How to Start a Courier Business

A courier business is a company that moves packages from one location to another for a fee. Starting a courier business can be a lucrative opportunity, but there are practical considerations and logistics you may overlook that need to be taken into account. With a little time and effort, you can start a great courier business.

EditSteps

EditStarting Off

1. Make initial decisions on your service area and types of packages. A courier service is a company that delivers packages from location to location. If you're interested in starting a courier company, take some time to make decisions about your service area and the types of packages you'll be delivering.
   
   • What kind of parcels and packages do you want to deliver at your company? The answer to this questions depends on your own resources. If you're relying on people using small cars or bikes, you may want to stick to small packages and envelopes. If you have access to larger trucks, you may be able to make money making bigger deliveries. Also, keep in mind there are specific regulations on certain types of packages. Medical goods and industrial chemicals have specific handling and care requirements. Your carriers may have to have specific certifications to carry such substances depending on your state.^[1]
   • How big do you foresee your service area? Do you want to deliver globally, transporting packages across the country? Or do you want to stick to a small, local region? What scope are reasonably able to handle? A local courier business might be easier to manage as coast-to-coast delivery can be expensive and you would be competing with larger companies, like FedEx and UPS. Spend some time thinking about how far your delivery range can reasonably be before committing to a courier business.^[2]
2. Meet with business advisers. Unless you have a strong background in business, it's unlikely you can establish all aspects of a new business alone. You'll need to meet with a variety of advisers to establish the terms of your courier business.
   
   • Consult a business attorney familiar with the courier service industry to advise you on matters such as local zoning laws, which is especially important if you will run the business from your home.
   • Consult an accountant to advise you on how to keep your business records, tax filings, the pros and cons of employees vs. independent contractors and setting up an accounting system. You'll need to figure out how customers can pay and what kind of credit cards, checks, and other payment options you're willing to accept.
   • Consult an insurance professional to advise you on obtaining the proper business insurance for your office and its contents as well as commercial vehicle coverage, cargo insurance, worker's compensation insurance (if needed) and health insurance.
3. Gather the necessary equipment. You'll need some basic, physical goods to start a courier business. Spend some time gathering these materials as you move through the preliminary process of starting your business.
   • Decide on vehicle types. If you're only delivering letters or small packages, consider using bicycles or small cars. You may be able employees to provide their own transportation as long as their cars and bikes are able to pass certain tests to assure they're running properly. However, if you're transporting bigger items you may need to use large, cargo trucks. You will have to provide these types of vehicles to your employees. You may need to take out a business loan to front the initial cost of trucks.^[3]
   • Cell phones, clipboards, maps, and GPS systems are also important for a courier business. If you want your employees to wear uniforms, keep this in mind as well.^[4]
   • Once you're ready to start advertising your business, you'll need to put some money into this as well. While you may not need to advertise in the early stages, as you'll be busy securing permits and making decisions regarding your business plan, it something to keep in the back of your mind. You do not want to over budget.
   • As stated, you will probably some kind of loan to pay for early costs. Talk to the business attorney you spoke with earlier and ask him about the logistics of securing a loan.
4. Consider monthly expenses. You want to make sure your business plan is feasible. Spend some time estimating what your monthly expenses can be. This information can be helpful down the road when deciding on how much to charge customers.
   • For a courier business, your main monthly expenses will be vehicle insurance, cargo insurance, and fuel.^[5]
   • There may be specific expenses regarding your personal business plan. Make a list of potential expenses you may encounter each month to help you estimate your total monthly expenses. Consider things like wages, marketing and advertising, utilities, and any interest you'll have to pay regarding loan costs.^[6]
5. Decide how much to charge. Considering your monthly expenses and other factors, you need to consider how much you'll charge your customers. Spend some time thinking over the prices you'll charge as a company.
   • Consider your location. In a bigger, metropolitan area you'll have to charge more to make a profit. You should also look at your competition to get an idea of average rates. If you can get by charging slightly less than the competition this might give you an edge.^[7]
   • You should also study your target market. If you're, say, delivering food and groceries in a college town you may have to keep your rates low. However, if you're delivering pricey antiques and high scale items in an affluent suburb, you can charge more and still get business.^[8]
   • With the help of an accountant, see how much you need to charge to make enough profit to maintain your business. From there, tweak prices and rates when you can to make more money. If you lack experience running a business, you may need to enlist the assistance of a professional here.^[9]

