Updated: Jul 15, 2020
By Rayan Omer
As COVID-19 negatively impacted the majority of businesses, only a few companies continued to succeed. During the Coronavirus shelter-at-home orders, it became the period of deliverables. I don’t mean deliverables in the sense of work output; instead, I am referring to small courier delivery services.
With more than one-third of the world’s population in lockdown, according to Business Insider, online trade businesses like Amazon, eBay, and Walmart thrived because the shelter-at-home order and the fear of getting infected with the Coronavirus made outside interactions very limited.
Now that more companies are re-opening, the fear of infection is still lingering in the air. According to Healthline, confirmed COVID-19 cases are increasing in numbers with stage two openings of businesses nationwide. Launching a small business for delivery courier services saves people the unnecessary trips to run errands. In the courier business, you can choose who your customers are and the type of business you provide, such as delivering for dry cleaners, florists, or other public entities.
Even though there are other transport companies that are already in business like FedEx and UPS, the need for a small business that provides faster or same-day delivery is still in demand because of delivery delays from big companies.
Some good reasons for opening a delivery service is that one can run the majority of the business from home. Added benefits to doing so are: the savings on business leases, local short commutes, flexible work hours, instant payments upon delivery, IRS tax deductions (e.g., IRS allows you to deduct 57.5 cents per mile) as a business expense, and reducing your tax burden significantly.
For all of the reasons mentioned above, it makes delivery businesses ideal to launch during a Coronavirus Pandemic. But, hold your horses! Before you jump into starting your own courier service business, here are a few things to consider:
What Do You Need to Start?
Starting a courier business is simple. It doesn’t require much, nor do you need a specific degree, training or even prior experience to begin. If you have a driver’s license and a car, you are all set to go. The main skill that you need besides knowing how to drive is communication skills with your customers. To launch your business, you’ll need a few things to start like a dolly, straps, or a van (if you’re planning big).
But before you jump into your new business, there are a couple of things to consider:
Creating Your Business
You need to determine what type of entity your business will be, whether it’s going to be a sole proprietor, LLC, or S corp. It’s essential to limit your liability in case of any potential claims in the future.
Know Your Delivery Boundaries
Determining your delivery boundaries helps in identifying your future customers and saving on mileage and gas.
Advertise Your Business
Whether you hand out business cards or depend on referrals, you need to market your business. Some business owners use posters and flyers for advertising in popular local shops, like pizza places, while others use Facebook ads. How you advertise depends mainly on your budget. Other inexpensive ways for advertising include creating a website or social media postings. The more you pay in marketing, the greater publicity your business receives.
Have a Budget
Your financial expenditure and requirements are your initial budget for planning your delivery service business. Determine how much you’ll charge your customers, typically when using light vehicles like mini-vans and pickup trucks; the average cost would be $36 per hour according to Profits on Wheels.
Customers need to be involved in calculating how much their delivery would cost. Business Express provides a list of criteria to help in determining the cost of delivery. The list includes the time and mileage it takes to reach your package’s destination, how fast customers want their packages delivered, and how heavy their packages are. Keeping your customers informed about how your fees are calculated helps them in budgeting for your service and makes them understand your pricing fees. It’s better than your customers thinking you are too expensive or you came up with the price from thin air.
How Much Would It Cost to Start Your Business?
The main cost of your delivery business would depend on the type of deliveries you make. If the deliverable packages are smaller in size like paperwork or medical supplies, then having an SUV or a compact car would do the work just fine. In contrast, delivering big items like furniture would require a van or a truck. The main cost comes from the vehicle you’ll be using for transport. According to Upcounsel, the cost of a van or a truck ranges from $18,000 to $50,000. The higher the vehicle’s price, the more useful extras are included, such as automated lifts.
Additional costs may include a dolly, straps, and blankets for fragile items. Getting insurance for your business car is also an essential cost to cover. Other costs would depend on whether you’ll use your personal phone number or get a different phone number specifically for your business. Having a separate phone number matters significantly if you are not a sole proprietor business because it keeps the formalities of conducting a business. This could help protect you from piercing the limited liability shield protection you have and not jeopardize your personal assets if you get sued.
