Are you interested in starting a courier business from home? If YES, here is a complete guide to starting a courier service business with NO money and no experience plus a sample courier service business plan template.
Before starting a courier service, you would need a dependable vehicle to deliver goods, and a cell phone that your customers can use to get in touch with you. The courier business is a simple one to start and operate, and does not need a huge capital before you can start up.
What is a Courier Business?
The job of a courier business is to ensure that they pick up and deliver packages, documents, and whatever legal else customers want transported, which could be individuals and businesses. The courier service is one that is always in demand regardless of the location it is in, as people always want something delivered for them. Which is why as a start up, you can provide the service that large scale courier services cannot offer.
You can start a courier business on a shoestring budget, as it requires very little to start it – little capital, no formal training or education – just the ability to communicate with customers clearly. You could also start your courier business from home, where you won’t need to pay any rent or additional utility cost, before staring the business.
The list of potential customers for your courier business is endless, as everyone from architects, engineers, printers, grocers, doctors and medical labs, contractors, caterers, pharmacies, accountants, flower shops, attorneys, to busy individuals who do not have the time to run errands, and home bound individuals such as the elderly citizens who might not be able to leave home due to an accident or an injury.
Regardless of the list of potential clients available, you have to decide if you want to focus on business or residential customers or both, especially if you are starting out small.
You can also decide on the type of packages you will pick up and deliver, which includes, checks and money orders, personal gifts, perishable goods, or body organs. You can also limit the weight of the items you pick up and deliver if you desire.
In setting the rates for your courier business, check out what your competitors in the same area are offering, for different package sizes, client types and mileage, so that you could comparatively set your price to that of your competitors.
Always maintain a log of all pickups and deliveries and as your business expands, hire other drivers and create dispatch center, so that you can hire employees to work the phones, while you focus more on building your clientele base, and getting them to sign long term contracts with you.
Steps to Starting a Courier Service Business from Home
1. Understand the Industry
The industry has a very low level of capital intensity, due to the fact that the industry is labor-intensive, with industry operators spending more on wages than on capital investments. As of 2016, industry operators are expected to invest about $0.10 of capital for every dollar of labor.
Labor here refers to wages and salaries of drivers, pilots, operators of call centers and drop off locations, ground and administrative staff, and loading crew.
Interesting Statistics About the Industry
For the past five years, capital intensity has continually been on the increase, as companies invested more on emerging markets, labor saving technology, and more fuel efficient aircraft and trucks. Before the economic meltdown, the industry had experienced a period of rapid growth, and grew and later developed as the economy grew and stabilized, but has struggled for growth over the past five years.
Also, the past five years have seen a large portion of the industry’s growth come from greater business activities, and demand for time-sensitive goods in emerging economies. Another thing that has aided revenue is the growing number of individuals with access to the internet, especially as more consumers make use of e-commerce websites.
The revenue for the courier industry is $242 billion, with an annual projected growth of 0.6% for between 2011 and 2016. There has been a growth explosion for courier businesses from the year 2000, with over 581,718 courier businesses established, and employing over 2,494,000 people.
The industry is divided into two segments: large networked couriers that are capable of deliveries nationally and internationally, and smaller local services that transport packages within a geographical area.
The united states courier segment is highly concentrated, with the big names accounting for most of the industry’s revenue, with Federal Express (FedEx) and United Parcel Service (UPS) largely dominating the market. The smaller local segment of this industry is also highly fragmented.
Some of the larger players though are moving into the home delivery market, although this has proven to be a tough sector, as most consumers might not be at home when the delivery person calls the first time. However, more timed delivery options are being offered for evening deliveries, so as to meet people in their homes, and this is a slowly growing sector, due to the boom in internet shopping.
Globally, the courier service delivery industry generates about $220 billion in revenue, with the United States being the largest market, followed by growing markets such as China, India, Europe and Latin America. The global economic slowdown had caused the world trade and global consumer spending to decline in 2009.
The demand for the transportation of parcels and packages decreased causing the industry revenues to fall. Since the United States form the largest market for the courier service, the global courier service industry is highly affected by the economic conditions of the United States.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
When it comes to the demographic and psychographics composition of those who need the services of a courier, it is obvious everyone needs it. Here is a list below;
- doctors and medical labs
- flower shops
Also, busy individuals who do not have the time to run errands and home bound individuals, such as elderly citizens; who might not be able to leave home due to an accident or an injury. Working class folks, retired folks, aged citizens, online stores, and even young people; who have the desire to send a package or document to someone not within their regional area.