EditGetting Licenses and Insurance

1. Figure out what kind of licenses and permits you need. As a business, you'll need a variety of licenses and permits. The requirements for obtaining a license vary by state. However, there are some general rules that can help you determine the right license for your business.
   • A courier business is not consider a professional field like medicine or psychiatry. Therefore, you do not need a professional license to practice. However, most states do require a business permit and certain tax forms for you to legally operate.^[10]
   • Use SBA.gov to find state specific information. The necessary licenses, as well as the processes involved in obtaining said licenses, varies greatly by state. The SBA website allows you to search by your state and can walk you through the process the right license to operate a courier business in your state. If you're confused by anything, the website should provide contact information regarding which offices in your state can help answer questions over a phone. You should also talk to a business lawyer throughout the process to make sure you're following all regulations properly^[11]
2. Look into tax permits. You will also need to file taxes with the state and local government, which requires registering your business. Depending on your state's regulations, your business may need a federal tax identification number. The SBA website has a tool called "PermitMe" that can help you determine which tax forms you need to fill out based on your business's size and services.^[12]
3. Get insurance. Courier insurance is a must for you business. A courier insurance policy makes sure you are not held personally liable if items you're transporting are damaged or lost during delivery. Courier insurance policies are generally inexpensive and you can talk to a business attorney or go online to find the right policy for your company. You may also need to get insurance policies regarding the vehicles you'll use for transportation. Keep in mind, depending on the size of your business, you may need health and other insurance policies in place for your employees.^[13]

EditEstablishing A Business

1. Hire and train employees. Once you've established the basics, you'll need to hire and train employees. The amount of employees you'll need depends heavily on the size of your business and your needs.
   
   • First off, you will need delivery people able to transport products. Look for people who have clean driving records. You should also keep physical fitness in mind. If you have people making bike deliveries, for example, you'll need to find people physically capable of riding a bike long hours. If you're going to have couriers transporting large objects, make sure employees are able to do heavy lifting.
   • You will also need a variety of administrative positions for a courier company. Who will answer phone calls and deal with customer concerns or complaints? Who will keep track of the location of items? You'll need a customer service team, a sales team, and other basic administrative employees. Seek people out who have experience working with people and are friendly, respectful, and outgoing.
   • You'll need to conduct some training with new employees. Every business has certain ethics and standards it strives to live up to. Think of a training policy ahead of time and spend some time going over ideas on how to best instruct your employees.
2. Advertise. As your business is starting, advertising is vital. You'll need to make sure customers know you're an option in the world of transportation and delivery.
   
   • Forming an advertising campaign is difficult, especially if you're doing it for the first time. However, the advantage to a campaign is that you have full control over how your product is advertised and the image you're presenting. Prior to starting a campaign, think of how to brand your business. Is your appeal lower costs? Reliable drivers? Do you deliver items that other companies might not? Spend some time forming a fun, engaging advertising plan.^[14]
   • Be upfront about certain facts when designing things like fliers, websites, and press releases. What services do you offer? How can customers obtain these services? What are your rates? What promises or guarantees are you giving? Customers are more likely to contact your business if the information is presented in an accessible manner.^[15]
   • Knowing your audience can help you decide when and where to advertise. Having an online presence, for example, can help with a younger crowd. If you're advertising for an older generation, you might want to stick to more traditional forms of advertising. Knowing your audience will allow you to most effectively deliver your message.^[16]
   • If you're new to running your own business, you might want to consider taking a marketing, graphic design, or business course.
3. Look for clients and customers. You may have to seek out clients and customers as a courier business. Are you planning on offering your services to local businesses that do not offer delivery? Make some phone calls to restaurants, furniture stores, or other places. Word of mouth helps a lot with these kinds of businesses. Offer special member-to-member discounts when you're starting to encourage people to recommend your services to others.^[17]
4. Be persistent. Starting any business is stressful. However, try to be persistent. It may take awhile for a new business to become establish so don't except success to happen overnight. Keep working hard and eventually it will pay off.

EditTips

• Consider dedicating one credit card to all of your business expenses. It will make it much easier on your accountant when it comes time to reconcile your accounts and pay taxes.
• Keep close track of your business mileage vs. personal mileage. Mileage for personal matters is not tax deductible.

EditWarnings

• If you plan on delivering interstate, be sure to check rules and regulations of those states as they pertain to your work.

EditSources and Citations

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