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How to run a courier business

Most courier companies are set up by former couriers, for the simple reason that they know how the industry works.

It's a competitive industry, seemingly because it seems so straightforward. 

In reality, the logistics of delivering items safely, on time and to the correct location, multiple times a day across numerous locations, could not be described as easy. 

Roadworks, accidents, bad weather and a failure for the recipient to collect are commonplace. 

A mistake can cost precious time and waste petrol money, losing a customer forever. 

In fact, it's estimated that nearly a third of courier companies fail to make it past year three.

What do I need to start a courier service:

  1. Research
  2. Vehicles
  3. Equipment
  4. Logistics
  5. Insurance
  6. Employees

Research

Competition is one aspect of becoming a courier, but there are many others:

  • Where will you be based? Will you limit yourself to a specific area, or area type (e.g. a particular city).
  • What vehicles will you use ?
  • Will you buy vehicles, or lease them?
  • Will you specialise in a certain field or niche? Is anyone else currently competing in that niche, and how can you differentiate yourself?
  • What will you charge? What do competitors charge?
  • What software will you use?

Vehicles

There are many different considerations for your choice of vehicle. 

Your vehicle may be travelling several hundred miles a day so clearly comfort, reliability and efficiency must be among the priorities. 

Size, weight and contents maybe important factors as well.

For example, a small van (two metre cubed) might be able to carry one pallet, while an articulated lorry could hold up to 26 pallets weighing 24,000 tonnes. 

The former of these will be quick but only holds a very limited amount of contents; the latter is entirely impractical for the vast majority of urban travel. 

If you're utilising a fleet you may perhaps want several different vehicles, but in the early days of your business you might be forced to choose just one or two, such as a Luton or Sprinter van.

A white ford transit van being used for couriering

An alternative is motorbikes or bicycles, for those occasions where time is of the essence and only a small package needs to be delivered. 

These may allow you to skip through traffic and along routes that would otherwise be unavailable. 

Bicycle couriers are also a more environmentally-friendly option, although if that is a concern you might wish to plump for an electric or hybrid fleet of vans. 

You'll need a specific licence for the motorbike option, of course.

One final thought; if you're taking on employees they might be able to use their own vehicles. 

Check with your insurance company to see if they can be included.

Equipment

Don't be tempted to skimp on equipment. 

While the equipment you need clearly depends on the items you intend to handle, there are a few key things to consider:

  • Clothing: Cycle and motorbike riders will need clothing that deals with weather extremes and potentially accidents. You might also wish to have uniforms for your staff.
  • Specialist handling and storage equipment, such as gloves or refrigeration: You may have to deal with:
    • Extremely rare or precious items
    • Fragile goods
    • Confidential documents
    • Small objects (eg flash drives)
    • Biohazardous/chemical/perishable goods
    • Items that need to be kept within a certain temperature
  • Heavy lifting equipment: This might be fitted within your vehicles (eg ramps) or a mobile heavy lifting trolley.
  • Backpacks/baskets (for cyclist couriers)

Logistics

Cloud technology is so commonplace that we barely even raise an eyebrow when it's suggested to us now, but it's crucial for any functioning courier business to succeed. 

Quite what you'll need in your software and hardware package varies, but options to consider include:

  • Online product management for keeping invoices and accounts up-to-date and making the bookkeeping process simpler.
  • Warehouse management systems, recording the movement of packages in and out of buildings. It can be easy to lose track of items, particularly if you are handling large amounts. Technology can make this less of a hassle - and can allow you to offer customers a 'live tracking' facility so that they know where their parcels are.
  • Smartphone apps for drivers to help them beat traffic jams and take the most fuel-efficient route from A to B.
  • SMS messages giving customers notification of delivery, booking and tracking, and if possible the allowance to change delivery dates.
A delivery driver delivering parcels

Insurance

Many insurance firms offer dedicated courier insurance to cover you against every eventuality. 

It is by no means cheap, simply because of the risk of exposure that a driver will experience. 

Couriers make multiple stops, working against the clock, often on road systems with which they are unfamiliar and poses a risk that you need to protect yourself against.

Goods-in-transit insurance can help to protect your precious cargo from damage or theft, while van breakdown cover will ensure that your vehicle, your lifeblood after all, is covered. 

If you have a fleet, consider searching for a multi-vehicle policies. 

Public liability insurance might also be wise in case of accidents or incidents when you are on the property of a client or customer.

Employees

While there are no specific qualifications required for a courier (save for a driver's licence), good communication skills and driving skills are usual prerequisites. 

A courier should be diligent with time, and able to manipulate and use the appropriate technology without using the phone while on the road.

The National Careers Service advises that typical starting salaries lie between £14,500 and £18,000 although this can climb as high as £40,000 with experience. 

Many drivers are self-employed, meaning that they tend to be contractors rather than full time employees.

Potential applicants should be ready to work evenings or weekends, and travel long distances. 

As mentioned earlier, discipline, stamina and physical fitness are important.

Learn with Start Up Loans and help get your business off the ground

Thinking of starting a business? Check out our free online courses in partnership with the Open University on being an entrepreneur.

Our free Learn with Start Up Loans courses include:

Plus free courses on climate and sustainability, teamwork, entrepreneurship, mental health and wellbeing.

Disclaimer: The Start -Up Loans Company makes reasonable efforts to keep the content of this article up to date, but we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. This article is intended for general information purposes only and does not constitute advice of any kind, including legal, financial, tax or other professional advice. You should always seek professional or specialist advice or support before doing anything on the basis of the content of this article.

The Start-Up Loans Company is not liable for any loss or damage (foreseeable or not) that may come from relying on this article, whether as result of our negligence, breach of contract or otherwise. “Loss” includes (but is not limited to) any direct, indirect or consequential loss,  loss of income, revenue, benefits,  profits, opportunity, anticipated savings, data. We do not exclude liability for any liability which cannot be excluded or limited under English law. Reference to any person, organisation, business or event does not constitute an endorsement or recommendation from The Start-Up Loans Company, its parent company British Business Bank plc, or the UK Government. 

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