Steps To Starting A Transport And Logistics Business

starting a logistics business

Logistics is a big business both locally and internationally, this is because almost everything we use daily are been shipped and delivered across various locations before it’s being sold and put to use. This is where you can step in and start logistics business and make good money out of it.

Are you thinking of starting your own transport and logistics company any time soon? Getting into the industry may not be a difficult thing to do, but staying successful as a logistics company can be very challenging for you if your business plan, finances and recruitment strategy aren’t solid from the first day you set out to start.

Whether you are starting off with a motorcycle or a minibus, you need to make sure that you are prepared for the high competition that is involved in the business because of the transport and logistics industry’s low barrier to venture. 

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Why do I need to start a logistics business?

Apart from the ease of entry into the industry, you don’t need so much capital to start the logistics business with – but you will need to do your feasibility study. This is the only way you’ll build a very stable and profitable business.

In many instances the startup entrepreneurs go into logistics businesses with very small to no capital at all, depending instead on revenue that would come from the business to cover all expenditures from day one. You need to seek out customers and contracts around before you start the logistics business because transport contracts don’t appear magically later on.

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So far you have established the line of business you will be entering into, how do you go about starting your own logistics business? These are some of the important questions you should be asking before starting a freight company:

What are the costs to consider when starting a logistics company ?

You do not need to be a finance professional, but a basic your basic understanding of finances will be helpful when starting any kind of start-up any time.

  • Number one, you will need to have a clear thought of where you’re going to source capital to get your logistics business launched. There are many options for sourcing for funds to start a logistics business, examples include: the bank, and investors.
  • Second, you need to consider the specific expenses that are always associated with the logistics industry, for example getting the licence to operate and toll expenses, aside from maintenance, fuel and driver skills development training expenses.
  • Although you have not started running your transport and logistics business yet, you need to consider the costs of operating and maintenance costs too when drafting up your budget for your logistics business.  The latter is important for providing effective service to customers as you must deliver the excellence you will sale to them. While marketing may not look as though important at this stage, it’s important to budget money for this expense as your company grows with time.
  • Remember that aside all the above expenditures, you’ll need some money to keep your vehicles safe when they aren’t in use and when they are on the road. Invest in a secure location and other security facilities, such as car trackers.
  • Lastly, you’re going to be paying your drivers and other staff remunerations on a monthly basis, so include in that expense when you are budgeting for your transport and logistics company.

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How can I acquire finances for my new transport and logistics company?

Regardless of how your business’ vehicles are funded, the cost of maintaining a transport and logistics company is one of the biggest expenditure you will have to manage in your logistics business.

Make sure you do your research before hand and understand the different options that are available when it comes to paying for buses, trucks, vans, motorcycles etc. You can choose between the following options:

  1. Financial lease and extended rental agreements, where the use of vehicles is being paid for from the revenue, no upfront payment is required here, but the ownership of the vehicles remains with the lessor of the vehicles in question;
  2. Installment sale where a small amount of money relative to the total purchase price is paid as a deposit, your installments are always fixed, and you become the owner of the vehicles at the end of the term.

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Remember to factor in the running costs of operating a logistics business, such as maintenance and wear-and-tear. These expenses should be included when considering the amount of money needed to launch and sustain your transport and logistics business.

Before meeting a financial institution for financing of your logistics business, craft a budget and calculate your affordability.

How do I employ riders and drivers to work for my logistics business?

The main components of your logistics business, besides your fleet of vehicles, are your staffs. Your drivers need to have the relevant licenses before they can be considered legal to drive vehicles in your transport and logistics company.

Avoid getting yourself into business threatening issues later on, with the law and your clients, by making sure you are employing only qualified and experienced rider/drivers at launch and as your business needs to grow. Not only do quality drivers boost productivity, but your reputation is elevated when your customers know they can rely on your employees.

Where do I find clients for my logistics business?

As mentioned in the beginning of this article, everything around us needs to be delivered from one point, to another point. So, while it may seem that jobs are scarce and getting business is difficult in the beginning, avoid grabbing the first opportunity to get your first customer.

It may sound counterintuitive to let chances at getting the wheels turning pass by, but, it’s important to assess whether it’s worth your while or not. Proper planning is essential so it’s advisable to avoid ad-hoc business.

Remember that all you need to get customers’ attention is a computer, a smartphone and an Internet connection.

Read on Effective Social media marketing for entrepreneurs

The best part is that, not only is getting word about your transport and logistics coming out there inexpensive, it’s also relatively easy and quick.

Embracing technology doesn’t mean setting up an elaborate website, but you do need to ensure that your customers can track their deliveries and reach you quickly if they need to. Perhaps you should implement an SMS notification system so clients can track their orders at the touch of a button.

Use the social media to advertise your new startup to reach a wider audience. Advertise on Facebook, Google, instagram and on twitter.

Your service needs to be as simple and convenient to use as possible.

About Syphonn

Syphonn is a Geographer, Graphics/ Web designer and Content Creator.

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