Logistics keeps the business world running. Advanced logistic practices lead to higher efficiencies, lower costs, more customer satisfaction, higher productivity, more intelligent control over inventory, enhanced customer experience, and better use of inventory space. The success of a business greatly depends on the efficiency of its logistic processes. Considering the significance of logistic operations for any company, we can say that logistic services are high in demand globally. Some businesses handle their logistics themselves or get help from a third-party service provider. However, offering logistic services is not an easy job. There is a huge responsibility on the shoulders of logistic service providers because the overall credibility of a business highly depends on the efficiency of logistic operations. Starting a logistics company is a good idea, but the real question is, how to start a logistics company?
There are a lot of things that a business has to consider while starting a logistics operation. This blog post is a step-by-step guide for you to start a logistics business.
Table of Contents
How to Start a Logistics Company
Having the right knowledge, expertise, and tools is critical to running a successful logistic business. Below are mentioned some important points you must know as an aspiring logistic business.
Get The Skills & Expertise
The first step is to get the right skills and expertise to run your logistic business effectively. Your staff needs to get proper training to manage local or global transportation. The following are the things you should understand before getting into the logistics business.
Inventory Operations Management
Controlling the inventory is probably the most challenging task in logistics. You must get proper warehouse management training. This way, you would know how to handle the products throughout the logistics operation.
Transportation Management System
To achieve greater efficiency and reduce complications, most logistic businesses use translation management systems. Everything is handled by a translation management system from tracking your records to vehicle management, so your project managers should be trained to handle the software entirely.
Rules and Regulations
Whether you are providing domestic or international logistics services, you must be aware of the laws and regulations of the destination country. Based on your work area, you must be familiar with the regulations and policies related to shipment and trading.
Choose a Location
Even if you offer logistic services to international businesses and deliver products to multiple countries, you must still have a base business location—a location from where you would handle all of your business operations. It would help if you kept in mind a few things while choosing your business location.
First of all, considering your target market, you must choose a closer location to the target customer.
Second, it is essential to consider whether you will buy or rent the place. Ensure it is a high-ceiling area with enough space to keep the inventory.
Choosing a place near airports (for international transportation), railway stations, and highways (for domestic transportation) is always recommended.
Do Competitive Analysis
Understanding your competitors gives you an idea about the market trends and makes you ready for the challenges of the industry.
Knowing the competitors helps you avoid your competitors’ mistakes in the past. Moreover, you can add more value to your services to give your business an edge over existing competitors. At the end of the day, no matter how good quality your services are, it is very important to stay one step ahead of the competitors to capture the attention of maximum customers.
Choose Your Niche
This is an important step, and you should take your time researching different niches before finalizing the one you want to choose for your business. If you sell your services to everyone, you are selling them to no one, so it is essential to choose your ideal customers.
You don’t create a service for everyone but for your ideal customers. So, you must choose one niche and focus on your target customers only. For instance, you can provide logistic services for electronics companies that sell electronic products and home appliances to customers, or you may be able to provide logistic services to restaurants.
Create Business Plan
To keep things on track and ensure that your strategies are aligned with your business goals, it is important to create a solid business plan. Following are some important things that you will add to your business plan.
Company Description
You should be very clear about your company’s vision and mission from the beginning. In the company description, you will include the location of your business, number of employees, goals, and date to start your business.
Industrial Analysis
You should conduct an industrial analysis to evaluate the political, economic, social, legal, and environmental factors of the markets where you will operate your business. You can conduct a SWOT analysis, PESTLE analysis, and competitors analysis to understand the strengths and weaknesses of your target market.
Marketing Plan
Promoting your business to the customers is one of the significant factors influencing your company’s success. It would help if you came up with a solid marketing strategy to build a positive brand image in society. It would also help you reach maximum customers.
Choose A Business Entity
There are different ways of running a business, such as sole proprietorship, limited liability partnership, and limited liability company. You have to pick the most suitable option among these for your business.
Sole Proprietorship
Under this business entity, your business is entirely owned by one entity, so there are fewer documents involved. Your business would not have any liability protection.
Limited Liability Partnership
In this business entity, different partners own the business. One partner has more responsibility, and he looks after things. At the same time, other partners have limited liability and less control.
Limited Liability Company
Under this entity, the business itself protects the owners from liability. Such businesses have different laws and regulations in different countries. All the profits and losses are reported on their tax returns.
Do Financial Planning
Open Bank Account
Your business bank account should be separate from your personal bank account. This way, you can maintain separate business records and financial information.
Investments
Raising the capital for your business is not easy. You have to get some investors on board to raise money and operating costs for your business. You must have a financial expert who will care about these investment intricacies.
