Due to the COVID-19 pandemic, online shopping has increased in 2020. More people are having products and services delivered to their doorstep to minimize the spread of the virus, and this has caused a spike in the demand for reliable delivery vehicles.
In 2019, the courier, express, and parcel services (CEP) market was worth $336 billion. This phenomenal growth rate is owed largely to the advancements in e-commerce. Revenue generated by the e-commerce sector is estimated to reach around $2.8 trillion with its CAGR (compound annual growth rate) of 21.7%.
The CAGR of the CEP market is estimated at 8-10% between 2019 and 2024. By 2024, the CEP market will be valued at an estimated $400 billion.
Depending on the size and the type of courier service you start, profits can vary greatly. According to Business Insider, individuals signing up for Amazon's delivery service network can expect between $75,000 and $300,000 profit per annum, with a minimum capital investment of $10,000.
How to Start a Courier Service:
You may already have a reliable vehicle you could use to start a small courier service, but getting your business up and running requires careful thought and detailed planning. You'll need to write a business plan, secure funding, and build a strong client base. Follow the steps below to find out what you need to start your own courier service.
Conduct market research.
Determine the need for a courier service.
Before you invest in equipment and vehicles, you need to determine the need for your business in the areas you wish to service. If you're starting out small, find out how many potential clients there are in your area and neighboring regions. Your research should help you determine your headquarters' location, equipment costs, and hiring requirements.
Below are some questions your research should yield answers to:
- Who is your competition?
- What type of goods or items will you be transporting?
- What type of vehicles will you need to transport these goods or items?
- Which demographic do you want to target?
- What type of courier service do you want to start?
- What kind of insurance coverage will you require?
- Which areas will your courier service cover?
- What are the fastest routes between your pick-up points/warehouses and the areas you will be covering?
- What additional supplies will you need?
- Will you require office or storage space?
- How many drivers/packing staff/admin staff will you need?
Determine whether a courier service is a viable business opportunity.
Consider the risks involved and make a list of all negative and positive aspects of owning a courier service. Conducting further research and speaking to entrepreneurs who own courier services could be a good place to start. Find out what you can from those who have the knowledge and practical experience.
Connect with key players in the courier service industry by sending them an email or message on social media with all your questions. This way, they'll be able to respond to you at a time most convenient to them.
You could also try a different approach by calling up an industry professional and asking your questions directly. If you're able to schedule an in-person meeting or video call, that would be even better.
Make a good impression on the experts you meet and build networks and lasting relationships wherever possible.
Determine your business goals.
Do an overview of your business plan.
A business plan is a highly detailed document, so do some groundwork before diving in. Preparing an overview of your business plan should help you gain a better understanding of your brand identity, your offerings, and your goals. The insights you've gained from your market research phase should help you here.
Some important questions to answer include:
Who are you? What makes your courier service superior or different?
What services/solutions are you providing? Think about how your courier service will ultimately benefit customers.
Who is your target market? What does your ideal customer look like? Consider those who would benefit most from your courier service and how you will reach them.
Who are your competitors? How does your courier service differ from the competition? What makes you special?
How will you market yourself? So you have lots to offer customers, but how will you make sure they know about your new business? How will you network and advertise?
Who will work for you? Who will your staff be? Think about the people you already have on your team and all the others you still need to employ to make a success of your courier service.
How will you spend and make money? Provide a list of your expenses and your projected income.
What are your milestones? Create a timeline and fill it with all of the activities you need to complete before you can start your business. Include due dates and the names of responsible staff members.
Write your business plan.
To successfully start your own courier service, you will need to create a courier service business plan. Your business plan will help you keep track of your finances, assets, marketing solutions, goals, and the steps you will need to take to reach them.
Essentials for a Courier Service Business Plan:
- Executive summary.
- Company description.
- Marketing plan.
- Operational plan.
- Financial plan.
Your business plan should be professional, accurate, and detailed. Remember, you'll need to present it when you approach investors or apply for funding.
Use the template at the top of this article to streamline the process of writing your business plan.
Brand your courier service.
Choose a name that reflects your brand values.
Your business's name is essential parts of your brand and it needs to make a lasting impact on your target audience. When naming your courier service and choosing a domain name, keep it simple, appropriate, creative, and unique.
To avoid trademark infringement, make sure the name and logo you choose are not similar to ones used by an existing company. If you wittingly or unwittingly use the name of another company, you may be required to change your business name and/or pay damages.
Follow these simple steps to check if the name and domain you have in mind are available:
- Conduct a Google search to check if anyone else is operating under the same name.
- Check the fictitious name databases at your county clerk's office; their list will include unregistered trademarks used by small companies.
