How to start a courier usiness

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How to start a courier usiness

  1. 1. How to start a...Courier companyBy Michelle HammondTuesday, 28 June 2011 Courier companies provide a valuable service, delivering important packages to companies andindividuals alike. With high customer expectations, competition is fierce.The rise of e-commerce has seen courier companies become even more eager to deliver. It’s therefore crucialyou package your offering correctly in order to nail the competition. StartupSmart provides a snapshot of theindustry.What is it and who is it suited to?A courier company delivers messages, packages and mail, and is distinguished from an ordinary mail service byincreased speed, security and tracking.As a premium service, couriers are usually more expensive than regular mail services, and their use is typicallyrestricted to packages considered important enough to warrant the cost.Courier services operate on all scales, from within specific towns or cities to regional, national and globalservices.In cities, bicycle couriers or motorcycle couriers are common but for consignments requiring delivery over greaterdistances, this may often include trucks, railways and aircraft.Most people who start up in the courier business have a good knowledge of the industry, having already workedin it. You need to have an understanding of the market and know your finances.You also need to be able to provide good customer service and relate well with clients and staff on a day-to-daybasis.Rules and regulationsThere are no specific laws attached to courier businesses. However, there are insurance issues you need to beaware of, in addition to health and safety standards.It’s also worth noting the new regime for motor vehicle fringe benefits tax. Changes to the FBT saw the differenttax rates applied to 570,000 cars, purchased on salary sacrifice, replaced with a single 20% FBT rate.Earlier this month, a Senate estimates hearing was told by Treasury the reform would create fewer advantageousconditions for about 60% of the current users of such cars.“We estimate around 60% of cars are travelling distances of 25,000 [kilometres] or more and therefore would beimpacted by an increase in the statutory fraction,” a Treasury spokesperson said.“A bit less than 15%, we estimate, are travelling less than 15,000 [kilometres] a year and would see a benefitfrom a reduction in the statutory fraction.”Research and competitionNewcomers to the industry are encouraged to join an industry body; the Logistics Association of Australia is oneexample.The association’s current membership comprises logistics professionals managing supply chain, operations,transport, contracts, distribution centres and inventory. This is in addition to consultants and educators, andservice, systems and equipment providers.
  2. 2. The LAA also attracts professionals in sales, marketing, purchasing and manufacturing. With the impact of e-commerce on the supply chain, IT professionals, financial controllers and strategic planners are also involved.“The LAA is the ideal forum for the interchange of ideas networking and personal/professional development of allthose who join,” the association says.Even if you think you are familiar with the industry, it’s important to research the area where you’re looking to setup.Looking at your competitors’ prices will help you decide what you can afford to charge and whether it’s possibleto undercut them.It will also help you to see if there’s a niche in your area. For example, you might be near an airport and canfocus your business there or, alternatively, you may focus your attention on delivering items such as foodstuffs.When it comes time to design a company logo, a recognisable image will make it look like you’re everywhere,even when your numbers are few on the road.It’s also worth reiterating that your couriers are the public face of your business. They’re the ones who are outmeeting your clients and who can therefore make or break your business. Strong support at your end can helphead off potential trouble.Costs and earningsVehicles and staff wages will probably be your biggest expenses. Start-ups can generally expect to start makinga significant profit after their third year of trading.If you’re known on a local level as a reliable and friendly service, word of mouth could carry your fledglingbusiness a long way. An individual courier can earn up to $60,000 a year.An average dayAccording to a regional manager for Express Couriers Limited, every day in the industry is different, but a lot ofhis time is spent communicating with people across his region.“There are meetings on how we are performing operationally…I also meet customers or influencers to try to opendoors for our sales team to generate new business,” he says.“My role gives me many opportunities to do different things. For example, I can be talking to a courier one minutethen to the CEO of one of our customers the next. The variety is enormous.”Industry Sector: Courier ServiceWriting the business planBusiness Guides HomeCost CalculatorIndustry SectorsSectors A - DSectors E - ISectors J - RSectors S - ZSector overviewsSantander Business Banking HomepageAs part of your business planning you will need to thoroughly research the sector in which your business will operate.What is the Plan for?There are two reasons why a Business Plan is produced.First of all, anyone that you are going to approach for funding for the business needs to see that your proposal has been carefullyresearched. They will want to knowhow the business will operate;why you consider that it will be successful; and
