Smartphones and online shopping have changed the landscape of delivery businesses significantly. Therefore, starting a niche now can give you a leg up. Also, getting late to the market will shrink your opportunity due to increased competition from established brands.
For instance, in 2018, UPS failed to buy the struggling US postal service, its main competitor. It turned out to be a humiliating loss of opportunity, leaving UPS with only a 30% market share of the total delivery business in the USA.
Keep reading to know how to start a delivery business.
Starting a Delivery Service: Step-by-Step Guide
Below are the 9 steps to starting your delivery business:
1. Business Plan
When starting a delivery service, you need to make a business plan. Having a written plan is crucial to communicating your ideas and describing how they will come together into a cohesive service.
When creating a plan, go in order of priority. A simple way would be:
- What services to offer?
- How are these services offered?
- The equipment needed to offer the services outlined
- Business goals (how much profit, the prices to charge, etc.)
- Marketing (how customers will find out about the service, where they can go to make orders, price levels of advertising, etc.)
- Management (who will manage the business, criteria for choosing managers, delivery drivers, etc.)
- Financials (what the company makes, the prices for the services it offers, the budget necessary to meet startup costs, and running overheads until profits trickle in).
2. Operating Costs
The next step is listing out all of the equipment and supplies you will need to operate the service.
This list should include everything from paperclips to gas for delivery trucks and permits/licenses.
For instance, if your service requires early morning deliveries, there is probably an extra fee for occupying the street early in the morning.
3. Finding Business Partners
The partnership is the right way to go with delivery businesses. That’s why Amazon is making headlines with its Amazon Delivery Service Partner.
Most importantly, finding the right business partners could spell success for your delivery business. A business partner can be anyone from a close friend to someone you share the same business interests.
Be sure to pick trustworthy people and share similar goals as you. It is also important to realize that this business venture is a long-term commitment. People you partner with must be willing to invest time and effort into a long-term plan.
4. Legal Issues
At this point, you need to register your company legally. This is a crucial step that you can do through your local municipality. If you think you need help register your delivery business, you can trust these renowned formations services and registered agents to help you with starting up or running your business.
You are also legally required to open a business bank account so as to separate your personal finances from the business monies.
Sometimes there will be extra fees for starting a business in a particular area, but the cost of not complying with regulations outweighs them by far. Therefore, you need to pay state and federal taxes, which vary from one country to another.
In addition to registering your legal business entity, you must also, if necessary, register your service with the local government to ensure safety and compliance with regulations.
5. Operational Hours
Next, you need to establish the operational hours for your service/ orders. You can do this by setting specific days and times or simply making it available every day within a particular time.
In case there are many working-class people in an area, you may schedule your services from 8 am-6 pm Monday through Friday.
6. Equipment / Vehicle Checkout
At this point, your delivery business is almost taking off. The next step is to coordinate vehicle checkout.
One way to start a delivery service cheaply is to begin by hiring cars for local delivery. Additionally, you can approach start-up loan companies and sign a car loan. Or else, you can sign a vehicle rental agreement to use a delivery van until the company buys its delivery vans.
7. Hire People
You not only hire people but hire the right people. Hiring the right people with a positive mindset can take your small business to horizons.
Therefore, this step requires a lot of thought and consideration. Be sure to hire trustworthy and hard-working employees who will work well with your partners.
8. Finding Customers
At this point, you're now ready to accommodate customers' orders. However, you need to find customers first.
There are multiple ways of doing this, from word-of-mouth marketing, reviews (having satisfied customers tell about your services), or through advertising in places where your potential customers frequent.
9. Grow Your Business
You have established your service, so it is time to grow your business. You can grow your business through new services. For example, you could advertise another delivery service like the pick-up/drop-off laundry service.
This growth method ensures that you are continually adding to the number of your customers.
Another way of growing your business is by expanding. For example, you could open a shop that offers deliveries and pick-up/drop-off service.
Is a Delivery Business Profitable?
Many factors can influence whether running a delivery business is profitable or not.
Business model: Different delivery services have different costs for each service they offer. For example, if your unique selling proposition is quick, express deliveries, you will have less overall costs than in the case of most typical services.
Delivery operation: Your geographical location affects the size of your demand. The more demand for your service in a city or town, the more you can enjoy better profits there.
Operation costs: Operating costs can also be crucial to the success or failure of a delivery business. There are fixed costs that the business cannot influence, such as insurance costs.
However, companies must keep variable costs as low as possible for high profitability. Delivery service companies lower operational costs; they can charge less than competitors- this translates to high sales turnover and much profit.
Economic conditions: During economic downturns, the demand for affordable delivery services tends to rise as consumers seek ways to cut costs. Conversely, during an economic boom, more lavish spending on deliveries may reduce the need for cheap alternatives.
Therefore, the best way for businesses to remain profitable is to be flexible to respond swiftly to changing market conditions.
Market size: Large cities can be profitable. However, small towns near larger cities or which have large institutions can sustain delivery businesses. Be sure to do your research before opening your doors.
Customer satisfaction: Customer reviews are essential to the success of any business. Your market research, customer service, and consistent delivery always reflect positive reviews as we altready showed in our 'How to Start a Bed and Breakfast Business' post.
What Are the Top Delivery Business Ideas?
Courier Delivery Services
Courier delivery services are rapidly becoming the top choice for companies who need their products delivered in a timely matter. Courier delivery services have become remarkably popular with the ever-increasing number of online shoppers (see our best online businesses guide).
These services offer more than just package delivery–they also include complete logistics management. Also, such businesses are so popular for providing high-quality, speedy delivery services. So, the courier service business is an important job as many companies rely on this service!Starting a delivery business in 2022 is not too late. The guide below will help you get started. In addition, due to the mushrooming delivery business industry, most people know how these businesses operate. Take advantage of this guide and dive into this growing industry.
Many restaurants and bakeries are now delivering food across your city, thanks to delivery service apps like UberEATS and GrubHub.
This business idea is especially great for those looking to work from home or on the go, as you'll be able to manage your whole delivery process on an app. Don't worry about keeping an office; you can handle your transactions through your phone or another mobile device!
Fruits and Grocery Delivery
As a fruit and grocery delivery service provider, you would be responsible for picking up produce from local farms (see 'Starting a Farm Business')and delivering it to customers' doors!
This may sound like a lot of work, but there's a whole industry that caters to this need. With the increase in demand for organic and high-quality fruit, this idea is perfect for those with access to fresh produce.
You would presumably start your own delivery business by buying a pickup truck. This way, you can maintain complete control over what goes into your customers' boxes as well as the pricing.
Once you've decided on a system for your deliveries, you can begin advertising and signing up customers!
Laundry Delivery Services
You can run laundry delivery services as a side job or your primary income. You are responsible for picking up and dropping off the laundry at the clients' homes/offices.
You can act as the middle man between the clients and the local businesses. Additionally, you can open a cleaning service station and opt to pick and drop customers’ laundry.
You only need a website/App where customers drop the request, a delivery van, and a carry bag. Additionally, you can brand your equipment to help market your services.
After Hours Delivery Business
Some people get back home late due to their working schedules. These people still require delivery services for snacks, laundry, or other services.
You can offer after-hours delivery services and fill the opportunity in such a scenario.
What more? Such clients are willing to pay higher to receive the service during such odd hours, translating to higher profit.
Delivery Business Closing Thoughts
Due to the mushrooming delivery business industry, most prospective entrepreneurs know how these businesses operate. Take advantage of this guide and dive into this growing industry.