- Get in touch with the state filing office if you plan on registering as an LLC, corporation, or limited partnership; you will need to scan their database to search for similar names.
- Scan the federal trademark database to check if your courier service name has not been registered with the USPTO (U.S. Patent and Trademark Office). You can access their free database and click "search," then follow the instructions. You can also use this database to check if the domain you are interested in is available.
- Run a check of your state's trademark database.
Look at the names of established courier companies for inspiration.
Conduct industry research to find keywords that can be used in your courier service name.
Use a free business name generator to create a list of courier service names and to verify domain availability.
Remember to do a thorough check before choosing a name for your courier service. You could end up paying heavy fines and risk losing your business name, should a similar name already exist. When searching for unregistered trademarks, The Thomas Register is a valuable, free resource you may want to consult. Another useful website for finding business domain names is Network Solutions.
Design your logo.
Just like your business name, a good logo is an essential part of your brand. A good logo should help customers distinguish you from the competition. If you already have an idea for your logo, you can go ahead and design it yourself if you feel comfortable. Alternatively, hire a freelancer or use an online logo maker.
Your logo design should be unique, eye-catching, scalable, and timeless.
Make sure your logo looks good in grey scale and color.
If you design the logo yourself, the onus is on you to obtain a copyright and trademark from the United States Patent and Trademark Office.
Hiring a freelance designer will likely produce a more professional logo, but working with a designer will require a lot of trust on your part. Always leave room for unforeseen delays.
Online logo makers are fast and free, but most of them use generic, low-resolution images.
Choose your logo carefully. A logo redesign can be quite costly. It may mean removing the old logo from all existing products, properties, documents, fleet cars, etc
Outline the finances you will need.
Determine the overall costs of starting your courier service.
It may seem like the only essentials required to start a small courier service are the vehicle and the driver, but there are many more expenses. Make a list of everything you think you'll need, and refer to the estimate prices in the table at the end to get a rough idea of the costs involved.
Outlined below are some of the expenses you'll want to set aside financing for.
Most of the drivers you interview should ideally have a commercial driver's license or at least have completed a defensive driving course, but you may want to send them, as well as other workers, for various training workshops that will, for example, improve their efficiency and customer service.
Buy fuel, vehicles, and other equipment.
You will need reliable transport. Whether you decide to purchase vehicles, lease them, or hire drivers who already have their own vehicles, you will need to organize the transport and other equipment like dollies and various office supplies.
You may require a POS system to accept payment for deliveries, as well as fleet management software, hiring software, and a business email address.
Hire drivers and office workers.
You will need a team of couriers to make the deliveries on time, as well as an administrative team to respond to queries and manage affairs at the office.
From pens, invoices and stamps, to spare parts for your vehicles, you will need to source many of the items that keep your courier business running.
Buy Personal Protective Equipment (PPE).
In light of the COVID-19 pandemic, face masks, alcohol disinfectant, infrared thermometers, hand sanitizer, and more, will have to be purchased to keep your workplace safe. You can find out more on the WHO's website
Office space and storage facilities.
Depending on the size of your company and whether or not you choose to buy the vehicles or hire drivers who already have their own transport, you could work from a home office, which would greatly minimize your business costs, but might also limit your expansion potential. Rent and a safe storage location might need to be factored into the costs, especially if you have a pick-up facility at the warehouse.
Obtain business license and permits.
Every state has specific licensing and permit requirements that must be met before you can start your courier service. Visit the U.S. Small Business Administration website to find out more.
Ensure you have sufficient start-up capital for your courier service.
Before you begin your courier service, you will need capital. Starting small and hiring self-employed drivers who already own cars, instead of permanent staff, could greatly minimize your costs. If you do not have your own fleet or require storage space, you might be able to operate your courier service from home.
Below are some ways to generate the funding you require to make a success of your courier service.
Before deciding how to finance your courier service, weigh up the pros and cons of each funding method.
Using your own money and resources to fund your courier service can be a good approach. There are always risks involved with starting a new business, and if you can remove debt from the equation, you automatically minimize those risks.
Get help from friends and family.
Before seeking external funding for your courier service, ask those in your immediate circle. Make sure you have a business plan ready, that you are able to present all the facts and projections to your friends and family, and that there is a clear understanding of whether they stand to gain anything from investing in your business.
Friends and family may be more willing to help you than a formal institution as they already trust you and are familiar with your character.
You may be able to negotiate lower interest rates or repayment terms than a bank would offer you.
Have a formal written agreement drawn up so that all parties are clear on repayments, profits, etc.
Start a crowdfunding campaign.