  3. 3. what financial performance to expect.Secondly, but no less importantly, you need to set out clearly your objectives and targets so that you can monitor your ownperformance once the business is up and running.What should I put in the Plan?History of the business. If the business has been up and running for a while and now you propose to expand, or change direction,you should include some details ofwhen it first started;how it has performed financially; andhow the new project will build on the existing business.The proposed business. You should include in this section an outline of the business you plan to set up, sayinghow it is different from its competitors;what are its unique features (the Unique Selling Point, or USP); andwhy customers will choose your business or products.The market research you carried out as part of estimating your cash sales will help you with this.Who will manage your business. Anyone lending money for your business will want to be reassured that you and anyone elseinvolved in running the business will have the necessary management skills. You should include details of previous managementexperience, identifying strengths and recognising any weaknesses by saying how you will overcome these.Your market. It is very important that you identify the sector of the market that your business will operate in and whether this isgrowing, static or contracting. You should set out your strategy forwinning market share and keeping customers loyal to you;identifying who will be your major competitors and how you will deal with any possible threat to your business;pricing, advertising and selling.Practical matters. In this section you should coverwhere the business premises will be;the equipment you will need;where your supplies will come from; andother operating details.The figures. As well as a business plan, you will also need to complete a cash flow forecast and a profit and loss forecast for your newbusiness venture. You should include notes explaining all the reasoning behind the figures you include.These notes should identify anything that might affect these forecasts, to demonstrate that you have anticipated the possibility thatthings may not go exactly according to plan. (Your accountant will be able to help you with these forecasts.)The future. You should outline how you see your business growing and developing in the future. If you are looking to raise money foryour venture you should include details of how much you will need and how the money will be repaid.Dont forget to make your business sound interesting to a prospective investor by stressing its unique features and demonstrating howwell you have researched the market.Starting a courier driving service does not require a lot of startup or overhead costs, but it does require you toplan ahead so you can maintain a steady stream of clients. Couriers deliver a variety of items, includingpackages, letters, human organs, signed documents, medical records and other items. The reputation of acourier can be a powerful marketing tool, so it is important to always deliver these items on time and at areasonable, but practical price.Sponsored LinkMake Huge income at HomeSign Up to XForex ™ And Learn How To Increase Your Monthly Income.www.xforex.com
  4. 4. Step 1Draft a business plan that outlines each stage of your business development when setting up a courier drivingbusiness. Use the first section to describe the day-to-day activities of your operation. List the types of servicesyou want to provide, such as package/letter, human organ or time-sensitive materials delivery. List your hours ofoperation and whether you will offer different delivery options, such as one-hour delivery or overnight service. Inthe second section, list all startup and overhead costs, such as car maintenance, gas, employee wages, if youare hiring employees, and rent if you are opening a storefront. In the third section, list ways to market your courierservice. In the last section, provide an estimate of your first years earnings and the number of courierassignments you will have to complete to achieve this goal.Step 2Lease or purchase a delivery vehicle. If you plan to use your own vehicle, take it to a reputable mechanic for a fullinspection to ensure its reliability. Depending on your budget, lease or purchase a fuel-efficient vehicle with lowmileage. Lease retail space or create a home office. If you create a home office, contact the local zoning office todetermine if you can legally run a business out of your home.Step 3Purchase materials and equipment for your courier business. Materials and equipment include cell phones, two-way radios if hiring one or more employees, office supplies, such as envelopes, pens, pencils, notebooks, a GPSunit and computer software to track pick-ups, deliveries, invoicing and bookkeeping. You may also want topurchase gas cards for employees and ledgers to track gas usage and miles driven each day.Step 4Contact local businesses to market courier services. Lawyers, banks, corporate offices, notaries, hospitals,medical offices and individuals in your community may all have a need for a courier. Create a brochure thathighlights your courier information, such as services, hours, delivery options and contact information. Createbusiness cards, fliers and postcards to send to prospective clients. Advertise your courier services in online andprint business directories. Attend local trade shows and small business conferences to network with potentialclients.Step 5Hire one or more employees if you want to manage the office and leave the pick-ups and deliveries to others.Conduct a criminal background check and credit check before hiring anyone to work for your company. Makesure all employees have clean driving records and reliable transportation if using their own vehicles.Step 6Develop a pricing structure for items delivered. For example, you may charge less for letter delivery than for aheavier package. If you are offering same-day or one-hour delivery, consider the time and effort it will take toprovide these services and price them accordingly. Take into consideration the cost of gas and vehiclemaintenance when creating a price structure.

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