Starting your own business is the best way to build wealth. Instead of working day in and day out as an employee to help someone else build the life of their dreams, owning your own company means that every hour you work will be to create your own dream life. When it comes to starting a business, there are several lucrative options. For many people, launching a logistics company is a great option.
Modern businesses depend on logistics companies to manage their warehousing and shipping needs. As online shopping has become increasingly popular and more people are buying on the web rather than shopping in brick-and-mortar stores, the demand for the services logistics companies provide has grown exponentially. From storing products, shipping large quantities and supplies between businesses, and delivering products to consumers, logistics companies offer a wide range of vital services.
If you are considering starting your own business, there are always several things that need to be taken into consideration. Here are a few things to keep in mind before starting a logistics company.
- Starting a Logistics Company Isn’t Cheap
There are plenty of businesses that you can start with minimal upfront investment. Unfortunately, a logistics company isn’t one of them. To get started, you’ll need to cover the cost of purchasing, renting, or leasing vehicles, equipment, a building to house your business, etc. You will also need to invest in various types of technology to help your business run smoothly. Remember that you will need to make sure that your company is appropriately licensed and insured, which can cost a lot of money.
When you are getting started, you will most likely need to find investors who are willing to provide funding for the startup phase. The exact amount of money you will need will depend on the services you plan on offering when you start. If, for example, you launch a brokering and freight management service, you won’t need as much money as you would need to start a 3PL company. Determine the exact services you plan on offering at the beginning and which ones you would like to offer as your company grows. From there, you can come up with a rough estimate of how much startup capital you need, develop a business plan and approach commercial lenders and other potential investors to seek funding.
- You’ll Need to Obtain the Proper Licenses
As mentioned above, you will need to obtain certain licenses, permits, etc. when starting a logistics business. The exact requirements vary from state to state and even in different cities. It is your responsibility to determine which ones are required in your area and to obtain them before opening for business.
At the bare minimum, most states require you to obtain a business license. Depending on the services you offer and the types of materials you work with, you may need additional licenses and permits from federal, state, or local agencies. If, for example, you plan on transporting or storing hazardous materials, you will need to obtain special licensing and permits. The U.S. Small Business Administration provides valuable resources to help you determine the licenses and permits required to operate a business in your area.
- Insurance Is Vital, Too
Logistics companies carry a lot of risks. This, of course, makes business insurance extremely important. You need to make sure you have coverage for your physical property, vehicles, employees, and the goods that you transport or store. Typically, owners of this type of business also need to purchase workers’ compensation insurance.
Insurance is expensive, but it’s not something you should skimp on to save yourself some money. Without proper coverage, a single incident could bankrupt your company. Consult with an insurance agent who specializes in business insurance to determine what types of coverages you need and how much you should invest in.
- You Need the Right Physical Location
Even if you are starting out offering just a few services and you could run your business from the comfort of your couch, you need a physical office space. Without one, clients are unlikely to have much confidence in your company. Having a physical office makes you look more professional, and it gives you a way to separate your work life from your personal life.
If you plan on offering warehousing services, you’ll also need warehouse space. Be mindful when searching for a location and remember that the facility you choose needs to be secured in order to ensure the safety of both your equipment and your customers’ products. Think about ease of access, too. If shipments arrive by truck, for example, your facility needs to be in an area that large vehicles can access. If they are arriving by ship, your warehouse should be located close to the wharf.
- The Right Staff Can Make or Break Your Business
When you are ready to start hiring employees, choosing the right people is crucial. Make sure that anyone you hire is properly licensed and can do the job legally. Run background checks. Provide in-depth training to ensure that everyone knows exactly what needs to be done and how to do it. Make safety a top priority, and ensure that all employees know safety protocol and are familiar with how to use safety equipment.
Building Your Business from the Ground Up
Starting a logistics company is a great way to become your own boss and earn a lucrative income. Doing so is not without challenges, though. It takes a considerable amount of money to get started, and you need to be sure to obtain the proper licenses, permits, and insurance prior to doing business. With careful planning and determination, however, it is possible to hit the ground running and start a profitable logistics company.