Do you want to start a delivery business from home with contract drivers? If YES, here is a complete guide to starting a pick & delivery service business with NO money and no experience plus a sample delivery service business plan template.
For sure it is quite challenging to start any business, but one business that you can start with little challenges is a delivery business. A delivery business is a business that involves helping your clients deliver goods, documents and parcels et al.
With this type of business, you can choose to operate from any part of the country as long as there are businesses and people who will patronize your services. The truth is that a delivery business is quite profitable, very easy to start and it is not so capital intensive.
Getting the right medium (motor cycles, drones and delivery vans) and good tracking devices are the secrets of running a successful delivery business. So, if you are serious about starting your own delivery company, all you need do is to read this article and you will be well equipped.
18 Steps to Starting a Pick & Delivery Service Business With Contract Drivers
1. Understand the Industry
Companies that operate in the courier and delivery services industry basically provide air, land, sea or combined express courier delivery services of parcels, documents and packages for individual and corporate clients. Courier and delivery companies generally provide services between metropolitan areas or urban centers, and form a network that includes local, national and international pickup and delivery to serve customers’ needs.
Research conducted by IBISWorld shows that the Global Courier and Delivery Services industry struggled for growth over the last five years. Going forward, the industry experienced a period of rapid growth from its recessionary lows, as the global economy improved and developed economies stabilized.
Over the last five years, a large portion of the industry’s growth came from greater business activity and demand for time-sensitive goods in emerging economies. The growing number of individuals with internet access has also aided revenue. So also with more consumers leveraging on e-commerce websites, a greater number of goods need to be transported using courier and delivery services.
The Global Courier and Delivery Services industry is indeed a thriving industry and pretty much active in all parts of the world. Statistics has it that in the united states of America alone, there are about 171,604 registered and licensed courier and delivery services companies responsible for employing about 720,124 and the industry rakes in a whooping sum of $86 billion annually.
The industry is projected to enjoy 2.3 percent annual growth. It is important to state that FedEx Corporations and United Parcel Services are indeed the market leaders in this industry not just in the United States of America, but also on the global stage.
The Global Courier and Delivery Services industry has a moderate to low level of capital intensity. Players in this industry spend on average $0.17 in capital investment for every dollar spent on labor. Bigger cargo aircrafts and trucks are needed to transport packages to their intended destination, while technology is employed to track the packages while in transit.
Despite investment by companies in machinery and other reliable technologies, manual labor is still needed. This labor includes drivers, pilots and delivery personnel who work alongside and operate the machinery. With the amount of manual labor required, wages are expected to account for 28.5 percent of the revenue generated in the industry in 2016.
Any aspiring entrepreneur or investor that is considering starting this type of business whether on a small scale or large scale should ensure that he or she conducts thorough market survey and feasibility studies so as to get it right.
The truth is that this type of business does pretty well when it is strategically positioned. Places like campuses, school districts, passport offices, immigration centers, licensing offices and recruiting centers are ideal for this type of business.
The global courier and delivery services industry will continue to blossom because people and organizations will always want to send goods, documents and parcels to different locations. Despite the fact that the industry seems saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own delivery services companies.
Over and above, the Global Courier and Delivery Services industry is a profitable industry and it is open to any aspiring entrepreneur to come in and establish his or her business. You can chose to start on a small scale in one or two public facilities and operate on a local and national level or you can chose to start on a large scale with several outlets in key cities, delivering packages on both national and international level, if you have the capital and business exposure.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of delivery companies cut across individuals, corporate organizations, fast food restaurants, grocery stores, online stores, banks, students, job applicants, schools and business owners cum entrepreneurs amongst others who need their goods, documents and parcels to be delivered to a recipient.
3. Decide Which Niche to Concentrate On
Most delivery and courier services companies tend to operate general services that involve every business activities that a standard delivery and courier services company is expected to offer. That is why it seem that there are no niche areas in the industry.
But on the other hand, some delivery and courier Services Companies may decide to major in some key areas such as;
- Providing air, surface or combined courier delivery services
- Providing express messenger and delivery services
- Delivering parcels, documents and packages
- Packing and sorting operations
- Transferring and trucking (without storage)
- Delivering time-sensitive and high-value-to-weight products
- Providing food / grocery delivery services (i.e. independent service from Grocery Store)
- Providing restaurant meal delivery services (i.e. independent delivery services)
- Providing alcoholic beverage delivery services
The Level of Competition in the Industry
The competition that exists in the global courier and delivery services industry goes beyond delivery and courier services companies within your location of operation. You are expected to compete with major players all across the globe that have a stake in the country you operate in.
For instance, DHL is in full operation in United States hence you are expected to compete with them. So, it will be right to say the competition in the courier and delivery services industry is tough. But no matter the level of competition in an industry, if you brand and promote your products or business properly, you will always make headway in the industry.
Just ensure that you position your business properly, adopt safe and swift delivery process and know how to attract and reach out to your target market. But over and above, there are several small, medium and large scale delivery and courier services companies scattered all around the United States.
