As e-commerce and social marketplaces have become more entrenched in the global economy, the role of logistics has grown tremendously in recent years. The global retail logistics market is expected to grow to a staggering $639.14 billion by 2030. This has created a perfect opportunity for entrepreneurs and investors to plunge into the logistics business.
Starting a logistics company provides a gateway to many opportunities for businesses to grow internationally. Knowing how to start a logistics company can help you plan your business and streamline all the stages of creating a logistics company. This article provides a comprehensive step-by-step guide on how to start a logistics company.
How to start a logistics company: What is a Logistics Company?
If you want to know how to start a logistics company, it’s important to understand the operations and types of logistics companies. A logistics company is responsible for transporting goods and people from one geographical location to another for commercial purposes. Logistics operations vary from warehousing, packaging, shipping, and moving to freight forwarding and retail dispersal on a wider scale, both domestically and internationally.
How to start a logistics company: Types of Logistics Companies
Logistics companies are the backbone of the commerce industry today. Before knowing how to start a logistics company, you need to be aware of the different types of logistics services you can commercially offer. Here are four basic types of logistics companies you can choose from:
Freight companies are involved in the actual movement of tangible goods from one location to another. Transportation can be of two types – personal or local. Global transportation is a mix of these two types. Based on available capital and business feasibility, you can start your own trucking company, rail transportation company, ocean freight carriers company, or air freight carriers company.
In a complete supply chain, the finished product or raw materials must be temporarily stored before they’re shipped to distant locations, also called warehousing. Warehousing companies keep goods safe while they await shipment to the next process stage.
Freight forwarders don’t require a huge capital investment as they provide consultancy instead of directly dealing in transportation. They help their customers find the most efficient and affordable way to get their products to their destination.
Distribution companies handle the entire distribution process for their clients. Dropshipping businesses are one popular type of distribution company. These companies take care of everything from vendor selection to product manufacturing, packaging, shipment, and delivery.
How to Start a Logistics Company?
Logistics is among the most lucrative businesses that offer opportunities for substantial growth. Scroll down to learn how to start a logistics company.
Choose the Type of Company
The first step toward starting your logistics company is to choose your business path. You must first select the type of logistics company from the list above and choose the specialized area you would deal in. Conduct market research to identify gaps you can fill with your services.
Budgeting, your skill set, and available capital are important before considering a business. Once you have chosen your niche, you must organize your finances. Hiring professional financial consultants to create a realistic budget for your business is always a good idea. Your budget is dependent on the type of service you choose to offer. While you may not need a bigger capital for a consultancy business, you’ll require a hefty capital for domestic or international transportation fleet management. Include all your initial expenses and create a business feasibility report to evaluate return on investment and ROI duration.
Having a rough idea of all startup costs will help you avoid unprecedented issues and better estimate how much startup capital you’ll need to make the business operational.
Choose a Business Entity Name
This is a crucial step in our guide on how to start a logistics company. After budgeting, it’s time to create a legal business entity. Instead of registering as a sole proprietorship, consider registering your company as a limited liability partnership (LLP), limited liability company (LLC), or limited company (Ltd.). This way, you won’t be personally held responsible for any losses to the company, and your company assets will get legal coverage.
Choose a business entity name that resonates with the services you’re planning to offer. Take professional help to design a creative and inspiring logo. Use colors, shapes, and text strategically to convey a strong message to your prospective customers and build a brand identity.
Acquire Licenses and Permit
To run your business legally, you require a license to operate the business and permits to form a legal business structure. For this purpose, you’ll have to complete the legal paperwork, mention payrolls, and register for the tax filing process. The taxation and legal documentation depend on the type of business and legal jurisdictions for your area of operation.
Curate a Business Plan
Creating a solid business plan is critical to learning how to start a logistics company. Keep your business plan simple in the beginning. Hire professional consultants to help you figure out details. Plan your business for initial capital, expenses, payroll, and overhead costs—plan on getting clients and generating income.
Plan for Investment and Funding
Make it easier to file taxes when the time comes by opening a separate bank account and credit card for your business. In addition, it’ll help you get money. The funding you require depends on how many vehicles you want to add to your fleet. Starting a one-vehicle business might be doable on your own. To get funding, you need to apply for a small business loan from the government or bank loans using your company’s credit card.
Build Your Fleet
Once you’re done with legalities and financing, it’s time to invest in your fleet. Purchase the right vehicle for the job and conduct thorough research to avoid over-expenditure. Ensure the fleet is in good condition, maintained, and has a comprehensive maintenance record and schedule. Your vehicle will drive your company’s performance, so invest wisely.
Starting a logistics company is the first step toward becoming a leader in the supply chain industry. A comprehensive knowledge of how to start a logistics company can help you streamline the company registration, investment, and asset acquisition process. We hope the above steps and tips will help you understand how to start a logistics company and make an impact in the logistics industry.
Are logistics and transportation the same?
While transportation is a part of logistics, the term logistics encompasses a wider span of goods movement from one place to another, including warehousing, shipping, packaging, and transportation.
How to start a logistics company for e-commerce?
The process for starting a logistics company for the e-commerce industry is the same as mentioned above. You can follow the above guidelines for starting a logistics company for e-commerce.