What You Need to Consider Before Starting a Small Logistics Company

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Anytime you start a new business, there’s a lot of research and planning to do before you start serving customers or clients. So it’s not surprising that’s also the case for those who want to start a small logistics company. If that’s your plan, here are a few things to think about first.

Capital and Overhead Costs

You can’t start a small logistics company without some sort of capital. There are too many things you’ll have to purchase and pay for upfront. For example, you’ll have to find big trucks for sale to handle your shipping needs and at a decent price. You’ll also need to obtain the proper insurance, business licenses, and any equipment needed for your office. Additionally, you’ll need to have an account with enough cash to cover payroll and benefits for your employees. Without even one of these things in place, it’s impossible for a logistics company to start making money.

You don’t want to forget costs that are specifically associated with a logistics company either. For example, you’ll need to consider the cost of maintaining your fleet of trucks, the cost of securing your trucks when they aren’t in use, and the cost of tolls drivers may encounter when they’re on the road.

Planning for Success

When you start a logistics company, chances are that you’re putting a lot of cash into the business upfront. This means if everything doesn’t go as planned, you could end up losing quite a bit. To help stack the deck in your favor, you need to have specific plans in place for overcoming common hurdles, consistently bringing in new clients, and keeping your clients and employees happy.

As you continue to build, you’ll need to have operating procedures in place so your employees know how to handle specific situations they may encounter. For example, your drivers need to know what to do if they arrive to drop off a truckload of supplies to a customer and how to handle the customers if they aren’t happy or have a lot of questions. Your office staff also needs to know exactly what to do if they need to reroute a driver.

Complete Market Research

It can be difficult for smaller companies to “beat out” large ones. If your company is going to succeed, you need to be able to show your clients how you differ from the big players in the market. There’s a good chance you won’t be able to beat their rates, but there are other ways you can set yourself apart. For example, when you first start a logistics company, focus on providing outstanding customer service instead of pricing your rates as low as you possibly can. Even though you may not be able to beat your competitor’s rate, you might be able to fill in specific gaps in the industry and, a lot of the time, that matters a lot more than the cost of your service.

Work to Get the Attention of Suppliers

Ultimately, if your logistics company is going to succeed, you need regular customers on the books. Suppliers are the clients who need your services on a regular basis and, if you fill your books with them, you won’t run out of work any time soon. This means that, when you start your logistics business, the first thing you should focus on is being reliable. Suppliers don’t want to work with companies that are frequently late with shipments because it makes them look bad. Start by working with small, local suppliers and, once they know that your company is reliable, they’ll become loyal customers. Then you can use these companies as references as you continue to build your business.

Like any other business, starting and growing a logistics company takes time, money, and planning. But if you focus your efforts on working with local suppliers, being reliable, and providing excellent customer service, there’s no reason your company can’t grow into the massive business you’ve imagined.

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