GPS units if not using smartphones
- Marketing, branding and advertising
- Software for tracking pick-ups and deliveries
- Vehicle maintenance and fuel
- Mileage notebook or app to track
- Business registration fees
- Permits and licenses
- Additional personnel
- Software for payroll and accounting
Types of financing for a delivery business
Your chosen niche will dictate the startup costs of your courier service. Local couriers and food transport may be able to use standard vehicles for their deliveries, whereas oversized cargo will need specialized equipment.
If you need some seed money to get your company going, here are some resources that can get your service off the ground.
- The Small Business Association (SBA). If your business is new and the bank thinks it’s too risky, the SBA can guarantee your loan or help in other ways.
- Amazon’s delivery funding. If you decide to work with Amazon, it offers up to $10,000 for qualified candidates to build their business.
- Crowdfunding. Access your digital network and raise money online through platforms like GoFundMe and Kickstarter.
- Government programs. State, federal and local grants and loans are often available for new businesses as the government invests in its communities.
- Partners. A family member, friend or someone else in your local area may be interested in working with you or becoming an angel investor.
- Business credit cards. Unlike a personal credit card, business credit cards often come with bookkeeping benefits, consumer protections and higher limits.
- Microlenders. If you lack access to conventional banking, a microlender can offer small-dollar loans for entrepreneurs, usually with more lenient requirements.
Between ecommerce and the coronavirus pandemic, demand for delivery services has never been higher. Making your mark in this industry is possible by carving out your niche, establishing your brand and offering specialized service. Learn more about other small business resources you may need to give your courier business a running — or driving — start.
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