How To Start A Delivery Service In 9 Easy Steps

The first step in starting any business is to make a business plan.

We recommend starting with a one-page business plan in which you list the following information about your business:

• The problem your business solves
• Objectives
• Experience
• Target market
• Competition
• Financial summary
• Marketing strategy

Every startup requires capital, and with a delivery business, you have to invest in a lot of equipment upfront. If you don’t currently have the funds you need to start your business, we suggest looking into financing options.

There are many ways to fund a business. One option to consider might be crowdfunding through sites like GoFundMe or Kickstarter.

Many businesses will look for business loans as a way to finance their small business. There’s a lot to consider with business loans. You can meet with your bank or use a loan aggregator to research the loan that will be the best match for your business needs. The best business loans will have a repayment schedule that works for you and a lower interest rate. There are even options for loans for businesses with bad credit. Do your research.

You may also find a business credit card that works well for your business. Look for business cards with great rewards.

Some other options might include:

• Merchant cash advances
• Personal loans
• Invoice factoring

One of the big startup costs you should anticipate is the cost of equipment. Depending on the types of products you decide to deliver, you’ll need to choose equipment that can help deliver shipments safely and efficiently.

Here are a few examples of equipment you may need:

• Vehicles (sprinter vans, pickup trucks, freight trucks, trailers, or refrigerated trucks, depending on your shipments)
• Dollies
• Ratchet straps
• Moving blankets
• GPS systems
• Cell phones or radios for all team members
• Tablets and card readers for processing payments and signing off on orders

As you create a list of the types of equipment you need, you should also consider how you’ll pay for that equipment. Will you purchase it outright or use equipment financing to lease or loan your vehicle? Research to find the best equipment financing companies available.

Make sure you calculate the interest rates you pay for equipment financing into your business’s budget.

Your next step is to decide how much you’ll charge for deliveries. There are a few different ways you can price your services.

Many delivery companies charge on a per-mile basis. Each mile driven costs a set amount. In another model, you can charge a base rate and then add per-mile costs on top of that base rate.

As you set your prices, you should also determine the boundaries in which you will deliver orders. You can choose to not make any deliveries outside of these boundaries or charge a distance surcharge.

Make sure that your prices account for your company’s total overhead (including fuel, vehicle maintenance, time, and other costs) to protect your profit margin.

To legally register your business, you first have to decide on a business structure. The business structure you choose depends on the amount of liability you are comfortable with and if you plan on hiring employees.

If you’re just starting up and you plan on working independently for a while, a sole proprietorship is a good option. However, if you plan on hiring employees, you should look into setting up an LLC and purchasing LLC insurance.

The next step is to register your business name, also known as a “doing business as” trade name (DBA). As you choose a name for your business, consider using keywords such as “delivery,” “same-day delivery,” or even “floral delivery.” That will help your business appear in Google searches.

During this step, you should also look into available domain names. Choosing your business name and domain name at the same time can help you create consistent branding and make your site easier to find online.

Your final steps are to register your small business with the IRS, register for business licenses and permits, get an EIN if you have employees, and register with your state’s revenue office.

As you set up the legal part of your business, make sure you sign up for any necessary insurance. These insurance plans protect you and your business, and they also protect your employees.

Here are some types of insurance you should purchase:

• General Liability Insurance: This insurance package covers delivery services and delivered products. This insurance protects companies against lawsuits related to delivery services. Learn more about understanding small business liability insurance.
• Commercial Auto Insurance: Commercial auto insurance covers damage or theft done to a fleet of vehicles, an owner’s vehicle used commercially, or an independent contractor’s vehicle. Also, commercial auto insurance covers bodily injury and medical expenses. If your business operates trucks, you may also need commercial truck insurance.
• Garage Liability Insurance: If you plan on storing vehicles on-site, you’ll also need garage liability insurance.
• Commercial Property Insurance: To protect your employees’ property (things they store in their vehicle while they are at work), you can also sign up for commercial property insurance.
• Workers’ Compensation Insurance: Workers’ compensation insurance is required in every state except Texas. This insurance covers medical costs and lost wages for work-related injuries.

There will be no shortage of numbers you’ll need to manage and track for your delivery business. Do your best to scrutinously organize the cash that flows in and out of your delivery service.

Choosing the best accounting solution for your business will curb the financial risks that come with the volumes of orders, invoices, payments, miles, times, and operational costs you’ll have to juggle.

You can also track tax-deductible expenses, such as fuel, repairs, and new equipment.

For payroll specifically, there are options available that are seriously budget-friendly and even free. Check out our articles on cheap payroll software and the best free payroll software.

Don’t forget, you’ll need to have payroll taxes sorted out, too.

Finding the right software for your delivery business can streamline your day-to-day operation and even reduce the number of people you have to hire to get things started.

Here are a few software recommendations that you should consider adding to your business:

• Square: If you choose to accept digital payments — which you probably should — consider Square for your credit card and payment processing. This all-in-one platform can be used to manage payroll and inventory in addition to handling payments, though it does charge a small fee on transactions. Its base service starts out with zero subscription costs, and you can scale up from there. (If B2B deliveries will be your niche, read about the best B2B payment processors here.)
• Shopify: Shopify offers multiple ways to put delivery services to work. The company partners with local delivery services for same-day delivery, so it will likely have opportunities for you if you have transportation ready. Shopify’s Local Delivery Service app allows you to give delivery status updates, use GPS, and communicate with customers. If you’re simply looking to sell a product and have deliveries handled, the platform puts you in contact with shipping carriers to manage and fulfill your business’s orders.
• Wix: Every business needs a website, and with Wix, you can build a fully functioning website from scratch. It boasts straightforward customizability, making it an appealing option for business owners who don’t have much experience with web development.
• Squarespace: Like Wix, Squarespace is an easy-to-use website builder. We recommend Squarespace over Wix for businesses looking to sell services online.
• QuickBooks: QuickBooks is a highly integrable accounting platform that allows users to track and manage income, mileage, receipts, and invoices. Users can also file tax forms through the platform. Multiple product versions of QuickBooks exist, but these mentioned benefits are common.

At the very least, this should help give you an idea of what you need to have your bases covered. Each aspect of your business should be addressed before it could lead to frustrated customers and drivers.

For example, if you need to track customers’ contact info and interactions, customer relationship management platforms (CRMs) such as Salesforce or Zoho will help. Time tracking software can help you manage your vehicles’ drivers, too.

The next step you should take in starting your business is to create a solid online presence and marketing plan.

Your business’s online presence is the overall impact of your brand’s website, review pages, and social media interactions. Essentially, your online presence is made up of everything your brand has done online.

Work to create a strong online presence from the very beginning by building a beautiful and easy-to-navigate website and registering your business with business directories, such as Google My Business and Yelp.

Mobile-friendliness can’t be understated, either — 63% of online searches take place on phones and similar mobile devices, per Statista. If your site struggles with mobile formats, you’re missing out on business opportunities.

Finding & Keeping Customers

As you build up your business’s online presence, you should also consider the ways you will draw customers to your business. Make a plan for acquiring and retaining clients. Will you purchase online advertisements or claim an ad spot on the radio? Will you place ads on billboards or in the local newspaper? Will you partner with local businesses and rely on them for new customers?

No matter what you decide, make sure you have a plan for your marketing approach. And if your attempt doesn’t pan out, adjust your marketing strategy, and try again.