Setting up a crowdfunding page might be a viable option if you are not eligible for a loan from the bank. Tell potential investors why they should believe in and donate to your courier service, and be sure to mention if there are any rewards in it for those who help fund your business.
Crowdfunding is hands-on and can be incredibly time-consuming. You'll need to set time aside to communicate with your audience and to update those who have donated to your cause.
To start a successful crowdfunding campaign, you'll have to be a good storyteller. You'll need a compelling narrative if you wish to draw people to your cause.
Be sure to use your crowdfunding platform to establish networks and build your client base.
Even if people don't necessarily donate to your courier service, they could still offer valuable advice and insights. Listen to what your audience has to say and use your crowdfunding platform as a market research tool.
You can find angel investors who are willing to provide capital for your courier service. Angel investors can be found online or through industry and top business school networks.
Angel investors can be found through crowdfunding platforms. They can also be friends and family, or mutual business associates. Comb through your existing networks and see what comes up.
Bank loans or venture capital.
Before you can secure a loan, your bank will conduct a thorough analysis of both your and your business's financial information, and they will also require collateral. Building a good relationship with your bank through setting up a business account and credit card, might give you an advantage.
Decide on location.
Determine how much space you need.
Decide if your courier business will be based online or if you will require premises. If you're doing most of the deliveries yourself or using a network of independent contractors, a home office should be sufficient.
Find the perfect place for your courier service headquarters.
There are several factors that should be considered when deciding upon a location.
Some questions you may want to ask yourself include:
- How big should your premises be?
- What kind of security do you require?
- How much will insurance cost?
- How big is the team that will be stationed at the location?
- What kind of amenities do you need at your location?
- Are you in a central location, close to the areas you want to service?
- Are you close to the warehouses you need to collect consignments from?
- Are you close to a train or bus station so workers can arrive in a timely manner?
- Is the neighborhood you are located in safe?
- Will you have a pick-up option? If so, will clients be able to easily find your location?
- Will you have designated pick-up points for clients to collect their orders?
- Are there parking facilities available?
If a permanent location is not the best fit, maybe shared office space is the way to go? It is a good solution if you would like to test the waters and work from a few flexible locations while you get your courier service off the ground.
Take care of the legal requirements.
Obtain the necessary permits.
If you're using oversize or overweight vehicles in your business, you'll need a special permit. These permits can be obtained from your state government, but the U.S. Department of Transportation will redirect you to the correct state office.
Open a business account and obtain a credit card.
Applying for a small business account and a business credit card will help you keep your business and personal expenses separate. You can use these cards to pay for any business-related costs like licenses, permits, vehicle leasing, fuel, insurance, and taxes. Before applying for a business bank account, you will need to provide proof that your business has been registered.
Decide on a legal structure.
For tax purposes, you will have to choose an appropriate legal structure for your courier service. What type of business entity will you be? Setting yourself up as a sole proprietorship is the easiest route as everything will be owned and controlled by you, but operating as a limited liability company (LLC) is a better choice given the size of typical courier services. You can also set yourself up as a limited liability partnership if you have a partner.
Requirements vary by state when forming an LLC. Get a copy of your state's LLC Articles of Organization Form by visiting your state's Secretary of State website.
Consider hiring a lawyer to help you establish the legal structure of your business, especially if you've never started a business before.
Taxes and EIN.
Now that you have chosen a legal structure, registering with the IRS (Internal Revenue Service) is the next step. The IRS will issue you with your Employer Identification Number (EIN), that you will need if you plan on employing staff to work at your courier service.
To apply for an EIN, visit the IRS's website
First-time business owners can do their own taxes using software, or hire a professional to help. There are many factors that contribute to the price an accountant or tax professional will charge. Businesses who have not kept accurate records of income and expenses could find themselves paying more to have their taxes done. You can sign up with the National Society of Accountants to find out more and to get in touch with an accountant who can provide an accurate quote.
The drivers in your employ may need a commercial driver's license. If you will be making some of the deliveries yourself, you should also apply for one. Visit your local DMV website to find out more.
Every state has its own licensing laws and requirements. Depending on your location, you may need to apply for additional permits. Visit the United States Department of Transporation's website to find more information and resources.
Buy comprehensive insurance.
It is a smart idea for any business to be insured, but it may also be a requirement in your state. As a courier service, you should consider the following basic insurance needs:
- Business insurance.
- Vehicle insurance.
- General liability insurance.
- Workers' compensation insurance (some states require this even if you don't have employees).
- Equipment insurance.
- Income protection insurance (for circumstances where you are prevented from working).
- Critical illness insurance.
- Business life insurance.