So, if you choose to start your own delivery and courier services company in the United States, you will definitely meet stiff competition amongst delivery and courier services companies within and outside your business location. Besides, there are larger delivery and courier services companies that determine the trend in the industry and you should be ready to compete with them for customers.
4. Know Your Major Competitors in the Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long while and so are known for that, while others are best known for how they conduct their businesses and the results they have achieved over the years.
These are some of the leading courier and delivery services companies in the United States of America and in the globe;
- DHL Express
- FedEx Corporations
- United Parcel Services, Inc. (UPS)
- Red Star Express
- YRC Worldwide
- Schenker AG
- Royal Mail
- Blue Dart – Dart Courier Service
- Central Courier
- Lone Star
- TNT Express
If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.
Delivery and courier services business is not a Green business, as a matter of fact, you will come across several small, medium and large scale couriers and delivery services companies all across major cities in the United States of America.
So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of the required amount needed to purchase delivery bikes, drones, vans/trucks and also the running cost to successfully run the business.
Over and above, if you are considering starting a delivery and courier services business, then you must also focus on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, then you are sure going to maximize profit in the business.
5. Decide Whether to Buy a Franchise or Start from Scratch
If you are looking towards starting a delivery and courier services company, you would have to start from the very scratch because you can hardly get a franchise of a delivery and courier services company to buy, if you do, it will be way too expensive.
With a delivery and courier Services Company, you should just try as much as possible to secure delivery bikes, drones, vans/trucks, build business relationship with organizations and then leverage on every marketing tool within your disposal, especially the internet to market your services.
Please note that most of the big and successful delivery and courier services companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own delivery and courier services company today, one of the major challenges you are going to face is the presence of already established delivery and courier services companies in your business location. The only way to avoid this challenge is to create your own market.
Some other challenges and threats that you are likely to face are economic downturn and unfavorable government policies. There is nothing you can do as regard these threats and challenges other than to stay positive that things will work out well for you.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When considering starting a delivery and courier Services Company, the legal entity you choose will go a long way to determine how big the business can grow; some delivery and courier services company design their business for neighborhood market, some for city wide market, while others for national and global market.
You have the option of either choosing a general partnership, limited liability Company which is commonly called an LLC, or a sole proprietorship for a business such as delivery and courier services company. If your intention is to grow the business and carry out deliveries all across the United States of America and other countries of the world, then choosing sole proprietorship is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your delivery and courier services company; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
8. Choose a Catchy Business Name
When it comes to Choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own delivery and courier services company, here are some catchy names that you can choose from;
- Lion Express Courier and Delivery Services, Inc.
- Eagles Wing Courier and Delivery Services, LLC
- Classic Flight Courier and Delivery Services, Inc.
- Zap Express Courier and Delivery Company
- Speed Lane Delivery Services, Inc.
- Double Pace Logistics, Inc.
- The Tracks Logistic Services, Inc.
- Swift & Safe Courier and Delivery Services, LLC
- Anthony Brown Logistics Services, Inc.
- North Pillars Logistics Group
9. Discuss with an Agent to Know the Best Insurance Policies for You
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. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your delivery and courier Services Company.
Here is some of the basic insurance covers that you should consider purchasing if you want to start your own delivery and courier services company in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Risk Insurance
- Credit insurance
- Motor vehicle insurance (comprehensive insurance)
- Deposit insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own delivery and courier services company, you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection.
11. Get the Necessary Professional Certification
Asides from the results you produce as it relates to swift and safe delivery of goods, documents and parcels et al for your clients, professional certification is one of the main reasons why most delivery and courier services companies stand out. If you want to make impact in the delivery and courier services industry, you should work towards acquiring all the needed certifications in your area of specialization. Certification validates your competency and shows that you are highly skilled, committed to your career and up-to-date in the market.
These are some of the certifications you can work towards achieving if you want to run your own delivery and courier services company;
- DAS Certification
- Degree or Diploma in logistics and transportation related courses
Please note that you can successfully run a delivery and courier services company in the United States and in most countries of the world without necessarily acquiring professional certifications as long as you have adequate experience cum background in the delivery and courier services industry.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot run any business in the United States without the proper documentations.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own delivery and courier services company in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Business Plan
- Non – disclosure Agreement
- Commercial Vehicle Operator’s Registration
- Appropriate driver’s licenses for drivers (Commercial driver’s license (CDL)
- Assistant’s licenses for assistants
- Proof of ownership, proper identification and vehicle license
- Copy of license for the service support facility (warehouse) and/or a recent inspection report
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Franchise or Trademark License (optional)
13. Raise the Needed Startup Capital
Starting a delivery and courier services company can be cost effective especially if you choose to start on a small scale with just one delivery van operating within a community or city. Acquiring delivery van/truck, or bike or drone et al is part of what will consume a large chunk of your startup capital, but if you choose to start the business on a large scale with fleets of delivery vans/trucks, bikes and drones and even cargo planes, then you would need to go source for fund to finance the business because it is expensive to start a large scale delivery company with networks spread out across the United States of America and the world.