3. Decide Which Niche to Concentrate On
Regarding the niche within the courier industry, the factors that differentiate one company from another is that the company might offer something different or in line with what others might be offering, with the goal being the same – which is on time delivery of the packages regardless of what kind of package it is.
Some of the area of specialization in the courier industry includes the following;
- Delivery of envelopes and small packages
- large cargoes
- medical equipment
- perishable goods
- educational materials
As a small scale entrepreneur or a start up, you can first specialize in handling certain type of packages, till you are able to do more. Medium or large scale courier businesses, do not limit themselves to a specific type of package, and might be into more than one area or all of the above mentioned areas of specialization and more.
The Level of Competition in the Industry
Starting a courier business is not difficult or an expensive business venture. Anyone can decide to start this business, as you just need a working cell phone and mobility (van, car, bicycle or motorcycle). This however does not mean that there have been no failures in this industry, as the level of competition is quite stiff, which is why those that didn’t carry out a thorough research might have more challenges than those that did.
Smaller courier companies all compete amongst themselves, while also competing against the big brands. Competition in the courier business usually take the form of price competition, service introductions, and advertising battles, which in the end is all for the benefit of the customer, as competition keeps businesses on their toes, and ensure that they remain proactive, if they want to continue to exist or grow.
4. Know Your Major Competitors in the Industry
The industry is dominated by strong brands that have become a household name over and over the years. The reason why there are brands in an industry is due to the fact that they have stood the test of time, and have overcome many challenges in the market place or their specific industry. Below are some of the well known brands in the courier business industry in the United States of America:
- Air T
- United Parcel Service
- ONS Express & Logistics
- SWIFT Couriers Services
- Royale International
- One World Express
- Air Transport Services Group
Before starting out this business, entrepreneurs need to carry out a thorough research so as to be certain of certain factors that might hinder their businesses or act as a cog in the wheel. Chief of which is finances, how you intend to finance your courier business so that you can favorably compete with others in the same line in the industry.
What unique services will you offer apart from package delivery that will make customers leave the brand they are used to or get new customers? The demand for courier services have slumped in recent years, due to the global recession, and also due to the boom in online shopping, so you might need to work harder to carve out a niche for you in the marketplace.
Regardless of the state of the economy, you can still get a place for your business in the industry, if you have niche offerings, and keep your operating costs at a minimum. For example, you can operate out of your van or home instead of renting an office facility, that way you can save up on rents. You can also offer excellent customer service to your clients so that they not only stick with you but refer you to other potential customers as well.
5. Decide Whether to Buy a Franchise or Start from Scratch
Everyone dreams of starting their business from scratch, especially if they have got enough start-up capital for the business, and if it seems like a relatively easy business to start with. Starting from the scratch not only ensures that you are completely your own boss, it gives you total control over the things that you can handle and change, such as your marketing strategies, and the vision and objectives of the company.
If your business is going to be to your local surroundings, it will be good for you to start off from the scratch, and garner experience for yourself as the business grows.
Buying a franchise also has its advantages, as it means you get guidance from those that you are buying the franchise from, and also get to worry less about getting customers for the business. The ultimate decision of what an entrepreneur wants for his or her business, lies in what vision about the business he or she has, which will lead to either deciding to buy a franchise or not.
6. Know the Possible Threats and Challenges You Will Face
Every business no matter how easy it is to start up will always experience threats and challenges. Some threats might be from other competitors who might lower their prices so much so that you find it hard to meet up even after reducing your operating costs to the barest minimum. Challenges might come from customers especially the pay on delivery kind of customers, who might not be at home and might lead you to wasting gas on several trips.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Having a legal entity for your courier business is so as to ensure that your business is legal on all fronts. Legality involves choosing the proper business entity, obtaining licenses and permits, getting adequate insurance, as well as dealing with employees if it ever gets to that point.
As a courier business, you could decide to operate your business as a sole proprietor or enter into partnership with someone, but it is best if you consider using a legal form that protects you from personal liability, such as a Limited Liability Company (LLC) or a corporation especially as you would be responsible for all the cargoes under your care till it gets to its destination. If you use an LLC instead of a sole proprietorship, the liability of the cargoes and packages will fall on your business and not on you personally.
