Do you want to know how much it cost to start a courier service? If YES, here are 12 factors that determine the cost of opening a courier business. Players in the global courier and delivery services industry primarily provide air, surface, or combined express courier delivery services of parcels, documents, and packages for business customers.

Industry operators generally provide services between metropolitan areas or urban centers and form a network that includes local pickup and delivery to serve customers’ needs. A recent report published by IBISWorld shows that over the five years to 2020, the Global Courier and Delivery Services industry has experienced a moderate level of revenue volatility.

Industry revenue is subject to a variety of volatile factors, such as the world price of crude oil, overall consumer confidence, and the prominence of online retail. As a result, sudden shifts in these determinants can lead to substantial volatility in the industry’s revenue growth. In addition, the industry’s diverse range of clients from a wide variety of industries typically leads to relatively stable demand.

Estimated Cost Breakdown for Starting a Courier Business

When it comes to starting a standard courier services business, one is expected to spend the bulk of the startup capital on purchasing delivery vans, bikes, and drones et al and of course, renting and equipping a parking yard and warehouse or storage facility.

You are also expected to secure the required licenses and permits, service, maintain and fuel you vehicles, pay your employees and utility bills. In view of that, here are the key areas where you are expected to spend your startup capital on if you want to start a courier service business;

  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the hotshot business in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant including writing a business plan – $2,500.
  • Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $12,400.
  • The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $146,000.
  • The cost for office and parking lots construction – $60,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500) – $3,000
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $90,000
  • The cost for purchasing first set of delivery vans, bikes and drones – $250,000
  • The cost for equipment and accessories – (GPS, dependable phone, internet access on the road, cargo straps, chains, tie downs and safety equipment, basic tools, spare parts, gasoline and diesel, brake fluid and engine oil, uniforms, safety boats and hand gloves et al) – $100,000
  • The cost for store equipment (cash register, security, ventilation, signage) – $3,750
  • The cost of purchase and installation of CCTVs and car tracker software- $22,500
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $4,000.
  • The cost of launching a Website – $600
  • Miscellaneous – $5,000

From the rough estimate as listed above, you would need a minimum of five hundred and ninety – five thousand, five hundred USD ($595,500) to establish a medium – scale but standard courier business in the United States of America.

Please note that this is a rough estimate and we usually advise our readers who are interested in opening a courier business to directly contact suppliers of the brand delivery vans, bikes and drones they would need to get the real time prices of these items.

The truth is that, if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.

12 Factors That Influence The Cost Of Starting a Courier Services

  1. The Number of Delivery Vans, Bikes and Drones You Are Starting With

A major factor that will determine the overall cost of opening a courier services business in the United States of America is the size, number, and brand of trucks you intend to start the business with. For example, if you choose to invest in drones or even aircraft and speed boats, you are expected to spend more in starting the business than someone who is just investing in vans and bikes.

  1. The Choice of Location

Another major factor that will determine the cost of opening a courier services business in the United States of America is your location. In business, location is key part of what determine the success of the business. As a matter of fact, there are business consultants cum realtors who are specialized in helping people choose an ideal location for their type of business; a location that will guarantee them profitability and to breakeven within the shortest time frame.

The truth is that the location you choose to open your courier services business determines if you will be issued the required business license and permits. Government officials must first inspect your facility to be sure the area is zoned for such business.

Please note that in the United States of America, zoning violations and citations can be very costly for a business. It is always preferable to make sure you comply with all the zoning and land use laws before you choose a location for your business.

  1. The Required Licenses and Permits

In the United States of America, you cannot open a courier services business without first applying for the mandatory license and permits. Top on the list is that you would need a broker’s license. Please note that you will be expected to pay the $300 dollar application fee to the Federal Motor Carrier Safety Administration and apply for a freight broker’s license and a USDOT number.

You will also need building license, zonal permits, and signage permits amongst others that may be unique to different cities and states. These license ad permits cost money and it will influence the overall cost of opening your courier business.