When it comes to financing a business, one of the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your delivery company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell of shares to interested investors
- Applying for Loan from your Bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
When it comes to choosing a location for your delivery and courier services company, the rule of thumb is to be guided by the demand for such services and the demographic composition of the location. Of course, if you are able to start your delivery and courier Services Company in the right location for such business, you won’t struggle to make headway with the business.
It is important to note that a business facility in good location does not come cheap hence you should allocate enough fund for leasing/renting in your budget. If you are a novice in the dynamics of choosing a location for your delivery and courier Services Company, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your company.
These are some of the key factors that you should consider before choosing a location for your delivery and courier Services Company;
- The demography of the location
- The demand for delivery and courier services in the location
- The purchasing power of the residents of the location
- Accessibility and road network of the location
- The number of delivery and courier services companies in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
15. Hire Employees for your Technical and Manpower Needs
On the average, there are no special technologies or equipment needed to run this type of business except for customized logistic and deliver software, tracking device and software apps, Point of Sales (POS) Machines and other relevant software applications. You will definitely need distribution vans/trucks, bikes, drones, computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst other and all these can be gotten as fairly used.
As regards leasing or outright purchase of a warehouse facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short term rent/lease while test running the business in the location. If things work out as planned, then you can go on a long term lease or outright purchase of the property.
When it comes to hiring employees for a standard delivery and courier services company, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Transport and Logistics Manager, Warehouse Manager, Sales and Marketing Officer, Dispatch Riders, Delivery Van Drivers, Accounting Clerk and Cleaners. These are some of the key employees that you can work with. On the average, you will need a minimum of 5 to 10 key staff members to run a medium – scale but standard delivery and courier Services Company.
The Service Delivery Process of the Business
When it comes to the delivery of goods, parcels and documents, there is no hard and fast rule about it. Basically, it is the duty of the marketing and sales team to help the organization source for clients. They go out there to source for organizations, schools, online stores, restaurants and other enterprises that are regularly sending stuffs to their clients.
Once a delivery deal is sealed, the delivery drivers either load their vans/trucks or bikes directly from the clients’ location or from their warehouse, if the goods are brought to the warehouse, and then the goods are delivered to the expected location, they either collect money on delivery from the receiver or they get paid by the sender. Usually, there is a business agreement with the sender or receiver as regards who will pay for the services.
It is worthy to mention that swiftness and safe delivery is very important in this industry hence then need for all delivery and courier services companies to install trackers on the delivery vans, bikes, trucks and also leverage on reliable logistics and software apps. This will enable them keep track of the goods, parcels and documents that are on transit and also give almost accurate timing of delivery.
16. Write a Marketing Plan Packed with ideas & Strategies
Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a delivery and courier services company, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well-known brands determining the market direction for courier and delivery services industry.
These are some of the marketing ideas and strategies that you can adopt for your delivery and courier Services Company;
- Introduce your delivery and courier services company by sending introductory letters alongside your brochure to individuals, corporate organizations, fast food restaurants, grocery stores, online stores, banks, students, job applicants, schools and business owners cum entrepreneurs within and outside the city you are operating in
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on the social media or those who read blogs can know who to call when they need to deliver goods, documents and parcels within your location
- Create a basic website for your business so as to give your business an online presence
- Directly market your services
- Engage in road show in targeted communities from time to time to create awareness of your delivery and courier services company
- Join local delivery and courier services company associations for industry trends and tips
- Provide discount days for your customers
- Advertise your business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of Word of mouth marketing (referrals)
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If your intention of starting a delivery and courier services company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is dynamic and requires consistent brand awareness and boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your delivery and courier services company;
- Place adverts on both print (newspapers and magazines) and electronic media platforms
- Sponsor relevant community based events/programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
- Install your billboards in strategic locations all around your city or state
- Engage in roadshow from time to time in targeted neighborhoods to create awareness of your delivery and courier Services Company.
- Distribute your fliers and handbills in target areas
- Contact individuals, corporate organizations, fast food restaurants, grocery stores, online stores, banks, students, job applicants, schools and business owners cum entrepreneurs within and outside the city you are operating in informing them about your business and the services you offer
- List your delivery and courier services company in local directories / yellow pages
- Advertise your delivery and courier services company in your official website and employ strategies that will help you pull traffic to the site.
- Position our Flexi Banners at strategic positions in the location where your delivery and courier services company is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans, bikes and drones are well branded with your company logo.
18. Create a Suppliers/Distribution Network
In order to successfully run a delivery and courier services company, you must establish good business relationship with transport and logistics companies and even airplane services and of course organizations and businesses that are always sending goods, parcels or documents to their clients. You would need steady supply of deliveries from these organizations and businesses in order to remain in business.
If you are just starting out, you might not have the capacity to own a plane or fleet of delivery vans or even drones that will make your job easier. This is why you should look towards partnering with key stakeholders such as logistics and transportation companies and airline companies who have the capacity to deliver goods to any part of the world within the expected time frame.