Keep in mind other expenses that I have mentioned earlier like advertising your business plus fuel and maintenance costs to keep your business going.
Another main crucial cost is commercial insurance. It’s vital to protect your vehicle. You don’t want any expenses coming out of your personal assets because you failed to have commercial insurance.
Progressive Commercial has a few tips to ponder upon before deciding on the type of insurance you’ll purchase. The type of vehicle you’ll use in your delivery business matters in the type of coverage you get. For example, different cars will have different commercial insurances because if a truck gets in a car accident, it would cause more significant damage than a smaller vehicle,
Another thing to consider is your driving history. Violations and accidents have a greater impact on a commercial truck policy than a typical auto policy because carrying heavy items like furniture have a higher risk of damage than smaller pieces.
As a small business owner, you need to be mindful of keeping your record clear from any violations or accidents to save money on your insurance policy. Also, the price of commercial insurance differs depending on the states you’re operating in. If you need more protection from your commercial insurance policy, then make sure you have more coverage.
In purchasing an insurance policy, the price of the annual rate may shock you, but bear in mind that baby steps work better. You can have monthly payments instead of the full annual fee.
Who Are Your Customers?
When it comes to having customers in a delivery business service, the sky is your limit.
You can choose the type of customers you want by how far you’re willing to go or you can keep it for local customers, such as a pizza place or a florist shop.
Each one of those customers has its own benefits. Being only within range of your home helps with delivering things in no time, since you are close to your customers. On the other hand, making further deliveries gets you more profit since you charge by the mileage until you reach your destination.
Maintaining your car and paying for fuel are costs you need to consider before defining your range of customers.
How to Pick a Name for Your Delivery Business?
Profits on Wheels provides tips on picking a name for your courier business. First, personalize your business by choosing your first name. This is vital because it gives your business a persona and helps customers know whom they are dealing with besides the customer service. Also, by choosing your name, you make sure it’s unique and unlike anything else in the market. You can personalize your name further by adding the region of where your business is operating in, such as including the name of your county or city.
Second, your name should be clear as to what your business is. This might not be the case for big companies like Uber or Google, but it’s essential for small businesses. Customers don’t have the time to search for what your business does. So, think of your name as the first way to advertise for your business.
Third, if your business operates at different times, try and incorporate that detail into its name. For example, if a person can order delivery in the evening and get it delivered early morning, it’s imperative to make sure your name highlights this feature since most businesses don’t work overnight to deliver packages
Additionally, if you provide a 24-hour delivery service, consider adding your hours of operation. Some examples are “Rayan 24-hour delivery” or “Rayan overnight delivery.” This helps you brand your business name and answers some of the questions that your future customers might have as to your business’ operating hours.
After establishing your business and dealing with all the logistics of creating a legal entity, such as choosing an easy name for your customers to remember and defining who your customers will be, your job is not over yet! You need to keep up with your reputation.
Keep Your Good Reputation
As a small business owner, you want to create lasting relationships with your customers to enable them to come back to your business according to Chron. Stand out from the crowd by knowing what your customers want and need.
Encourage your customers to use your delivery business by having a rewards program. For instance, for every 10 deliveries they order, they get a flat fee price or, if you feel more generous, they can get a free of charge delivery!
In summary, to start a courier delivery business, it needs planning just like any other business. It’s nice to be your own boss and quit the rat race of nine to five, but nevertheless, you’ll need to work hard for your business to grow.
Planning your business entails having a budget and knowing your costs and profits, who your targeted customers are, what type of entity you’ll form and how to market your business.
When you welcome complaints in a positive manner, they help you improve for the future. It also allows your customers to give you a second chance which keeps your reputation in good shape.
The Coronavirus’ unprecedented time has led the entire world to sign up for delivery services, such as food takeout, grocery delivery, medicine, etc. Launching a delivery business provides your customers with what they need and at the same time, it's an opportunity for small business owners to make money. In any negative situation, all we need is a positive attitude to keep us going. Change your lens and you might see around the corner --- a new idea to launch during the COVID-19 shelter-at-home order.
--- Are you interested in launching or sustaining a pandemic proof small business? Spot issues, take action, stay safe, and thrive in a post Covid-19 world with Legalucy. Learn more at thelucyreport.com
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