9 Things You Need to Start a Delivery Business
If you like the idea of starting your own delivery business, don’t be discouraged by powerhouse national couriers like UPS, FedEx, or the USPS. There are numerous local niches that may be better served by a local courier that knows the area well and is dedicated to serving the local delivery market.
Often, it’s the small local delivery service that can get things delivered quicker, and perhaps offers same-day delivery. Smaller couriers may specialize in a particular kind of courier service such as pharmaceuticals, food, or documents. Decide if you will be using cars, trucks, motorcycles, bicycles, drones, or some combination of these.
If you have zeroed in on a particular marketplace need in your area for a courier service, here are the things that you will need to get your business off the ground.
- A Business Plan
Regardless of which kind of delivery service you plan to establish, you need a plan. It’s
important to research and outline these essential concepts:
A Name for Your Business
Find a catchy and memorable name for your new activity and register it. Before registering your business name and logo, check local, state, and federal business records and trademark licensing.
Your Target Market
Are you planning on specializing in a specific courier service? Consider partnering with local businesses such as restaurants, bakeries, butchers, pharmacies, flower shops, or even legal studios to ensure regular income.
Startup Costs for Equipment, Insurance, Employees, and Logistical Needs
Create your business budget. This will include insurance for a vehicle or several vehicles, business insurance coverage, fuel, communication, marketing costs, licensing, telephone system, and general equipment. You may also need a place to park your vehicle/s, an office, or even a small warehouse at some point.
Geographical Boundaries and Business Hours
Determine your business hours and within what geographical area you are willing to deliver in.
Monthly Business Expenditures
Consider fuel and vehicle maintenance above all. You may select to pay monthly premiums for your insurance costs. Also, consider the depreciation of your vehicle and equipment.
Pricing for Your Services
This can be tricky as you will need to research what the average delivery prices are in your area. Will you charge by the mile or by the hour? Consider if you will charge extra for fuel on longer deliveries as well as for rush deliveries or special cargo. Also, consider creating package deals, or a customer loyalty program.
Marketing Expenses
If potential clients don’t know you exist, you won’t get any business. Fliers, business cards, a website, and ads will all need to be calculated and included in your startup costs.
- Legal Stature
This is a business, so for tax purposes and your own protection, you need to legally establish your business. You may want to create a Limited Liability Company (LLC) or a small corporation to protect you from personal liability if things go wrong or you are sued for some reason.
- Business Tax Registration
As you will be required to pay local, state, and federal taxes, you will need to register with tax authorities. Before establishing your business’s legal stature, check out what kind of business will afford you the best deductions.
Will it be an LLC, a small corporation, or a sole proprietorship activity? Do the homework before you choose to avoid unpleasant surprises that will eat into your profits. Also, check if you are required to apply a sales tax on your services.
- A Business Bank Account
To protect your personal accounts and property, it’s crucial to open a specific business bank account with a relative business credit card or checking services.
If you use your personal accounts for business purposes, your personal property and monies will be at risk of freezing or foreclosure if your business is sued. It’s important that all banking and credit is done in your business’s name and not yours.
- An Accounting System
You need to establish from day one an accounting system for your business so that you can manage cash flow and evaluate performance, making necessary changes quickly to protect your profits. Paying taxes and benefiting from business deductions will also be facilitated.
- Business Licenses
Depending on where you live and plan on working, your state or local municipality may require that you need a license for your delivery business. Your county, city, or town clerk will be able to aid you with the required permits.
If you will be working near a state line and perhaps delivering in at least two different states, ensure that you register your business vehicle for this purpose.
- Business and Commercial Vehicle Insurance
Business insurance is vital to operations. There are several kinds of insurance coverage that you will require to legally run your business. Delivery car insurance will protect your vehicle/s, as well as drivers, property in the vehicle, and responsibility to third parties.
You will also need business insurance to protect the company in case you suffer damage or a loss. Start with general liability insurance. For employees, you’ll need workers’ compensation insurance to protect your business assets and profits.
- Storage Space
Most delivery services will need some type of storage space for packages and this space will also require a reliable security system.
- Equipment
Apart from vehicles, you’ll need other equipment, especially when organizing your storage space. Shelves, office equipment and supplies, ratchet belts, cell phones, GPS units for vehicles, a dolly, two-way radios, and perhaps even uniforms together with anything necessary for good organization and performance on the job.
Offer your customers great service, loyalty incentives, and competitive prices, and you’ll create a loyal customer base that turns to your new company for all their delivery needs.
