A courier service is a business that you can literally start overnight. The simplicity of a courier service makes it a great business to start if you have limited funds. They also enjoy healthy profit margins, which you can read more about here.
Other than a small amount of upfront capital, not much is required to start a courier business. If you have a reliable vehicle, a cell phone, and a few hundred dollars, you are already half way there! Here’s some more information about how to start a courier business.
What is Required to Start a Courier Business?
There aren’t very many requirements that need to be met in order to start your business. You may already have, or have access to most of them right now.
Start Up Capital
The most important thing needed to start a courier service is cash. Fortunately, you won’t need too much of it. One or two month’s expenses should be enough. By then, your customer’s payments should start rolling in (if they are being invoiced rather than payment up front).
If you are really strapped for cash, which is understandable in this day in age, there is a way to get start your delivery business with no money at all. We’ll go into more detail about that later on in this article.
A Reliable Delivery Vehicle
Since you’ll obviously be driving a lot, having a reliable vehicle is extremely important. Not only because of costly repairs, but because you need to provide the highest quality service to your initial customers. Break downs and late deliveries won’t instill much faith in their eyes.
The Right Kind of Vehicle
You’ll also need to make sure that you have the right type of vehicle for the clients that you are targeting. If you are delivering small articles such as legal documents, a small compact car is ideal. But if you are servicing local manufacturing plants, dry cleaners, or other businesses, you may need a cargo van or pick up truck.
You’ll definitely need auto insurance if you are planning to start a courier service. But your regular policy might not fit the bill. There are usually restrictions in place that won’t cover business or commercial use. Your insurance agent should be able to help get you the coverage you need.
Business & General Liability Insurance
It is also a good idea to seek business or general liability insurance for your new delivery business. This will cover the loss or damage of items that you are delivering for your customers in the case of an accident or other unforeseen event.
Because starting a courier business involves a lot of driving, a cell phone is a must. You can use it for all of your courier service business. It is also a good idea to get a smart phone with GPS capability if you don’t have one. This will make it easy for you to always know where to go. There are also many useful apps that can help you avoid traffic jams and back ups so you can better serve your customers.
How to Start a Courier Business with No Money
Many people might have some cash constraints that don’t allow any room in the budget for additional risk. But there is still a way to start a new business. First, let’s talk about why you need 1-2 months expenses to start a delivery service.
Your Customers won’t Pay Right Away
In the business world, payment terms are generally 30 days. That means that after you provide a service to your customer, you will get paid 30 days after you invoice them. Sometimes this is dragged on a bit longer. That is why you should have 1-2 months of expenses saved up prior to starting a courier service.
So, How Exactly do You Start a Courier Business with No Money?
It’s simple. By using a financial product called invoice factoring, you can get paid within hours of providing a service. Factoring is when you get a cash advance on your accounts receivable for a small fee. It works like this:
- You perform a delivery for your customer, and invoice them later that day.
- Then, you contact your factoring company and send them a copy of the invoice, and some information about your customer.
- The factor will advance you a portion of the invoice amount (Usually between 75-90%) in about 24 hours.
- You now have enough cash to pay your bills and keep the business running.
- When your customer pays the invoice (30+ days later), the payment gets remitted to the factoring company. They will then forward you the remaining balance minus a small fee.
The Legal Requirements of Starting a Small Delivery Business
You definitely wan’t to make sure you are in compliance with all laws. It also may be a good idea to form an entity such as an LLC or a Corporation. It is best to consult with an attorney regarding entity formation, as we are not licensed to practice law nor are we providing any legal advice.
How to Market Your Courier Business
Now that you’ve got your new courier service all set up and ready to roll, you’ve just got to find some customers! This is probably the hardest part for most. Fortunately, you’re here reading this guide. Let’s get to it.
Cold Calls & Walk ins
While it is rough work and by no means glamorous, cold calling local businesses and showing up in person are the best ways to get your initial customers. Unless you have prior contacts or relationships, no one will know your name. You’ll have to go out and introduce yourself.
You should establish an online presence with the local business directories. This will put your business name and phone number out there. As you gain new clients, urge them to leave you a review. You can offer discounts to encourage reviews, as they will pay off tremendously in the future.
As you gain more online reviews, the search engines and business directories will display your listing higher up in the results, as it appears to be more trusted. This instills more trust in your potential customers, and creates your brand. The more times people see your brand and information, the more likely they’ll be to think of your company when they need a courier company.
Prior Contacts and Relationships
You should definitely use prior relationships and contacts when starting your service. Just be careful not to get caught up in any non-compete clauses if you’ve worked for a courier service in the past. Think long and hard about this. Maybe you used to work for a medical office that used a courier service regularly. Call up and old friend that still may work there, and ask them to give you a chance. You’d be surprised what you can come up with if you think long and hard.
The Big Picture
Starting a courier business is a great move if you have limited funds, and would like to start a profitable business in your locality. Often times, it can only take less than $500 to start your business. By following these tips outlined in this “how-to” guide, you should have a better understanding of what’s required to start a delivery company.