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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on December 15, 2021
Investment range
$1,850 - $24,600
Revenue potential
$60,000 - $300,000 p.a.
Time to build
0 – 3 Months
Profit potential
$52,000 - $120,000 p.a.
Industry trend
Growing
Commitment
Flexible
Here are the key factors to keep in mind when launching your courier business:
You May Also Wonder:
Is a courier business profitable?
Yes, a courier business can be very profitable. You should be able to bring in about $40 to $45 an hour just working by yourself. It’s a business that you can grow by adding other drivers, and eventually, make into the 6 figures or even more!
How long does it take to start a courier business?
You can start very quickly if you have a reliable vehicle. You’ll just need to market yourself to start getting clients, and then you can get on the road!
How do I get clients for my courier business?
First of all, you should have a website for your courier business so that potential customers can find you and order your services. You could also call local professional businesses, such as law firms, to offer your services.
How do I ensure the security of the items I’m delivering?
You should have some kind of container in your vehicle to keep items from falling. You also need to keep your car secure at all times.
How do I handle customer inquiries and complaints?
You should respond to customer complaints quickly and try to resolve issues. In some cases, you may need to offer a refund.
Every business has pros and cons that you should weigh before you decide if a courier business is right for you.
Research firm Technavio expects the global courier market to expand an additional 40% by 2025, when it will be worth close to half a trillion dollars. The opportunity is there for the bold entrepreneur.((https://www.technavio.com/report/courier-express-and-parcel-market-size-industry-analysis))
For a local courier, B2B (business-to-business) deliveries of important documents represent a significant opportunity. At the same time, when business is slow you could work as a courier for apps like DoorDash, Instacart, and Postmates and build up a reputation through customer reviews.
Courier services trends include:
Challenges in courier industry include:
Startup costs for a courier business range from under $2,000 to around $25,000. The high end includes purchasing a vehicle. So if you already have one, or plan to start your business small with a bike or scooter, don’t worry about that. On the other hand, if you want to start off with big delivery potential, you could invest in a used truck or van.
| Startup Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Licenses and permits | $200 - $300 | $250 |
| Insurance | $100 - $300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Vehicle | $0 - $20,000 | $10,000 |
| Initial marketing budget | $200 - $500 | $350 |
| Total | $1,850 - $24,600 | $13,225 |
For a local delivery that takes 30 minutes, the average price is about $22.50. Assuming you start out as a solopreneur, your delivery costs will be time and possibly fuel, so your profit margin should be around 90%.
In your first year or two, you might do 10 deliveries five days per week, bringing in almost $60,000 in annual revenue. This would mean over $52,000 in profit, assuming that 90% margin. As your brand gains recognition, you might hire couriers and rent out an office and make 50 deliveries a day. Your margin would fall to maybe 40%, but with annual revenue of nearly $300,000 you’d have a pre-tax profit of $120,000.
There are a few barriers to entry for a courier business. Your biggest challenges will be:
Now that you know what’s involved in starting a courier business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research courier services in your area to see what services they offer, their prices, and how their customers rate them.
Consider what you could do to differentiate your service. You might specialize in speedy deliveries, or you could create your own Instacart-like delivery app!
Customers could order an item from a local shop, for instance, then hire you from your app to pick it up and deliver it to them.
This would be targeting a niche market and could jumpstart your word-of-mouth marketing and attract clients right away.
You will need to decide what kinds of deliveries you will make and how far you will travel. Obviously your choice of delivery vehicle — whether a car or bike — will go some way in determining your range.
Also, do you want to do only B2B, or do you want to include B2C deliveries within a 10-mile radius? You could offer a prescription delivery service, a medical item delivery service for medical offices, or you could decide to offer a variety of services.
The average cost of a 30-minute delivery is $22.50, which is the equivalent of $45 per hour. Some couriers charge by distance instead, at an average of $1.50-$2 per mile. If you deliver heavier items, you can charge more.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will depend on the services you offer. If you have a B2B courier business, your target market will be mainly professionals like doctors, lawyers, designers and architects, so LinkedIn would be a good place to advertise your services.
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Discover over 220 unique courier business name ideas here. If you want your business name to include specific keywords, you can also use our courier business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to a courier business.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your courier business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a courier business. You might also try crowdfunding if you have an innovative concept.
Starting a courier business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your courier business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You can use industry-specific software, such as connecteam, OnTime360, or Track- POD, to schedule and manage deliveries and track revenues.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your courier business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its strong USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your courier business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a delivery business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working as a courier for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in courier services. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a courier business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
The courier market is booming, and the business is not complicated. The market is poised for further expansion as customers continue to make online purchases and seek to have them delivered as soon as possible. So why not get in on the action?
You can start your courier business as a one-person show and grow over time to become the new Instacart or DHL. It will take time, but if you hit the ground running and give it your all, you can be successful.
You’ve started off well by getting the right knowledge, and now your entrepreneurial journey should deliver success!
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