Insurance is a vital component of any business. As the owner of a courier service, you will want to get comprehensive business insurance that covers auto and liability insurance as well. You'll want accident and injury cover, as well as insurance that includes lost or stolen property. Ensure that you are well-protected against any potential lawsuits.
Because driving can be a dangerous occupation that depends on weather conditions, you should definitely consider getting business interruption insurance. Business interruption insurance will cover your courier service if regular operations are interrupted because of unforeseen circumstances like the destruction of property or personal injury.
Establish your rates.
Set up a pricing structure for your courier service.
Before you start spending hundreds of dollars on advertising, you need to determine what your services will cost. Here are a few things you should do:
- Analyze and understand your competitors' delivery rates.
- Conduct research on what clients in the area(s) you are servicing are prepared to pay.
- Make sure your income will cover all running expenses and costs, including tax, toll fees, parking tickets, and vehicle leasing, or vehicle depreciation and maintenance costs.
- Choose a competitive price when your courier service is just starting out.
Offer incentives to attract customers.
People who have relied on large courier services to get their parcels delivered will need a reason to switch over to your service. Make it worth their while by offering reduced rates to loyal customers and preparing special packages for big clients.
A simple way to build a superior courier service would be to find out what customers want. If they need express shipping or after-hours delivery, and you can provide it at a good price, you'll be a step ahead of the competition.
Staff your courier service.
Determine the number of workers you need.
When you start out, you may only have a few deliveries that you're able to do on your own, but as your business grows, so will the need for more fleet vehicles and staff. Positions you may need to fill include:
- Customer support staff.
- Security guards.
- Cleaning staff.
GPS has made it easier than ever for couriers to deliver packages, but hiring drivers who know the lay of the land and have a good sense of direction, still has its advantages. Be sure to keep an eye out for these candidates.
Use job posting sites, job boards, and social media to get the word out about your new courier service. Be sure to look for candidates who live close to your headquarters, or who are situated near the areas you'll be servicing.
Train your employees.
The couriers you hire will probably know how to drive, but they will still require training along with your other staff members. Training at a courier service may include:
- Workplace procedures and safety.
- Equipment and vehicle maintenance.
- Customer service training.
- General workplace etiquette.
- Systems training, which may include fleet management software, POS systems, shipping software, CRM, and more.
Online presence and marketing.
Know who your target audience is before you start your marketing campaign.
You would have established your target audience during your market research phase right at the start. Once you know who your potential clients are, you have a better chance of reaching them.
There are several ways to market your courier service. Some methods will not cost you a dime, while others can set you back hundreds of dollars. Carefully consider who you need to reach and the channels available to you.
Use the internet.
It is absolutely free to register your business on LinkedIn, Facebook, Instagram, and Twitter. Using these platforms will help increase brand visibility and also allow you to have meaningful interactions with your clients and the broader public. There are also free email marketing services you could use to inform clients about upcoming promotions.
Network with key players.
Approach businesses that are likely to require courier services so you can secure long-term clients. Another great way of expanding your client base is to attend events where you can meet potential clients.
Build a website.
Having a sleek homepage will increase the credibility of your courier service. It does not have to be anything fancy, just a place where you can list prices, contact information, and where clients can go to track their orders.
There are some great free options like WordPress or paid website builders if you require more features or customization.
This is a great way to communicate information about your new courier service to a news outlet. Choose a winning angle, a catchy heading, and keep it short and sweet. Make sure you've done your research on the website or platform you're submitting your press release to.
Printing your name and logo on your courier vehicles is a great way to advertise. Making posters and flyers are also more traditional methods of creating brand awareness. You can have customized merchandise like pens, notepads, and mugs printed with your courier service information, too.
Word of mouth marketing is one of the oldest and most powerful methods of gaining new customers. Providing existing clients with incentives like discounts and freebies can be a good way to get them to recommend your courier service.
You need to give people a reason to choose your company instead of UPS or FedEx. Offering free or discounted shipping and other incentives like reduced shipping times, are a few ways you might draw clients.
Try to create excitement around your opening specials and get your followers to tag, retweet, and share the information via social media.
What does it cost to start a courier service?
$450.00 /mo. per vehicle for a 3-year lease
Rent for premises
$8.00 - $23.00 /mo. per sq ft
$2.92 per gallon
$13.62 per hour
Fleet management software
$15.00 - $639.00 /mo.
$40.00 - $250.00 /mo.
10% of the total budget
Below 10% of your total budget
$10,000 - $125,000
Starting at under $10.00
Email marketing services
$0.00 - $99.00
Business email address
$0.00 - $8.00 /mo. per user
$9.95 - $2,200 /mo.
$0.00 - $299.00 /mo.