The decision on choosing a legal entity depends entirely on what the long term goal and vision for your company is, because in getting a legal entity, not only must you think of what’s best for your business. However, even if you decide to go for a sole proprietorship first, and you choose to expand later, you can always change your legal entity to whatever suits the business.
8. Choose a Catchy Business Name
- Carriage Enterprises
- Perfect Package Delivery Inc.
- Bob’s Delivery Services
- Loose Ends Ventures
- Just Packages Ventures
9. Discuss with an Agent to Know the Best Insurance Policies for You
Every business no matter the scale it operates on would need insurance. An insurance cover protects the business owner or entrepreneur from damages that would have personally been incurred by him or her. Before picking an insurance coverage, ensure that you speak with a broker or an agent, so that you would be properly guided on what best suits your business.
Below are some of the basic insurance covers that you should consider purchasing if you are looking to start your courier business in the United States of America:
- Courier Insurance
- Public Liability Insurance
- Occupational Insurance
- Personal Liability
- Vehicle Insurance
- Workers Compensation
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
No, if you are venturing into this business, you probably would not need to be concerned with the hassles of intellectual property protection, except you have a unique logo or slogan and intend to intellectually protect the logo of your business or a distinctive business statement. The truth is that most that have been in the courier business do not see getting an intellectual property protection as a necessity.
11. Get the Necessary Professional Certification
If you decide to start a courier business in the United States, you would not need to have a professional certificate, especially as you are basically providing service. You might be required to get certification for handling cargoes and packages, especially if you are going into a niche like medical equipment.
It is however, essential for an entrepreneur going into this field or any other n the United States of America to check what will be required of him or her in the state or municipality where they want to operate their business from.
12. Get the Necessary Legal Documents You Need to Operate
Below are some of the basic legal documents that you would need to successfully run a courier business in the United States of America:
- Certificate of Incorporation
- Business License
- Business Plan
- Non Disclosure Agreement
- Contract Documents
- Insurance Policies
13. Write a Business Plan
Having a business plan protects you from throwing your money into a venture that might not be profitable in the short or long run. The courier business might not be one that would require a comprehensive or technical business plan, and you might just end up drafting a business document, that would contain the essentials a typical business plan does.
A business plan is usually a guideline that shows the entrepreneur’s intention of how the proposed business is intended to run. It also helps in influencing all business actions and decisions.
writing a business plan isn’t an easy affair, especially as the strategies that will help you to successfully run the courier business have to be crafted and drafted with competitors in mind. The strategies could range from generating capital for the courier business to competing against competitors, from expanding the services of the business to attracting and retaining customers. Every business plan needs some key components.
The key components that a business plan is supposed to have are:
The Executive summary which states in clear terms what your courier business is about, the strategies you intend to use in getting clients as well as marketing to prospective clients, your business goals, your target segment, and your niches. The segment also covers the vision statement for your company, the goals and objectives you intend to achieve, as well as your mission statement.
Other components that are vital in a business plan are the publicity, promotion and advertising strategy, operations cost and financial projections, the strength and weaknesses of your business, and how you intend to source for capital and pay back if need be. This might seem too much for a courier business, but it is necessary especially when your intention is to be become a known brand.
If you are intimidated by the task of writing a business plan, you could employ the services of consultants, while supplying them with information that can be used to create the precise picture for investors or you could also decide to download a template online that would guide you on how to write the business plan.
14. Prepare a Detailed Cost Analysis
According to research, the courier business can be started with very little funds. Also, those that go into the business have varying operating costs depending on the state or country they are operating from and their priorities. However, it still isn’t a business that would require you breaking the bank to start up as long as some essentials – like the legal consideration – are in place to protect your business.
Most new entrepreneurs might be wary of going into this industry due to the fact that it seems the industry is dominated by a few big names, but in this business you can start off in your area, and still make as much as you should.
Below is the basic checklist that you would need to launch your own courier business in the United States of America and most likely in other parts of the world;
- The total fee for incorporation – name check and filing – would cost $200
- Liability insurance and business license would cost $500
- Business cards, fliers and handbills would cost $100
- Having a vehicle for delivery would cost $800
- Launching of website would cost $100
- Equipping the office with computer, phone, file cabinet would cost $200
- Other operating expenses would cost $100
The report from the above checklist shows that on a small scale, one would need at least $2,000 to be able to start a courier business.If one intends starting a medium scale courier business in the United States, one would need at least $5,000.
