Advice Before Starting A Courier Franchise
There are more people than ever purchasing goods online and the e-commerce market looks set to grow exponentially over the next few years. With this in mind, courier services are becoming an increasingly popular and in-demand business. When done correctly, a courier service business can be very profitable.
However, there are several things that you need to consider when setting up a courier business in order to see success and create a sustainable income for yourself. In this article, we’ll take a look at the most important things that you need to think about before setting up this type of business.
Reliable Transportation
When running a courier service business, the most important thing you need to get started is a reliable vehicle. The last thing you want when you start delivering is for your vehicle to suddenly break down, making it impossible to complete the work at hand.
Naturally, there are lots of vehicles to choose from. To help you get the most out of your transportation, we’ve broken down your options:
Bicycles And Electric Bikes
A cycle courier is an ideal green solution for city centre courier services, and a low cost vehicle to run if you’re on a tight budget. A bike will easily allow you to cover a two-mile radius, which is why it’s great for dense urban areas with relatively high concentrations of deliveries.
Bicycles are one of the fastest and most efficient ways to get around as they can take routes that other vehicles cannot, and can be pretty handy during peak travel times. Top brands include Raleigh, Fuji, Bianchi, Pure Cycles and Firmstrong, just to name a few.
Costs such as insurance, vehicle tax and general maintenance are either low or non-existent; however, the bike must have working lights, reflectors and brakes.
Motorbikes And Scooters
Motorcycles and scooters work on a similar basis to bicycles but allow you to go faster, meaning you can cover a larger area. Due to the limited storage space for carrying parcels, motorbikes would be suitable for city-centre work. Although they cannot take similar routes to bikes, motorcycles are less affected by traffic jams and can be parked almost anywhere.
Running costs for a motorbike are cheaper than a car or van, with average petrol costs around £500, compared to more than £1,000 spent per year fueling larger vehicles.
A helmet must be worn and in compliance with government regulations. Recommended motorbike and scooter brands include Yamaha, Harley Davidson, Honda, and Suzuki.
Cars
A car with a good size boot will allow you to cover a suitable area as you can carry more parcels, and is a good option for those starting out. Opting for a car that’s more economical on fuel will help you to keep control of your expenses.
Vans
The most popular option for courier services is a van as it allows you to access a wide range of clients and offers a broader scope of services, allowing you to take on larger deliveries, multi-stop deliveries and travel longer distances.
Vans also allow versatility by being transformed into specialist delivery vehicles (e.g. installing refrigeration units for temperature control).
It’s worth noting that running a van can have a significant impact on your outgoings as you need to cover the cost of the van, fuel, insurance, tax and MOTs. However, there are a number of economical options available to help with fuel efficiency, including electric and hydrogen vans. Examples include Ford Transit Courier, Renault Kangoo and the Fiat Fiorino Cargo.
There are many problems that can arise with an unreliable vehicle, so it’s always worth spending a little bit of extra money on a vehicle to ensure it’s reliable. If you’re opting for a used vehicle, check the previous owner history and find out what the vehicle was used for.
You should also pay for it to be serviced regularly, pay close attention to MOT reports for any faults that need your attention, and consider taking out insurance that gives you access to a temporary replacement if your vehicle breaks down. You should ensure that vehicles are stocked with the relevant equipment should you encounter any difficulties, for example:
Phone charger and extra battery
Details for breakdown service
Vehicle manual
Reflective triangles
High-visibility jacket
Spare tyre and car jack
Food and water
Jump leads or a portable battery pack
First aid kit
Extra clothing
Empty fuel can
Torch
Dash cameras
It can also be useful to learn some basic motor mechanics so you can review and fix issues on the fly, reducing any delivery delays.
While you don’t necessarily need a van to run a courier service, it can be an advantage as you can fit many more parcels into the vehicle. This means that you can handle larger deliveries.
No matter what vehicle you have, it’s important that you’re confident enough to drive it and that you can make all of the relevant routes without running into any problems - a large vehicle may allow you to handle more parcels, but it will only be worthwhile if you’re comfortable behind the wheel. One way you can do this is by studying maps and familiarising yourself with common routes that you are likely to take. Taking trial trips on possible routes can also get you used to local roads and motorways.
Payment Options
If you don’t have any experience in courier businesses, then you may be unsure about how much you can charge for your delivery services. Your service prices should reflect the nature of your business and the level of service that you provide. It’s also a good idea to do research on other local courier services so that you can get an idea of your competitor’s prices.
When coming up with pricing options, you should always be aware of your monthly expenses first so that you know how much you need to make in order to make a profit.
Courier services tend to charge by the job rather than an hourly rate. You should think about how long the deliveries will take and how much fuel you will use in the process before setting your prices.
Monitoring and managing your expected costs, income and profit are key to success, and making a budget doesn’t have to be complicated - you simply need to work out what you are likely to spend and earn. Begin by asking yourself the following questions:
1. What are the fixed costs and overheads?
2. What are the projected earnings over a period of time?
To work out your fixed costs and overheads, you should consider the following:
Vehicle expenses
Equipment costs
Cost of any premises (e.g. rent, taxes, and service charges)
Utility costs
Advertising and promotion
Legal and professional costs
Once you have your income and expenditure figures, you can then work out how much money you’re going to make. You should look at costs and work out ways to reduce them, and see if you are likely to hit any cash flow problems and ensure you have time to do something about them. You should review and revise your budget as required.
Insurance
Before you can start up your courier business, you will need to take out insurance that covers you for everything that may go wrong on the job. There are several different types of insurance policies that you will need to take out before you can start making deliveries.
You will need insurance for your vehicle, liability insurance, and goods in transit insurance. These three types of insurance policies should cover you for every possible issue. If you don’t have the right type of insurance, then you may encounter financial difficulties and customer complaints should anything go wrong.
When taking out your insurance policies, it’s important to always read the fine print so that you know exactly what’s covered.
It Takes Hard Work
Starting your own business is a very exciting prospect, but it’s essential to keep in mind that it will take a lot of work. While you won’t necessarily have to work 24/7 for your business to be a success, you may have to work outside the usual hours when you first get started to build a customer base and learn the industry. You will also have to remain dedicated and motivated, even when things aren’t going your way.
The best thing you can do when starting a new business is to always remember why you started in the first place - whether it was the freedom of working for yourself, or the possibility of earning more money, staying focused on your goals will keep you motivated. Your business may take some time to see success but as long as you stick to it and keep putting in the work, you will have the best chance of creating a sustainable, profitable courier service.
Don’t Be Afraid of Complaints
It’s never a good thing when you get a complaint from a customer. It may knock your confidence or make you feel a little bit disheartened. Don’t despair though, because you can use customer complaints to improve your business.
Checking in with your customers regularly can help you figure out what’s working and what isn’t working for your business. From there, you can make appropriate changes to ensure you’re providing the best service possible, and build ongoing relationships with those customers at the same time.
Encourage your customers to be honest with you and avoid entering into a dispute when a customer makes a complaint, even if you disagree. Instead, apologise and then work towards making some changes to avoid getting the same complaint in the future.
World Options works with many of the world’s largest carriers to provide businesses with an easy way to book, manage and track shipments to over 300 worldwide destinations. Our franchise opportunities mean you can work for yourself and connect businesses with the shipping services they need. For more information, click here.
