How to Start a Logistics Business



logistics business

Transporting goods is a big part of the network that keeps America running. Everything that people use on a daily basis has been delivered and shipped from various locations.

If you’ve ever thought about starting your own logistics company, read this blog. It will cover everything you need to know about getting one of these businesses going. From the actual transport to storage and everything else a start-up needs.



18 Actionable Steps to Start a Logistics Company

Starting one of these logistics businesses isn’t all that tough. But there are a few things that can make a difference to your success. If you don’t have any experience at all, you can partner up with a company like Amazon and its DSP business. This not only allows you to learn about logistics, but it is also a great business opportunity.

Here are 18 steps for getting a logistics company off the ground. Remember, this is about a bigger scale than personal transport couriers.

1. Complete the Required Training

This type of business needs the right skills. And that’s about more than just the right vehicle and some customers. Following is required training that’s extremely important. Remember these are different depending on whether you’re looking a global transport, local transport or both.

  • Transport Management Systems. This includes managing and tracking all the different aspects. Like vehicle maintenance, warehousing, communications, cargo handling etc.
  • Management and Inventory Operations. Handling inventory is an important aspect of a transport and logistics business. Inventory management works with warehouse management. You need to learn how products move through your operation.
  • Transportation Regulations and Law. Your transport and logistics business might be to cover both domestic and international services. Training should include regulations on interstate commerce and global shipments and carriers. The kind of training you need here depends on your organization.

There are other courses you might need to obtain. These will vary depending on your freight and where it goes to. Check with your local government to see if they need anything.



2. Pick a Location

A successful logistics company needs to pick the right home base. Here’s a few tips to help you through this part of the process.

  1. How close are you to your customers? Proximity to your target market is a big consideration.
  2. The Building. Are you going to rent or buy the place? Look for higher ceilings and smooth flat floors to store and move goods. Does it have adequate warehouse rollup doors? Enough space outside for transport trucks?
  3. Traffic Flow, Highways and Roads. Other options like access to highways and local traffic density need to be looked at.

A well situated transport business has proximity to ports, railways stations and airports. Try for all of that in one location if you want to work on an international scale.

3. Research Your Competitors

Understand what other service providers are doing. That will help you understand what customers expect so your business gets an edge.

Check out keywords other businesses are using.



4. Choose a Niche

Logistics is a big industry. Successful companies pick a lane. Here’s a few ideas for a successful trucking company.

Food and Beverage

You’ll have lots of customers. You’ll need to focus on packaging to reduce damage.

Automotive



You’ll balance cost effective solutions with heavy load requirements for parts. Custom crating is a plus in this industry.

Appliances

A turnkey solution here includes making sure connectors and hoses are bagged.

Industrial and Manufacturing



You’ll need to decide how much capital you’ll need. Storing raw materials can use lots of warehouse space.

Electronics

This type of logistics service deals with fragile materials. Be aware this industry has strict quality control regulations for transport.

5. Create an Amazing Logistics and Transport Business Plan

A solid business plan keeps you on the right path, this includes using a company such as Gold Star Logistics to help you will all the details. Follow directions like these.



An Executive Summary.

Include the unique points about your service.

A Company Description

Locations, milestones and number of employees go in here. Add the start date for your transport and logistics business.



Market Research

Nail down your target market. Don’t make this too broad.

Competitive Analysis

Potential lenders will want to know who the competition is. Outline their pricing and sales strategies.



There are other elements that you need to add. Here’s some in depth information.

6. Choose a Business Entity

You need to pick a business entity. That’s a category dictating how you run things. Following are a few common examples of the ones you can choose.

Sole Proprietorship:

There’s less paperwork for things like banking. But this kind of business doesn’t have liability protection.



General or Limited Liability Partnership:

A single general partner runs the show here. And there are limited partners with less say. There are limits in deductions.

Limited Liability Company:

This type of business protects owners from personal liability. The regulations change from state to state. Profits and losses are reported on personal tax returns.



7. Open a Business Bank Account

These help separate your business tax info and personal financial records. Get an employer ID number too. You need a business bank account for a partnership.

Business credit cards help. They keep personal and company money separate.

8. Look into Loans and Financing

You cant get going without startup capital. Read about the different kinds of financing below. Remember they vary by state.

SBA Loans

The SBA doesn’t provide loans directly. But they guarantee them at good rates.

Business Line of Credit

These are great for short term funds. They pay for operational expenses like payroll and supplies. Usually these are unsecured.