And if one intends to start on a large scale in the United States, one would need at least $10,000. This goes to show that it is an easy business venture to start up.
15. Raise the Needed Startup Capital
Financing any business from scratch is not easy for an entrepreneur, and the hassles in this process have led to the dearth of many business ideas and start-ups especially when you haven’t carried out enough research into the field you are going into. When it comes to raising finance, every business person is faced with different available options, the decision on which finance options to use for the benefit of the business will come after weighing the pros and cons attached to each option, and also depending on the business scale you want to start from, small, medium or large.
Most times, your personal savings might not cover a quarter of the financial requirements for a start-up, and it is then your business plan can be used to get funds from other places. This is why it is always insisted that your business plan is clear, providing concise strategies on how you intend to run and grow your business. Without a business plan, no serious investor would take you seriously, and might feel you are wasting their time.
There are several financing options available if you intend to raise money to start your courier business, and some of the options are:
- Personal savings
- Raising money from family and friends
- Getting a business partner
- Approaching an investor
16. Choose a Suitable Location for your Business
One of the hurdles faced by any startup business is in getting a suitable location for the business. Where you locate your business is important as it can either lead to your business’s growth and further expansion, or to the death of your business. Your location has to answer the storage space, as you would need a place to be able to keep the packages as they wait to be delivered.
To go into this business, one must be prepared for the location challenge and must look into issues that might possibly crop up. Leasing a property is okay, especially if you live in a tiny apartment that might not be much of a convenience to you whilst carrying out your business. Thankfully, you can start off small, and as soon as you are progressing can look out for an appropriate location.
This is a business you can run from home. Some entrepreneurs also use their vans as their locations too, this is very okay too, especially if you have a van that is reliable, and large enough. Your van and the contents in the van will also need to be insured, as the threat to a mobile office is higher than that which is in a traditional brick and mortar building. This therefore means that you don’t have to break the bank looking for money to rent or lease a suitable location.
This business can be started by any focused entrepreneur it isn’t a business that can be tied to one location, except you want to start a medium or large scale courier business.
17. Hire Employees for your Technical and Manpower Needs
There is little technicality required for the courier business, even though it might require the ability to be able to drive a car, van or motorcycle. Also most of the equipment that would be used like a van and computer can be gotten for cheap either as fairly used or in online stores. And if you manage these two tools well, you might not need to get another in a long period.
For those intending to operate from an office facility or even from home on whatever scale, here are some of the equipment that would be needed:
- Contract documents
Due to the nature of this business, the courier business can be run from home. If you want to get an office facility, it should be if you are handling a high volume of packages, and would require a place to store them as they cannot fit into your van or house.
The number of people that would be needed to run a courier business is one that can be decided on by the entrepreneur as the business grows, as one person can effectively run the business at first. However, if you are looking to run a medium or large scale enterprise, you could employ between 4 to 6 people and above, such as manager, courier people, and call handlers. The office would need minimal and functional equipment such as computers, phones.
The Service Delivery Process of the Business
There is no production process involved in the courier business; as this is a service delivery business. The process involved usually range from ensuring that the right packages get to the right location, as well as getting to the right person and any other requirements that will be needed while performing your duties as a courier.
The other process is being able to read, so as to be able to know what your contract documents entail.
18. Write a Marketing Plan Packed with ideas & Strategies
The aim of having marketing ideas and strategies is so that you could define and direct the marketing activities that are intended to build customer base, while increasing revenue. It is something that encourages an organization to look both inwardly and outwardly, so as understand the impact of marketing decisions and the target market.
A marketing strategy will create goals, whilst encouraging a business to expand. For businesses where owners work from home, especially ones that deals in service delivery, marketing is very essential, because you do not have the advantage of a storefront that will advertise your business to anyone that passes.
Before carrying out your marketing strategies, you would need to determine your marketing budget. Starting a new business, you might be required to use more money than an already existing business would need, due to that fact that potential clients aren’t yet aware of your services. When your courier business has become known, your marketing budget can always fall to 1 and 10% of your revenue.
