Most Americans feel like they spend far too much time rushing around in cars. Traffic, road construction, and bad weather frustrate millions who have disposable income to spare. That mix of frustration and spending money opens up a highway of opportunity for someone to get paid to fill in the gap. But knowing how to start a delivery business (also known as a courier service) does have its own twists and turns.
Here, we’ll set you up with turn-by-turn directions to start your new business through a series of easy-to-follow steps. Let’s get you out of the garage and into the fast lane with this quick guide to starting your own delivery company.
Benefits of Opening a Delivery Business
If you’ve got good time management skills, your new delivery business can start growing a customer base on nights and weekends. Once your company has a solid footing, you can decide if you want to go full-time. The average delivery driver in the U.S. makes $2,479 per month to $45,000 per year for single-driver operations, but as you scale up, that can grow fast. Plus, the overall earning potential is solid, with over 111.7 million customers in the online food industry alone.
If you already have a set of wheels, your startup costs can be almost nonexistent. Growing a delivery business can be fun, and it offers the chance to provide excellent service that generates strong word-of-mouth advertising. You don’t need employees, extra equipment, or even an office space to start, so getting things rolling can be more straightforward than starting many other types of businesses.
How to Start a Delivery Business Checklist
Eager to get on the road? The process is simple, but following the right steps can keep you on a sure and steady route.
1. Create a Business Plan
Starting a delivery business takes careful planning and some industry knowledge. Don’t jump in with both feet before you’ve taken some time to lay the groundwork. Start with a sturdy business plan to help you shape your company and avoid common, costly mistakes other small businesses make.
- What is your unique selling proposition, and how will you position yourself against the competition?
- Who is your target market?
- How will you bring in customers at first?
- Where will you base your new business? Do you understand the need for deliveries in that area?
- What problems will you face? Is there already a big, low-cost delivery company serving the area?
- What vehicle will you use? Will you need commercial auto insurance?
- How will you manage vehicle maintenance?
- Will you partner with other area companies? Some food stores and restaurants may not offer delivery now, but they may like to try it out with you.
- Consider the delivery hours you’ll keep.
- Will you charge per delivery, or by mileage?
- Will you offer a rush delivery service at a premium?
- Do you qualify for any federal, state, or local tax breaks or grants?
For a comprehensive outline, you can read our guide to create a business plan.
2. Choose a Business Structure
Sole proprietorships are popular delivery business models because they’re easy to set up. They’re simple, one-person businesses that need very little up-front paperwork. But pump the brakes, because a sole-prop structure doesn’t give you liability protection. If your courier service company gets in a legal jam, your house and car could be on the table for your creditors.
An LLC (limited liability company) can stave off future legal troubles with liability protection. It provides a bumper between personal and business finances. If you’re in a car accident or you end up in debt, an LLC setup can offer some protection for your house, car, and personal savings. This can be a key component when choosing a business model.
An LLC also gives tax incentives, like letting you distribute profits from your delivery company at a lower rate, and it can have multiple business owners.
3. Determine Your Delivery Business Costs
The biggest plus to making a delivery business is the minimal financial input required. There are costs to starting any business though, so don’t go in with blinders on. Here’s a list of costs you can expect when starting up:
- Business license: Getting an LLC for a delivery company can cost from $50 to $500, depending on your state.
- Vehicle costs: Will you buy a new vehicle, lease, or use the one you have?
- Vehicle maintenance: New vehicles cost $1,186 per year for average upkeep.
- Insurance fees: You may need commercial auto insurance, which can cost over $140 per month.
- Equipment costs: You may need a dolly, hand truck, and ratchet straps depending on what you’ll deliver.
- Computer or laptop
- WiFi or internet access
- Marketing and website expenses
For a true reflection of your potential startup outlay, refer to this guide on how to calculate small business costs.
How do you fund your startup costs?
You may start by using your personal vehicle for deliveries. But as your business grows, you may want to increase capacity. Although the initial expenses for making a delivery business are low, think through the costs of scaling up.
