In this year’s economic downturn, many business owners and entrepreneurs are seeking new ways to expand services, maintain a stable profit margin, and stay relevant during uncertain times.
One business sector that’s performed consistently well in 2020 is pickup and delivery. In fact, the current global market size of all courier, parcel, and express services is $285 billion with a forecasted growth rate of 4.9 percent by 2027.
If you’re able to access a team of people, vehicles, and companies to partner with who need delivery services, this is a venture worth considering. With millions of consumers ordering food, electronics, household products, books, personal care items, and other essentials online, it's possible to benefit from launching your own pickup and delivery service.
Before jumping in, educate yourself on the in’s and out’s of this type of business to set yourself up for long-term success.
Invest in the correct vehicle and equipment
In order to deliver any kind of parcel, you first need the right tools to load and transport them. If you plan to handle small or mid-size items, a pickup truck or SUV may be sufficient. If your pickup and delivery service will transport furniture, appliances, and other large, heavy items, a box truck or cargo van are often necessary.
In addition to size and loading capabilities, consider the vehicle’s fuel efficiency, which will affect the costs of doing business, whether you’re making short trips or taking long-haul delivery routes.
Finally, you’ll need to acquire basic equipment, which may include:
- Ratchet straps
- Bungee cords
- Moving blankets
- Stretch wrap
- Other packing materials, based on the products being delivered
Obtain insurance and form a legal business entity
As with any other business, you need to legally establish and protect your business. You may choose to form an LLC or corporation, both of which protect you from personally assuming business debts or liabilities. The tax regulations are different for each business entity, but an accountant can help you determine which one will maximize your tax return in addition to which option makes the most sense for your overall business plan.
Once your business type is established, you will need to insure it with commercial general liability and business auto coverage, among others, which offer the following protections:
- Premises liability: covers accidents or injuries on business property and damage caused to customer deliverables
- Products liability: covers financial loss from defective products, legal issues with advertising, and customer lawsuits or settlements
- Completed operations: covers delivery of the wrong items or to the wrong recipient, and later injuries or damage caused by service rendered
- Business auto: covers medical bills, automotive repairs, and other related expenses for vehicular accidents on-the-job
Work directly with a lawyer or insurance agent to be sure your insurance covers every area of your business. Your insurance needs will vary depending on a variety of factors including the products you’re delivering, for example, food versus furniture, the number of people you’re employing, and more.
Budget for all licenses, permits, and expenses
Before the business can be operational, you must first register for both state and federal taxes and then obtain the right permits and licenses for commercial deliveries, all of which vary in cost, that you need to account for in your budget.
When budgeting, factor in recurring expenses as well, such as gas, vehicle maintenance, insurance premiums, staff payroll, and health insurance. Other less obvious expenses might include GPS tracking software or ergonomic seat equipment for drivers.
Use this opportunity to create a separate bank account for the business to avoid any confusion between personal and business. You may also consider opening a business credit card to begin building your business credit.
Establish and implement your marketing plan
As you build a marketing plan, start with your target clients: are they local or within a certain mileage from your storage warehouse or offices? Does your customer base look for courier services online, in print, or both?
Once you have a clear picture of your ideal client, start market research, and tailor all promotional efforts accordingly. In most cases, a combination of digital and print strategies will be key to diversifying your audience reach, while online reviews and word-of-mouth referrals will help drive business from satisfied customers.
As you build a marketing plan, here are some platforms and tactics to consider:
- Run social media campaigns on Facebook, Twitter, and Instagram, depending on where your ideal audience is most active.
- Hang flyers in public areas or local establishments.
- Give coupons and business cards to local businesses and previous customers who can give them to others.
- SEO-optimize your website to drive organic traffic from customers looking for your services.
- Collect and share customer reviews, testimonials, and ratings.
- Get your business set up on Google My Business, Bing Places and Yelp for Business.
- Use Craigslist and local newspaper classified advertisements to reach more potential customers.
- Reach out to local businesses such as grocery stores, dry cleaners and law offices, to see if you can provide delivery service.
How to start your pickup and delivery service
Whether you’re a new entrepreneur or an established business owner, a pickup and delivery service could be an option worth considering. With its steady growth projections and relative ease of implementation, this cross-industry business venture is a valuable one to explore during these unprecedented and uncertain times.