Tax Management
As you are now starting your own company, you should be familiar with the state, federal, and local taxes.
Get The Required Equipment
Starting a logistics company would need inventory, vehicles, transportation tools, and storage space. Make a list of all required equipment and vehicles that you would need to carry out your logistic business processes. In the case of cars, make sure you have registered all of your vehicles through commercial registration.
Get Your Insurance
The logistics business is very profitable; however, there are a lot of risks involved. So, it is important to get a reliable insurance policy that would recover the damage or loss caused by accidents. There are three types of insurance you must consider.
- Commercial Property: This insurance policy covers damages caused by floods and natural calamities.
- Commercial General Liability: It covers personal injury.
- Commercial Vehicle: You must have this insurance for your vehicles. It covers the damage caused by accidents to your vehicles.
Get Licenses
Being a transport company, you have to follow all the regulations and get everything licensed. Below are some important permits and licenses you must get from the Federal Motor Carrier Safety Administration.
- Commercial Driving License: All of your drivers should have this license. Every state has its requirements for a driving license.
- DOT Number Registration: It is a must-have registration for your interstate carriers.
- MC Operating Authority Number: Businesses have to pay a certain fee for cargo that goes beyond borders. All new companies must have an MC Operating Authority Number.
Hire Skilled Drivers
You have to be extra careful while hiring your drivers. Here is a checklist of a few things that you must collect from your drivers.
- Medical certification
- A copy of the road test certification
- History of Safety Performance Attempts
- Three years of motor vehicle records
Set Your Pricing
Setting the right prices for your logistic services is a critical task. Too high or low pricing can affect the credibility of your company. Your prices should match the value of your services in the market. It is also essential to consider the pricing model of your competitors. You can place your prices somewhere around them based on your services. You will lose potential clients if you charge too much and offer logistic services at higher rates. Everyone is looking for quality services at reasonable rates.
Get Fleet Software
Having fleet management software can be very useful in managing your vehicles. It will take care of your EDL compliance, vehicle routing, and buying. Using such software can also help you prevent identity theft. You can buy your fleet management software from OptimoRoute, connects, etc.
Once you are done with getting all the required tools, equipment, licenses, and knowledge, it’s time to build your transport business website.
Must-Have Features In Your Logistic Website?
To build a robust online brand presence for your logistic business. It is important to develop a feature-rich website with advanced functionalities. Below are some important features that your website must have to create a successful transportation business.
Online Ordering
Being a logistics business, you must allow your clients to place their transportation orders from your website. Your client should be able to book shipments 24/7. It would help if you created an admin panel that allows the admin to manage the orders and improve the operations.
Real-Time Order Tracking
Creating a system that allows the customers to track the orders in real-time is very important. All the customers have to do is enter their shipment ID, and they can track the real-time order’s location. Having the real-time order tracking feature on your website would give your customers relief, and they would not stress out regarding the online delivery of their orders.
24/7 Support Team
To resolve your customers’ issues and listen to their concerns, it is important to have 24/7 real-time support. Customers can have questions regarding the registration, documentation, or shipment process, and it is your responsibility to give them all the answers. There should be a chat option on your website where your customers can talk to the team and ask questions.
Online Payments
Digitization of business is all about creating more convenience for your customers. It would help if you allowed your customers to pay online directly through your website. Secure and easy have made eCommerce businesses grow internationally. To create more convenience, you should offer multiple payment options to your customers.
Customers Feedbacks
It is essential to display the testimonials and awards on your website, so your customers would know that they are hiring a reliable logistic company. Putting your certifications, awards, stars, and feedback from customers on your website can be so helpful for you to build a positive reputation. You can provide this info on the homepage of your website.
Mobile Browsing
Most people access websites using their mobile phones, so building a website with mobile compatibility is crucial. It would allow your customers to access your website from any device. A mobile website is not just a small version of your website; you must create a responsive web design to adjust the layouts to every device. The content on the mobile site should be visible, and the user must easily click the buttons.
Higher Usability
The design and layouts of your website should be developed in a way that speaks for them. Users shouldn’t have a hard time understanding any piece of content on your website. Moreover, the navigation should be clear and easy so that your customers can easily find the thing they are looking for. To enhance the usability of your website, the buttons, CTA, and other UX & UI designs should be very simple and intuitive.
Summing Up!
The steps and guidelines mentioned in this article are quite beneficial to help you start a successful logistics business.
How to start a logistics company? This is the most common question indeed, asked by aspiring transportation businesses. In this article, we have tried to answer it in detail.
Register your domain name, buy a reliable web hosting plan, and get your logistic business website created by professional developers with advanced features.
If you still have any questions regarding starting a logistics business, you can ask in the comments section.