10 Tips to Start a Profitable Logistics Company in 2021

How to start a profitable logistics company

As with all businesses there are varying types of logistics companies; those who transport raw goods, such as grain or potatoes and the like, or livestock; those who transport packages from a to b on behalf of third parties, even a taxi company is considered a logistics company as it is transporting something (a person) from a to b.

Choosing which part of the logistics business you are targeting will determine what you are going to need to be able to start your own business. For example, if it is third party package delivery you will not necessarily need a big lorry to facilitate this…however, you will need to have a good understanding of how long a journey is going to take and excellent organisational skills to make sure you deliver everything from a specific area at the same time (rather than wasting time by going to and for).

If you intend to know how to start a logistics company which transports raw goods or livestock (or even white goods), you will need a lorry (specific lorries for different requirements). You will need to have a special HGV licence to drive said lorry (or to make sure that a designated driver has the certification).

There are some tips which apply in all cases – irrespective of what you will be transporting:

1. Have a Business Plan

Even if you only have one vehicle and are driving it yourself, this is your business. You will need to name your business and register that name as a business. But you will also need to think about where you go after all this is in place. You will need to make sure that you are visible, if they don’t know you exist, how will customers come? You will need to make sure that you don’t over-commit (and it is hard to turn down a job when you are working for yourself).

All of the above, along with any plans for expansion should be in your business plan. This will keep you grounded and focused.

2. Create your Brand

What are you going to call the new business? If it has a long name, can it be abbreviated to a catchy name that can be displayed on vehicles, letterheaded paper, business cards, etc.? Choose the colours wisely, you are going to be stuck with them for a long time (hopefully!).

3. Get Licenced

You cannot just decide that you are going to be a delivery driver and go out and tout for business. You need to make sure that you have the relevant licences for the deliveries you will be making. As stated at the beginning, the licence you need will depend on what you decide to specialise in.

4. Manage your Finances

There are many reasons you might want to work for yourself, including benefitting from being paid directly from the customer. However, if you are moving to this from a PAYE position you need to remember that many firms will not pay their bills until the end of the month (some at the end of a quarter!). If the business is plentiful from a supplier but they only pay every three months, you are going to need to self-finance during this time…so, make sure you have something to fall back on for such emergencies.

5. Know the Competition

The chances are that, if you have chosen to start a logistics company, you have worked in the field beforehand. This doesn’t mean you know everything there is to know. Do your homework, ask questions and go to networking events to keep up to date on what the competition is doing.

A great example of the need for this is knowing what to charge to make your service more appealing than the competition. Also, sometimes, a competitor will give you work that they cannot fulfil (rather than let the client down) and the same can be said for yourself…if you have an urgent job, but are already committed, you can call on other firms to help out. These unions happen more often than you realise and can be both educational and make you money.

6. Choose your Locale

This is an especially important step. Obviously, business premises are preferable as it gives the customer the impression of professionalism. When starting out, this might not be affordable but, if you can, investigate shared office spaces.

If you are looking to service a particular area, it is bound to be the area you live in and so the address is not really an issue as locality is what you want.

However, if you are going to offer a nationwide service, you will probably need a couple of addresses (even if one of them is a work at home locale) as this gives the company more credibility and comforts the customer.

7. Create a Website

These days it is extremely easy to set up a webpage. There are free apps out there that can guide you through each step. If you don’t feel comfortable doing this yourself, get someone to do it for you. If you must pay, it’s a worthwhile investment.

8. Create a Tariff

We touched on prices and how important it is to know your competitors. Once you have decided a price range – be it based on miles or cargo (or a mixture of both), create a price list and make sure that it is easily accessible on a website. As a fledgling business you may want to print some leaflets off and drop them around your target companies.

9. Employ an Accountant

Everybody who is self employed uses the services of an accountant. At the start of a business, it is wise to retain an accountant to advise you on what you need to declare to the authorities. You may learn from this on an ongoing basis and eventually only need an accountant for end of year audits.

Once your business has been successful for a while, look at employing an Accounts Administrator or Bookkeeper to keep on top of the day to day running of the business. Usually, you can combine this with them answering the phone so that you don’t miss any business.

10. Get Insured

If your vehicle breaks down, you are going to be responsible for any repairs (or maintenance). The longer it is off the road, the more money you are going to lose. Make sure you have a comprehensive insurance package to see you through these events.

In summary…

You only get one chance to impress, the above points will ensure that you are ready to take on work when it is offered and to fulfill the obligation and obtain repeat orders and word of mouth recommendations. Good Luck!

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