Starting a delivery business
Online shopping has revolutionised the courier industry, so you may be pondering how to start a courier business. As internet purchases have soared, demand for courier services has rocketed. Consumers have come to expect rapid and efficient deliveries, and companies are therefore always keen to work with a reliable courier who can work to the current level of demand. Starting a courier business could be an exciting enterprise if you’ve worked within the courier industry or have a head for logistics. With revenue from British parcel deliveries hitting £14 billion annually, plenty of opportunities exist to deliver a good profit.
In a highly competitive market dominated by a few big players, the savvy courier entrepreneur finds a niche and works hard to curate a loyal customer base within that niche first. In this article, we’ll steer you through all the key considerations for the new courier business, from the rules, regulations and qualifications to the equipment you’ll need to make your business run smoothly.
Delivering to the Modern Consumer
In 2020, when the country went into lockdown, couriers facilitated the unprecedented rise in online spending, with domestic volumes increasing by 50%. Post-pandemic, we’ve continued to experience a move to online shopping with members of the public and businesses seeking fast and trackable deliveries.
When starting any business, it’s crucial that you understand why a customer would want your service. In the UK, we have changed the way we shop. The changing face of the high street shows that we no longer have the time or inclination to drive into town to make certain purchases. Our fast-paced lives and desire to buy items for our home and business that align with our unique style and ethos means that we crave the choice afforded by shopping online. The likes of Amazon have elevated delivery expectations significantly, and if consumers can’t have a next-day delivery option, they would still seek a 3-5 business day as the cheapest option.
If you’re considering starting a delivery service, you need the infrastructure to coordinate and trace fast and cost-effective deliveries that will keep your client’s customers happy.
The Potential for Profit
The courier business relies upon the fast and efficient movement of parcels. With fuel prices at a record high, delivery services must carefully manage their logistics to prevent excess mileage and expensive fuel wastage.
The profitable courier service needs to be a slick operation regarding delivery route planning and drop-offs per shift.
When thinking about how to start a courier business, you must conduct market research to check that there is a large enough customer base for you in the area you intend to serve. Check how many national courier services, independent couriers, self-employed couriers and specialist couriers (cyclists) are working in your target region. Once you’ve made a list of your competitors, appraise the services they provide, their price point, their online review ratings and their unique selling point. Looking then at how your area is currently served:
- What niche could you fill?
- Is there a price bracket that isn’t being catered for, and could you meet that while still making a profit?
- Is a service not being offered, like same day or 24-hour, or could you make your mark by providing an exceptionally high quality of personalised services if the local couriers rate poorly on online review sites?
Choosing your Courier Style
You may decide to set up as a self-employed courier, making deliveries in your own vehicle or taking on a franchise from one of the national companies. There are several benefits to starting out this way, even if you intend to expand in the future. Flexible working hours are vital when you start out as a self-employed courier. Growing your business around an existing job could be the safest financial option. It’s often easier to nurture a good reputation as a courier when you’re initially the only representative of your burgeoning company because you have complete control over customer service.
Or, you could start a larger delivery business enterprise, employing drivers and taking on more deliveries and a wider catchment area.
When you think about how to start a delivery service, whichever route you take, you need to decide the style of couriering you’ll offer. These include:
- General deliveries – taking on parcels of different delivery speeds and content types. This can benefit the self-employed solo courier as it doesn’t limit your work opportunities, and it’s a wise option if you’re serving a rural area with fewer niche opportunities.
- Next-day deliveries – in years gone by, this was considered a premium service, but today, customers have come to expect this as an option on many everyday items. Businesses, therefore, need reliable next-day couriers who can keep up with this fast-paced service.
- Same-day deliveries – this specialist service will likely grow significantly in demand, as with next-day services. Though it’s fraught with time pressures, this could be an exciting avenue to pursue if you love a challenge, and the higher cost of this service can improve your profit margins if you can “deliver”. Establish yourself as a premium supplier of this service, and as demand increases, you’ll be ready with an excellent reputation to take on the work.
- Overnight deliveries – offering this service will make you an attractive option for companies that function 24/7.
- Onboard deliveries – for high-value or confidential items that must be carefully guarded.
- Specialist deliveries – commonly items for the healthcare industry, biohazards or high-value fragile items (such as antiques and art).
What Are The Rules And Regulations For Starting A Delivery Business?
Currently, in the UK, you don’t need a specific qualification to work as a courier or to set up a courier service.
You must follow several UK rules and regulations to run your courier business within the law. Before you start delivering parcels, you will need the following:
- A standard driving licence for all couriers working within your company.
