A savvy delivery start-up can make big profits
A savvy delivery start-up can make big profits
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Getting on the right path to start a profitable delivery business

The courier market is thriving and while it is a tough sector, there’s a lot to offer savvy mobile entrepreneurs. Here’s some advice to help you become one of the happy few to launch a successful – and profitable – delivery business.

Although the delivery and courier industries are dominated by multinational logistics, enabled by the internet, there’s still room for small businesses. The fact that new delivery businesses are starting up every day is proof of this.

What do today’s small delivery businesses do?

At first glance, starting a courier company seems as simple as getting a cell phone, publishing a few online posts, and a van. Maybe even a little office. And therein lies the appeal! It’s why vans with new logos advertising their delivery business seem to be popping up all the time. Being small in the industry may then seem daunting, but it also presents a number of advantages. The delivery market is more customer-led than ever. If a delivery service doesn’t meet their wants or needs, they’ll find another. And what’s more agile, more ready to meet specific customer needs – and with a personal touch – than something small? 

For this reason, opportunities still abound for delivery start-ups. One only has to know the business inside and out…

To get started on the right path, get real experience in the industry

Nothing can replace first-hand experience. Starting from nothing, without any experience delivering packages – whatever they might be – is a daunting task, and not recommended. If you don’t have experience working as a deliveryman or in delivery logistics, look for a job, either with one of the big multinationals or a smaller, more local business. 

Most start-ups – from founder to employees – are staffed with industry veterans. They already know how things work. Going into a business without that knowledge, against those that do, is far from impossible, but it’s a big risk.

Find the capital to cover start-up costs

Experience will come in handy when estimating income and costs. All of this information will go into your business plan, where you’ll balance a budget. This is also what you’ll present to obtain a loan or capital investment.

Your start-up investment will have to cover both monthly expenses and a contingency fund to keep you afloat until you’re profitable – which could take several years. If you follow these steps and encounter some luck, you’ll start making significant profits after three years. Have funds on hand to ensure your business remains operational until then.

Equipment

One of the advantages of opening in this industry is that equipment costs are generally low. Aside from the van or van fleet, all you’ll need is a dolly, some ratchet straps, and some phones. A branded uniform that matches your vehicle can also go a long way.

Choosing the van that’s right for you will depend on many factors, including the kind of goods you’ll be delivering, your area of work and your budget. Fuel costs are especially important to take into account. Fuel-efficient vans will pay for themselves in reduced fuel costs over time, as well as an electric vehicle like the Kangoo Z.E..

Many choose to begin their courier business at home, but an office location will likely become necessary further down the line. You will also likely require parking. For these reason, if you can afford an office, you might want earmark some capital towards rent.

Estimating income

As you begin to determine expenses, you can also estimate income. Figure out how you’d like to charge your customers. Start off by fixing a baseline price and charge either miles or time on top of that.

Income for you as an owner will be tied to the regularity of business more than the size of the outgoings. For that reason, it’s always better to focus on cementing lasting business relationships that deliver steady work. 

One way to inspire that kind of confidence is to be entirely up to par on legalities, as well as potential certifications or membership in trade organisations. Start by registering your business, whether as a sole trader or limited company.

Insurance costs

Insurance presents a significant expense to delivery companies. First, you’ll have to insure your vehicles and any drivers through employer’s liability insurance. Public liability insurance will guard against risks of late deliveries or (worse) lost packages. Make sure your van insurance has a sturdy “Goods in transit” clause or option to insure your customer’s normal goods. Some high-value goods require special, additional insurance, which you might want to be prepared to offer at your client’s request.

The initial costs may seem intimidating, but don’t be put off. If you know your market well, you’ll be on your way to seeing profits…

 Foodstuff delivery is one of the fastest growing subsectors of the courier industry
Foodstuff delivery is one of the fastest growing subsectors of the courier industry

Know your market competition and plan accordingly

Get to know your competitors, whether small start-ups like yours or multinational players. Review their prices in order to decide what to charge, and whether you can offer a better price. You’ll also get to understand local niches. You might even find your own!

You’ll also be able to determine your delivery boundaries. You might find an underserved area in which to start conducting business. 

There is another, completely different reason to get to know the local competition: you may need to work with them to survive. Partnerships are common among small courier services, which piggyback on each other’s fleets to reach places they can’t separately or to outsource services they can’t provide themselves. Networking can make your week easier – and more profitable. You’ll of course share those profits, but such business agreements can be mutually beneficial and lead to specialized local services with a personal touch.

The ultimate starting strategy: finding your niche 

There are things that large corporations just can’t offer, such as providing rush deliveries in a matter of hours to all areas. This kind of service is often in demand among, for instance, medical businesses.

Another way to tap into local niches is to build contacts with people whose delivery needs are greater, such as persons with reduced mobility. Seniors, for instance, require frequent deliveries of medicines, dry cleaning, and groceries. Care centres and medical complexes are, therefore, areas to look out for. 

A quickly growing subsector of the courier business, foodstuff delivery is also worthy of your consideration. Restaurants are increasingly looking to third parties to deliver foods and consumers seek options for the regular delivery of their groceries. Start-ups are launching themselves into this burgeoning industry left and right.

Establish and cultivate a strong brand image

Invest in custom signwriting for your vans: think of them as mobile, free advertising. Wherever you deliver, you’ll be seen. Driver uniforms that match the brand colours and identity go a long way in creating a professional image. And to the customer, professionalism spells reliability.

Some additional marketing is necessary if you want to attract customers, especially in the early stages. A clean-looking professional flyer can have an impact if its distribution is targeted. Drop them at local businesses that you think might benefit from the services you provide. Also create an online presence, creating a website and social media accounts. Through a combination of free and paid resources, you could advertise locally through a targeted campaign.

Ideally, once you break into a sector of the industry, clients will recommend you to other businesses they work with. The key is to provide excellent customer service and keep your word on deliver times. The delivery business isn’t easy, but if you carve out your local niche there’s no reason it can’t be profitable!