- Government assistance like grants and tax breaks can jump start your delivery business. Check out new funding options that have popped up during the pandemic.
- Business credit cards can give you a push, but watch out for interest rates and pay down balances each month.
- The Small Business Administration (SBA) can help point your new courier service to available grants and loans.
- Bank loans are a common option, and forming an LLC first tells loan officers you’re serious about your delivery business.
- Your family may want to lend a hand, but get all terms in writing to avoid damaging your personal relationships.
4. Name Your Business
Choosing a memorable delivery business name is an important step. Think about names that are quick to say, and easy to remember. Names like Speedy Wheels, The Rolling Zone, and Food En Route are fun and friendly. Link your delivery company name to the type of service you provide, and make sure it rings the right bells with your target market.
Once you’ve got a few concepts in mind, search online to see if they’ve already been snapped up. If you’re feeling uncertain, ask friends and family to pitch ideas or to “vote” on the ones you have in mind. Once you’ve decided on a moniker for your delivery business, go ahead and register it. Buy your domain name, too.
5. Register Your Delivery Business and Open Financial Accounts
Before you can start revving the engine, take care of a few steps to get your delivery business finances in order.
- Register your business as an LLC.
- File for an employer identification number (EIN).
- Open a business bank account
- Make sure your vehicle is registered and insured
- Consider taking out general liability insurance
- Purchase commercial auto insurance
Joining a trade organization like The Association for Delivery Drivers can help guide you through the twists and turns.
6. Purchase Equipment For Your Delivery Business
If you’ve got a personal vehicle, you’re already on your way to making a delivery business. However, you may still need to purchase added vehicles or other equipment. Take into account all the extras you may need.
- Reliable vehicle (box truck, in particular)
- Hand truck
- Ratchet straps
- Cell phone
Want to cross all your Ts? See this comprehensive guide to equipment needed for a delivery business.
7. Market Your Delivery Business
Marketing is often the toughest part of starting a delivery business. You can rely on word of mouth at first, but if you want to earn real revenue, you’ll need a marketing plan. Pounding the pavement and approaching potential customers in person is often the quickest way to build a client list of food stores and restaurants in your area.
You can offer a free delivery at first to show what you can do. Once you’ve got a small but stable client list, set up a small website and start email marketing. This may take a little extra work at first, but they can almost run on autopilot once they’re built out.
Create pages on social media platforms including Facebook, Twitter, and LinkedIn as well, and use local business directories and newspapers to advertise. One great freebie that can potentially generate business is Google My Business, which will allow your business to show up in more local searches. Also, consider partnering with local stores as their delivery service business of choice, and drop off some of your business cards for them to share with their customers.
Examples of Delivery Businesses to Start
As the demand for delivery services increases, so do the chances for your delivery company to grow. The online food to consumer chain is buzzing, with projected revenue of $26.5 billion in 2020. Here are some different related business ideas to consider (that are also experiencing growth):
- Fast food delivery
- Grocery/Food delivery
If you’re a people person and you love driving, then starting a delivery business may be the right choice for you. With its low risk and minimal startup costs, it’s easy to get rolling. And by following the rules above, your new delivery company could go from zero to hero fast.
Delivery Business FAQs
- How much do I need to capitalize my delivery business?
If you’re thinking about starting up a delivery business, you can get off the ground with just your existing car. That means you can basically start with $0, but as you scale up you may spend $200,000 or more to buy more vehicles, set up an office space, and spend on marketing and sales.
- How can I drive traffic to a website for my delivery business
Bring in traffic to your website through paid cost-per-click advertising, online sales, and content. Share sales and special offers on your social media pages. The more content you create, the more customers you can reach. Embed Google Analytics into your website to gauge traffic flow and bounce rate.
- Is a delivery business profitable?
During the ongoing COVID-19 pandemic, consumers are choosing to order online and wait for delivery. Revenue is expected to increase by 5.1% by 2024, creating ample room to succeed in the delivery service business industry.