You would need a minimum of $743,580 to start a medium–scale but standard logistics business in any city in the United States of America. Please note that this is a rough estimate and we usually advise our readers to get the real time prices of the types of moving trucks they want to buy, the required insurance and perhaps payment modalities et al.
The Freight Packaging and Logistics Services industry is an industry that is responsible for providing packing and crating services primarily for the transportation sector of the economy. The industry comprises of companies that provide consolidation of freight consignments, trade document preparation, packing, crating, and otherwise preparing goods for transportation and logistics consulting services.
Some of the key factors that will contribute to growth in this industry include growth in the manufacturing sector, consumption and international trade. Increase in technology reliance will also provide new opportunities for logistics consulting and advisory services, particularly for distribution chain networks.
Starting a logistics company can be capital intensive and challenging, but the truth is that it can be rewarding at the same time. One good thing about the industry is that it is open for both big time investors who have the capacity to start the business with a fleet of trucks and aspiring entrepreneurs who may want to start with just one truck.
Estimated Cost to Start a Logistics Company
When it comes to starting a standard moving and storage business, one is expected to spend the bulk of the start-up capital on is the purchase of standard trucks and warehouse facilities. Depending on the options you choose, the cost of a typical moving truck or van can be anywhere between $58,000 and $850,000.
Aside from that, you will pay for maintenance and fueling and of course pay your employees and utility bills. These are the key areas where you are expected to spend your startup capital on;
- 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 logistics software) – $3,300.
- Marketing promotion expenses for the 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 a Business Consultant (it includes writing of business plans) – $2,500.
- Insurance (general liability, workers’ compensation, and auto insurance) coverage at a total premium – $15,000.
- The cost for payment of rent for 12 months at $1.76 per square foot in the total amount of – $105,600.
- The cost for parking yard/facility remodeling – $25,000.
- 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, fueling and maintenance of the truck, and payments of bills et al) – $120,000
- The cost for office / store equipment (cash register, security, ventilation, signage) – $750
- The cost of purchase of two 50 ton trucks and vans (fairly used) – $450,000
- The cost of launching a website – $600
- Miscellaneous – $10,000
From the rough estimate as listed above, you would need a minimum of seven hundred and forty – three thousand five hundred and eighty USD ($743,580) to start a medium–scale but standard logistics business in any city in the United States of America.
Please note that this is a rough estimate and we usually advise our readers to get the real time prices of the types of moving trucks they want to buy, the required insurance and perhaps payment modalities et al. 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.
Having said that, here are some of the general factors that will influence the overall cost of starting a moving and storage business in the United States of America.
Factors That Will Influence The Overall Cost of Starting a Logistics Business
Table of Content
- The Brand and Number of Trucks You Are Starting With
- The Choice of Location
- The Required Licenses and Permits
- The Type of Facility
- Additional Service Offerings
- The Cost of Hiring and Paying a Business Consultant and Attorney
- The Cost for Branding, Promotion, and Marketing
- The Cost for Insurance
- The Cost for Registering the Business
- Source of Your Supplies and Ongoing Expenses
- Cost of Recruiting and Training Your Staff
- The Cost for the Purchase and Customizing of Uniforms
The Brand and Number of Trucks You Are Starting With
A major factor that will determine the overall cost of opening a logistics company in the United States of America is the number and brand of moving trucks you intend to start the business with. For example, you can start your logistics company with any of the following Semi-Trailer Truck, Extra Duty Truck, 18-Wheeler Truck, Tanker Truck, Heavy Truck, Flatbed Truck, or regular vans. Trust me, if decide to start with a fairly used truck or van, it is going to cost you far less but you might have to spend more on maintenance in the long run.
The Choice of Location
Another major factor that will determine the cost of opening a logistics company in the United States of America is location. 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 in the shortest time frame.
The truth is that the location you choose to open your logistics company determines if you will be issued the required business license and permits. Government officials must first inspect your facility to be sure that it is located in the location zoned for such business.
Please note that in the United States of America and in most countries of the world, 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.
The Required Licenses and Permits
In the United States of America, you cannot open a business without first applying for the mandatory license and permits. Of course, you would need, building license, zonal permits, CDL and signage permits amongst others. As expected, these license and permits cost money and it will influence the overall cost of opening a logistics company in the United States of America.
In order to get the overall cost of licensing and permits associated with opening a new logistics company in the United States, we will advise that you reach out to your city council or state government to find out what you need. You also need to consider state and federal requirements too.
The Type of Facility
The type of warehouse facility you want to run your logistics company from is also a major factor that will determine the overall cost of opening the business. As regards the warehouse facility, you have the options of renting, leasing, or designing and constructing your own logistics facility from the scratch.
With renting and leasing a warehouse facility, you might just have to spend extra cost 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.
Let us assume that you want to construct your logistics company facility from the scratch. It means that you will buy the land or a property, bring up your design and of course construct and equip the facility. With that, you will agree that you are going to spend way more when compared to people that rent or lease a facility.
Additional Service Offerings
Another key factor that will determine the cost of opening and operating a logistics company in the United States of America is the additional service offerings of the logistics company. The fact that there is no one-mold-fits-all means that these logistics companies are designed to offer different additional services.
For example, a logistics company may decide to go into any or all of the following services; packing goods, crating, and wrapping goods for transportation, freight consolidation, trade document preparation, storing goods prior to and after freight, physical distribution consulting and logistics consulting et al.
This means that they will have an additional facility, equipment, and staff members to handle this aspect of the business. In essence, some of the additional services you will offer will cost you more hence you must increase your budget for opening a logistics company if you intend to offer additional services.
The Cost of Hiring and Paying a Business Consultant and Attorney
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, a comprehensive SWOT analysis, and other advisory services that will help you with opening the business.
So also, 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. You will agree that these services will cost money and it will indeed influence the overall cost of opening your logistics company.
The Cost for Branding, Promotion, and Marketing
The cost for branding, promoting, and marketing the logistics company is yet another key factor that will determine the overall cost of opening a logistics company in the United States of America. Trust me, if you need massive results as it relates to 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 company.
As a matter of fact, it is not cheap to come by an expert in branding, promotion, and marketing that will help you compete with brands that are already determining the market direction in your city. So, if you add the cost of paying a branding and marketing expert, it will surely increase the cost of opening your logistics company.
The Cost for Insurance
The cost of paying for insurance policy cover is yet another important factor that will determine the overall cost of opening a logistics company. Interestingly, 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. 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 company.
The Cost for Registering the Business
The cost of registering the logistics company is yet another cost that will influence the overall cost of opening a logistics company in the United States of America. Although the cost of registering a business is affordable, it will no doubt add to the overall cost of opening the logistics company.
Source of Your Supplies and Ongoing Expenses
Another major factor that will determine the cost of opening a logistics company in the United States of America is the source of your supplies such as crates and pallets, spare parts, gas, et al. For example, if you have access to the manufacturers of all these supplies it will sure cut down the cost of running the company. So also, if you have in–house maintenance technicians, it will increase your profitability.
Cost of Recruiting and Training Your Staff
The fact that you are opening your logistics company 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 a logistics company.
The Cost for the Purchase and Customizing of Uniforms
Another factor that will determine the overall cost of opening a logistics company in the United States is the cost for the purchase and customizing of uniforms. Your staff members are expected to have uniforms and all these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening a logistics company in the United States of America.
Please note that there are other factors not listed above that will sure influence the overall cost of opening your logistics company 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.