- A goods vehicle operator license if you use vehicles with a gross plated weight of more than 3.5 tonnes.
- An operator licence for each Traffic Area you cover, provided by the Traffic Commissioner in each area.
- To follow the restrictions relating to continuous driving and the mandatory daily and weekly rest requirements for drivers.
- To install a digital tachograph in any new delivery vehicles being used in the business.
- To install a Department of Transport plate showing the maximum permissible cargo weights for your goods vehicles.
- To insure all delivery vehicles.
- To secure goods in transit insurance.
- To submit your insured goods vehicles to the Motor Insurance Database under current EU legislation.
- To comply with workplace Health, Safety and Fire
- To hold at least £5 million in employer’s liability insurance if you employ drivers or other staff members.
Equipment for a Courier Company
On the surface, it may seem pretty simple to set up a courier business. A place to base your operations, the IT to plan your deliveries and suitable works vehicles, and you’re up and running. However, each of these needs to be fit for purpose, and if you fail to have suitable equipment in place, the delays experienced can be costly to your company.
The vehicles you use within the business are crucial to the smooth operation of your delivery service. Purchasing or leasing new, reliable and fuel-efficient vehicles can ensure that breakdowns or mechanical issues don’t darken your workdays.
Carefully considering the size of your vehicles is prudent because, at this time of soaring fuel prices, you may want at least one large-capacity goods vehicle, such as a lorry, for transporting large numbers of parcels to your operational base. However, smaller vehicles such as vans and cars can be far more practical for urban deliveries. You may even consider bikes, motorcycles and even drones – especially if your niche is super-fast deliveries.
Your business also has the option to employ drivers who use their own vehicles. You’ll need to ensure their vehicle complies with all the necessary regulations, and you should speak to your courier business insurer to discuss whether you need additional cover.
Heavy Lifting and Specialist Handling Equipment
For efficiency and the safety of your employees, you will need equipment for moving parcels and loading and unloading from works vehicles.
Your employees may handle all manner of goods during their work, and it is your duty to supply them with the equipment that allows them to do so safely while maintaining the integrity of the goods being delivered. You may need to provide gloves for biohazards and install refrigeration units for temperature-sensitive deliveries.
For the modern courier, logistic technology is at the heart of the company, with cloud technology now commonplace. The software and hardware you may need to coordinate the logistics of your deliveries include:
- Vehicle tracking technology – this will meet the customer’s expectations to be able to accurately track their delivery and be kept up to date with estimated arrival times, but it allows you as the business owner to monitor your vehicles, appraise fuel-efficient routes and ensure your staff are taking the requisite breaks Be sure to tell your insurer if your vehicles are installed with this technology as you may then benefit from a reduction on the cost of your premium.
- Warehouse management technology – to monitor the movement of deliveries into and out of your storage facilities.
- Traffic apps for drivers – to avoid traffic jams and therefore reduce time wastage.
Insuring a Courier Business
Starting a courier business is an exciting venture but comes with various financial risks. Even if you run a tight ship, have a logistical whizz in charge of coordinating your deliveries, and offer employees excellent health and safety training, unexpected incidents can still occur.
Your courier business may face the theft of delivery vehicles, the loss of parcels, employee injuries or incidents involving a third party. Fail to insure your business, and you could be left shouldering the financial losses.
A couple of key areas of cover are crucial to a courier business. Goods in transit cover is the insurance your business will call upon if the items you’re delivering are stolen, damaged or lost. You’ll need to discuss with an insurer the level of coverage required. This will be based on the nature of the goods you’re delivering. If you specialise in transporting high-value artwork, you may need a far higher level of cover than a courier who provides low-value general deliveries, such as clothes and household items.
Courier van insurance is needed if you’re receiving a financial reward for transporting other people’s goods, which differs from standard vehicle insurance. It will help get your vehicle back on the road as quickly as possible should the worse happen.
You’ll need to add employer’s liability to your courier business insurance if you hire staff members. You can add further protection to your business with public liability insurance to provide cover if a member of the public makes a claim for personal injury or property damage.
You can safeguard your IT systems with cyber cover, and you may like to use contents cover to protect the equipment in your office, warehouse and onboard your larger delivery vehicles.
We hope you found our guide on how to start a courier business useful. If you’d like tailored advice on how to protect a new courier service, the friendly insurance experts at Park Insurance will take the time to learn about the company and your plans for the business as it grows. Get in touch today and see how we can help support your new venture.