A Startup Loan

Lenders don’t look for a business history. Just collateral, cash flow and usually credit. Get the funds quickly with these. Sometimes in as little as 7 to 10 days.

Bank Loans

These are a common way to get capital. Having a good idea for your logistics service isn’t good enough. You need a great business plan too.

9. Get Your Taxes in Order

You need to understand the local, state and federal taxes you’ll owe. Here’s a link to get started sorting through the info.

You need a federal tax ID number. Here’s another link that will help .

10. Acquire the Necessary Equipment and Vehicles

For this kind of business you may need inventory, storage and transport tools. Everything from forklifts to tractor trailers. There are different requirements for roads, ports and air cargo shipping.

Commercial vehicle registration is a must have for company fleets.

11. Purchase Business Insurance

Shipping goods is profitable, necessary and risky in some situations. That’s why you need to look at the following insurance coverage.

  • Commercial Property. Covers property damage from things like floods.
  • Commercial General Liability. Covers issues like personal injury.
  • Commercial Vehicle. Mandatory for all company vehicles. Covers things like accidents involving fleet vehicles.

Don’t forget to look at cargo insurance too. A good policy covers losses, damage and even network disruptions.

12. Get Licenses and Permits

Logistics is heavily regulated. Compliance is necessary. Here’s a few of the regulations. These come from the Federal Motor Carrier Safety Administration.

  • DOT Number Registration. This applies to interstate carriers.
  • Commercial Driver’s License. Drivers in all states need these. Requirements are different for each state.
  • MC Operating Authority Number. For cargo and passengers that cross state lines. There’s a fee. New companies go here.

13. Hire Drivers

There are several things you need to know here. Adopting a checklist helps. Here’s the info you need from driver candidates.

  • Three years worth of motor vehicle records.
  • A medical certification.
  • A copy of a CDL or a road test certificate.
  • A history of safety performance attempts.

Here’s another tip to find suitable job candidates. Set some standards with your insurance providers.

14. Set Your Prices

Setting prices is important. There’s no one size fits all solution. Along with costs like federal tax, consider the length of contracts.

15. Market Your Business

Taking the time to develop a marketing plan makes a big difference to your bottom line. Consider branding and focusing on tag lines and your business name. SEO, social media and other types of public relations tools work.

A good brand strategy can target small groups and other customers in bigger markets at the same time.

16. Invest in Fleet Management Software

Fleet management software looks after your vehicles. It looks after aspects like EDL compliance, vehicle purchasing and routing. Make sure they can protect you from identity theft. Business and customer data needs to be safe.

Here’s a few industry leaders.

OptimoRoute

They offer real time order tracking.

Cetaris

This software comes with built-in data validation. There’s a focus on vehicle maintenance.

Verizon Connect

You can track driver speeds and see real time locations.

17. Partner with Suppliers

Make sure any candidates have the right ISO and other certifications. Check out their ability to deliver in all kinds of weather.

18. Keep Up with Maintenance

Any software you choose should include detailed histories. This can help you decide when to buy new vehicles.

5 Reasons Why You Should Start a Logistics Business

There’s more than a few good reasons to start a transport company. Here’s why you should consider this as a new business.

It’s Versatile

Different people are employed. Like accountants, drivers, warehouse people, and fleet managers. It’s something even a married couple can do.

They Deliver Products

These companies are important links in the supply chain.

Customer Expectations

People expect goods will be delivered faster. Good logistics is a big part of these growing expectations.

Reduced Transport Costs

A logistics business reduces transport costs to clients. It makes even products you produce more available.

There’s Room To Grow

This type of job is connected to global supply chains. You can scale up or down in these networks.

How Much does it Cost to Start a Logistics Business?

Starting a transportation company means you’ll need to have money.

Operating costs include administration, inventory carrying and vehicle cash. Temporary storage for logistics companies can come under overhead costs.

Here’s some info on what a small business owner needs to know.

Is owning a transport and logistics business profitable?

A good transportation business is profitable. You’ll always be able to get clients. The average yearly pay in the US is $199,616 for owners. Those numbers go as high as $382,500 and as low as $41,500 for these services.

Image: Depositphotos


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Rob Starr Rob Starr is a staff writer for Small Business Trends. Rob is a freelance journalist and content strategist/manager with three decades of experience in both print and online writing. He currently works in New York City as a copywriter and all across North America for a variety of editing and writing enterprises.

One Reaction
  1. Good afternoon I’m much interested in starting a logistic business and I need a adivise

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