In order to get the overall cost of licensing and permits associated with opening a new courier services business in the United States, we will advise that you reach out to your county, city council or state government. You also need to consider state and federal requirements.

  1. The Type of Facility

The type of facility you want to run your business from is also a major factor that will determine the overall cost of opening a courier services business in the United States of America. As regards the facility, you have the options of renting, leasing or designing and constructing your own facility from the scratch.

With renting and leasing a facility, you only need to modify the facility to fit into what you have in mind, but there is a limit to how far you can go, and it will be dependent on what the landlord of the facility wants. If you want to construct your courier services business facility from the scratch.

It means that you will buy the land or a property, construct and equip the facility to fit into what you have in mind. With that, you will agree that you are going to spend way more when compared to people that rent or lease a facility. This indeed will greatly influence the overall cost of opening your courier services business.

  1. The Cost of Hiring and Paying a Business Consultant and Attorney

As expected, if you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney. A business consultant will help with drafting a workable business plan document, a marketing plan and strategy, comprehensive SWOT analysis and other advisory services that will help you with opening the business.

An attorney will help you with registering the business, drafting contract documents and offer you all the legal expertise that will help you start the business on the right foundation. Of course, you will agree that these services will cost you money and it will indeed influence the overall cost of opening a courier services business in the United States of America.

  1. The Cost of Branding, Promotion and Marketing the Business

The cost for branding, promoting and marketing the courier services business is yet another key factor that will determine the overall cost of opening the business. Trust me, if you need massive results as it relates to competing and winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing of your new courier services business.

As a matter of fact, it is not cheap to hire an expert that will help you compete with brands that are already determining the market direction in the industry in your city. So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your courier services business.

  1. The Cost for Furnishing and Equipping Your Office

Another very important factor that will determine the cost of opening a courier services business is of course, the cost for furnishing and equipping the facility.

Before you can open a courier services business, you should budget and buy security locks, flat screen TVs, sound system, DVD players, Satellite dish and decoder, internet facility, GPS tracker, office furniture (table, stools and sofas), drawers and cabinets, telephones, filing cabinets, office equipment (cash register, security, CCTV, ventilation, signage), amongst others. All these will cost money and it will influence the overall cost of opening your courier services business.

  1. The Cost for Insurance

Paying for insurance policy cover is yet another important factor that will determine the overall cost of opening a courier services business in the United States of America. In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from.

Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your business.

  1. The Cost of Registering the Business

The cost for registering the courier services business is yet another cost that will influence the overall cost of opening a courier services business in the United States of America. The cost of registering a business is quite reasonable, but it will no doubt add to the overall cost of opening your courier services business.

  1. Source of Your Supplies and Ongoing Expenses

Another major factor that will determine the cost of opening a courier services business in the United States of America is the source of your supplies and accessories – GPS trackers, dependable phone, internet access on the road, cargo straps, chains, tie downs and safety equipment, basic tools, spare parts, gasoline and diesel, brake fluid and engine oil et al. Again, if you have in-house maintenance technicians, it will increase your profitability of running the business.

  1. Cost of Recruiting and Training Your Staff

The fact that you are opening your courier services business as a new business means that you are expected to recruit and train your staff. The training will help you sell the corporate culture of your organization to the new employees. As expected, it will cost you money to hire expert trainers that will help you train your new hires and that will add to the overall cost of opening your business.

  1. The Cost of the Purchase and Customizing of Uniforms

Another factor that will determine the overall cost of opening a courier services business in the United States is the cost of the purchase and customizing of uniforms. As expected, your staff members (drivers, dispatch riders, loaders and assistants) and of course security personnel are expected to all have different uniforms. All these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening a courier services business.

In Conclusion,

Please note that there are other factors not listed above that will sure influence the overall cost of opening your courier services business which is why we will advise that you work with a result driven business consultant in your city to give you the needed guide and info as it relates to the unique factors in your location that will influence the overall cost of opening your courier services business.

Solomon. O'Chucks