Below are some of the marketing strategies and ideas that can be adopted for your courier business:
- Build an easy website that is user friendly and interactive, and promote your business from there. Also include online delivery forms on your website to make it more convenient for your customers.
- Ensure you have a brochure that can be helpful in discussing your business to people in your target areas.
- Hand out your business cards to individuals and businesses, or leave them on local bulletin boards.
- Have a set of coupons printed out, offering one free delivery, and give to target customers
- Exploit geo-locational capabilities for customers that engage in geo-locational shopping, as they will be able to identify your courier business if it is in their immediate area.
- Create a promotional calendar that will help to connect your marketing strategies to sales objectives.
- List your business on local directories and online directories as well.
- Use direct marketing or referral marketing
19. Work Out a Reasonable Pricing for your Services & Products
The factors that will enable you get the right pricing for your product is one that will be affordable to your clients, while not creating a price war between you and your competitors. The pricing should also not be one that will put dent in the overall revenue for your business. You could comfortably start with prices that will favour you and your company, if you start by keeping your operational costs low, by working from home.
20. Develop Iron-clad Competitive Strategies to Help You Win
For any business that has competitors, it is always imperative that you improve on the effectiveness and efficiency of your company by identifying structural improvements that will increase the speed of production, while striving to minimize cost. Overall, you have to choose the best tactics and circumstances that are right for your business.
Customers are drawn to incentives, ensure that you design your courier business in such a way that you can afford to give out incentives from time to time, like tagging your discounts to a special day, which in turn will see more packages being sent that day, while still offering optimal service regardless of the workload.
You could also seek to make the lives of your customers easier, by providing more convenient options by which they can use to reach out to you. This means that instead of just limiting your contact to a cell phone or landline, ensure that they can reach out to your company by mail, through your website, or any other means.
21. Brainstorm Possible Ways to Retain Clients & Customers
On an average, businesses lose around 20% of its customers annually because they fail to attend to customer relationships. The consequences of customer retention compound over time and a tiny change in customer retention can cascade through the system of a business and over time multiply.
Virtually, every business loses customers, but only few recognize how many inactive customers they have. Ironically, most business invests an enormous amount of time, and expense in building initial customer relationship,
You can increase customer retention for your courier business by re-contacting and reminding them of your existence, and also find out why they aren’t using your services anymore, through a string of communication. Other ways retaining your customers can be done is through providing immediate response and going above and beyond the call of duty.
22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
It is important that strategies are created to help boost your brand awareness as well as create a corporate identity for your courier business. If you want your courier business to be known to existing and potential clients, you would need to look for ways to promote the brand and if possible, get brand experts that will help you in handling it. These strategies will help in expanding the number of people who know what you do and why in the market space, you are the obvious choice.
Below are the platforms that can be used to boost the brand of your company as well as advertise your business:
- Attend conferences and workshops to network with other courier companies
- Be involved in coalitions that are regional and national
- Engage in public awareness and media campaigns by writing press releases for your local newspapers, going on radios and televisions.
- Distributing your handbills, fliers and business cards to people around you, and in places you go to.
- Encouraging your loyal customers to help with referrals
- Use blogging as a tool
- Use the social media as a long-term and cumulative process, such as Linkedin, Twitter and Facebook.
- Create a website and use it to promote your business.
23. Create a Suppliers/Distribution Network
If you run a standard courier business, then you would have to work, network and partner with manufacturers, and distributors of goods to help in delivering products to the needed areas where they need to go.
This means that you have to be in a good business relationship with these manufacturers and distributors, so that they could always send business your way. Apart from them sending businesses your way, they could also give you some tips that might help with certain clients and your business as well. In essence, it is always good to be in a good relationship with your business partners, as it will help the bottom line of your business.
24. Tips for Running a Courier Business Successfully
Starting your business is not enough; you will also need to tell people about your business. People need to know what your courier service can do for them, and you can do this by making use of your business’s website or blog, write a press release and send to your local newspaper, or pass out business cards with your company’s name and number on it.
In order to be successful in this business, you have got to realize that the world of couriering is that on a fast pace, and customers will always patronize those who can work fast, this means deliver the package as at when promised and this will keep your customers satisfied.
There is no better advertisement than really doing good work. Customers are happy when a brand or business they patronize goes the extra mile for them. Listen to the complaints of your customers, and learn from it. This way you can make your business, the one and only one people call.