$20.00 - $100.00 /mo.
Starting at $8.00 /mo. per employee
$0.00 - $30.00 /mo.
Accountability and customer service skills:
You can install fleet management software to monitor drivers on their routes, but ideally, you want couriers that do not need constant policing. Because your drivers are in a customer-facing role, you will also want to hire those with great communication skills. Consider only the most accountable, presentable, and professional candidates. If the driver struggles to answer questions or cannot provide friendly service, this could have a negative impact on your brand.
Is a courier service a good option for me?
- You will enjoy flexible hours and the satisfaction that comes with being your own boss.
- Courier services are constantly expanding due to an increase in online sales, so your services will be in demand and the potential to turn a profit is great.
- There is a consistent need for delivery services, and you could sign long-term contracts with certain clients.
- As your business grows, so does your fleet; you can offer different types of courier services and cater to various clients as you expand.
- There are many large companies, like FedEx and UPS, to compete with.
- During holiday seasons and in adverse weather conditions, your ability to deliver parcels on time might be affected.
- You will need a team of reliable, detail-oriented, honest staff who can cope under pressure in client-facing roles; it can be hard to assemble a team like this.
- There could be considerable downtime during off-peak seasons.
Interested in starting a medical courier service?
Medical couriers transport a range of medical items including lab specimens, blood, organs, and biohazardous materials. They can also deliver medical supplies and larger pieces of equipment such as wheelchairs. Drivers who want to become medical couriers should have a HIPAA (Health Insurance Portability and Accountability) certificate.
You do not require additional licenses or permits to start a medical courier service, but it is a smart idea to sign your drivers up for an infection control course. This will help minimize the risks your drivers are exposed to and also make your medical courier service look more attractive to potential clients.
How do I start a courier service?
- Conduct market research.
- Create a business plan.
- Name your courier service and create a logo.
- Outline the finances you will need.
- Secure funding.
- Decide on a location.
- Take care of the legal requirements.
- Determine your rates/pricing structure.
- Buy comprehensive business insurance.
- Start hiring employees.
- Online presence and marketing.
How much does a courier driver earn?
Courier drivers earn $13.62 per hour.
How much should I charge for my courier services?
Your courier service rates might depend on the size of your company, the type of client, as well as the type of delivery. You should also consider the weight of the package, the distance to the destination, as well as any toll fees. Make sure that your rates are competitive, and that you are able to cover all expenses.
Do I need a courier license?
You may need a commercial driver's license and additional permits depending on the state you're located in. Those interested in starting a medical courier service might require additional training.
Why are courier services important?
The relative safety of online shopping makes it a suitable option for those who cannot go out to the shops due to the coronavirus pandemic; an increase in online sales in 2020, has likewise seen an increase in the demand for courier services. Couriers can also get packages delivered much faster than postal services.
How much profit does a courier service make in a year?
Research shows that courier services can expect to earn between $75,000 and $300,000 profit per annum. This statistic is based on Amazon's delivery service network. A new courier service that still needs to establish its client base, may earn less.
Are courier parcels scanned?
Yes. Your parcels will be scanned at various stops en route. These scans will provide the customer with information regarding the location and status of the delivery.
What types of courier services can I start?
There are five main types of courier services: standard, overnight, same-day express, international, and pallet. A new courier service should probably limit their services to standard and overnight while they are establishing themselves.
How much does it cost to start a courier service?
The cost will vary depending on how big you want your courier service to be. You could start today, with your own vehicle and minimal running expenses. Use our expenses table as a guide. Keeping operational costs low when you are just starting out, will minimize your risks.
Can you start your own courier service from home?
Yes, it is possible to start your own courier service from a home office. Working from home will eliminate running expenses like rent, electricity, internet, as well as other office overheads. However, working from home might limit your expansion potential.
Do I need a degree to start a courier service?
No. You do not need a degree to start a courier service, but some business and marketing knowledge will give you an advantage.
How do I market my own courier service?
- Create a logo.
- Build your own website.
- Use social media to engage with your clients.
- Attend regular events to network with potential clients.
- Create a mailing list.
- Use mainstream and online advertising.
- Think of great promotional activities.
- Start a referral program.
What books could I read before starting a courier service?
- "Tony's Guide to the Courier Industry" by Tim Gilbert.
- "How to Become a Self Employed Courier" by Philip Dale.
- "Starting and Managing a Courier Service" by Johnny Carrasquillo.
- "The Drive To Freedom: The Hustler's Guide To Becoming An Independent Courier" by JT Hustlez.
- "Start Your Own Courier Business: Step-By-Step In Just 30 Days" by Craig Wallin.