A logistics firm is a company that stores and delivers the products of other businesses. They may specialize in the import and export of goods in and out of the country, or may concentrate on ground transportation within the area. Whether shipping, trucking or conducting air transportation, a successful logistics company will need to have some means of freight transportation at its disposal.
Logistics businesses are highly specialized operations that require more patience, persistence and planning than other businesses. As a logistics provider, you will be tasked with the challenge of coordinating the warehousing, inventory, shipping and/or security requirements of your clients' merchandise.
Below are the initial steps towards building your own logistics business:
Funding and Investment
The first step that any logistics company would need to take is to seek investment. Amount of investment in logistics business will depend upon the services that you wish to start. A simple brokering and freight management service will require less capital compared to a 3PL service. It is important to identify the niche services that you wish to target and prepare an investment plan based on it. You can obtain loans or get a partner to put up the business.
Figure out what kind of licenses and permits you need
As a business, you will need a variety of licenses and permits. The requirements for obtaining a license vary by state. However, there are some general rules that can help you determine the right license for your business. Most states do require a business permit and certain tax forms for you to legally operate. The necessary licenses, as well as the processes involved in obtaining said licenses, vary greatly by state. You should also talk to a business lawyer throughout the process to make sure you're following all regulations properly.
Look into tax permits
You will also need to file taxes with the state and local government, which requires registering your business. Depending on your state's regulations, your business may need a federal tax identification number.
Study the competition
Prior to launching a logistics business in your town, it is worthwhile to find out how you will fit in the competitive landscape.
Develop a business plan
Writing out your exact plan will help you uncover areas of your business that you may have overlooked. It will also help you flesh out the details of how you would secure funding so solve your early cash flow needs. Are you going to self-finance everything you need to get started? It can be done, but growth will likely be slower than if you take out a business loan from the bank.
But keep in mind; it is not uncommon for new logistics companies to need a line of credit in the amount of $250,000 – $300,000 in order to pay carriers before they can get paid by the shipper. You will want to develop a good relationship with your bank or banker, and show that you have excellent credit. Why? Because your business does not have any assets for the bank to come after should you default on your loan(s).
Get a physical office space for your company
Get a physical office for your company. It will give your clients enough confidence in your company. If you are extending to warehousing, you need to get a secured space for your warehouse. It should be located near the wharf if the warehouse will be used for short time storage for shipped consignments.
Get insurance cover
Running a logistic company is kind of risky. For instance, if your company’s truck with a load full of product gets involved in an accident that resulted to the loss of the products, your logistic company will be responsible for paying back the cash worth of the products damaged. One way to reduce the risky involved is by getting an insurance cover for your logistic company that will cover both foreseeable and unforeseeable damages in the future. The insurance premium may be expensive but it will save you a lot of expenses and court matters in the future.
Hire employees and get started
Once you have the correct insurance in place, you can start employing people. Your couriers will need to be insured on their mode of transport, and they may need some training. To operate a courier and logistics business, you will need some permits and legal documents, which should all be in place for when you get your first orders in.