How to Start a Courier Business

Starting a courier company is a fairly simple and accessible business venture, but there are important factors you must consider before heading out on the road.

For starters, you need to consider how the soaring price of fuel may affect the costs of your new venture. As a result of inflation, fuel costs have risen hugely in the last few months, and to run a successful courier business, you need transportation.

Secondly, you need to be accustomed to the competitiveness of the industry – according to stats from Ibisworld, you’ll be joining around 31,315 postal and courier businesses currently operating in the UK, which employ nearly 300,000 individuals.

You should also be aware of the big players dominating the courier and delivery market, as competing with the likes of Royal Mail – who employ over 162,000 people, and generated revenue of £10.4 billion in 2019 – is incredibly difficult.

Instead of attempting to immediately challenge the established companies like DPD, UPS, and Hermes, you should be realistic about your expectations, think smaller, and capitalise on offering niche courier services, which we will cover in this guide.

So, if a courier business sounds like the opportunity for you, read on for information on costs, vehicles, and finding customers.

This step-by-step guide will help you answer all those questions and more. However, if you are already confident of your courier business plans and they happen to involve vehicle tracking, we’ve put together an extensive breakdown of vehicle tracking costs.

Should you start a courier service post-Covid?

Since Covid-19, the demand for courier services has shot up as more and more people demand speedy, instant delivery to their homes and offices.

That means there is currently a lot of potential for starting a courier business, as you can take full advantage of the key external drivers contributing to the industry’s growth.

These include a huge rise in online spending, fuelled by the pandemic. It’s also predicted that over the next few years, the market for courier and express delivery will continue to grow, rising by 54% between 2019 and 2023.

There’s no better time to get your courier business started, but first, you need to decide: what kind of service you will provide? How will you stand out from other competitors? And what expenses do you need to factor into your business plan?

Step 1: Research – Types of Courier Business

Starting a business in such a huge and varied industry as couriering can be challenging. You need to understand how the different types of courier services work, to help you determine which service you want to provide to your clients.

Or, you can just buy yourself any old van, start delivering garden gnomes to your neighbours, and find yourself out of business within the first week – it’s your call.

Seb Robert, CEO and founder of Gophr

Next-day courier service

If you want to challenge any courier business, big or small, you will be aiming to deliver goods by the next day. This service is incredibly popular with consumers and offered by the majority of courier services, including the big players.

It’s ideal for short-notice delivery requests and the first choice for the younger demographic of online shoppers. Think Amazon, champions of the next day delivery.

The value of online retail sales in May 2021 was 58.8% higher than in February 2020, meaning the demand for next day delivery services has increased massively over the past year.

Verdict: Lots of established, reputable delivery companies already control the market, so you’ll have your work cut out. But there is high demand and a huge customer pool, so lots of potential to capitalise if offering this service.

Same-day Courier Service

A lot of couriers have challenged and succeeded in the market by offering this service, which is in response to consumer demand for receiving goods on the day that they’ve ordered them.

Lots of businesses have thrived on offering this service, including delivery companies like Beelivery, which offers rapid delivery 24/7 and aims to arrive at customers’ doors with goods in as little as 15 minutes.

According to an in-depth report by efulfillmentservice, consumer demand for same-day delivery stands at over 75%, but e-commerce businesses are falling short of offering this service, with just over 50% of companies offering same-day shipping.

Verdict: E-commerce sales are increasing every year, but many companies aren’t offering same-day delivery, and those that do haven’t always been getting it right.

There is a definite market opportunity here to work alongside online retailers and provide same-day delivery services for their customers.

You need to be aware of the pressures that come with this service, however, and ensure you establish clear same-day delivery cut off times and have adequately trained staff.

Onboard Courier Service

This type of couriering is niche in that it involves the transportation of important packages, confidential documentation, or high-value items. The goods are closely watched by the courier at all times during the delivery process, to ensure the highest level of care and security.

Larger courier services don’t typically offer this service, and it usually requires experienced couriers to do the job.

Examples of goods transported via this service include urgent and confidential documentation, critical parts (in manufacturing or engineering), prototypes, and samples. All of these goods need constant surveillance.

Verdict: This service is bespoke and so competition with other courier companies is smaller, meaning an increased opportunity to profit from offering this unique service.

However, unlike next-day and same-day delivery services, the demand for onboard couriering is limited to certain goods, which could harm the growth of your business if another competitor dominates the market.

Specialist Courier Service

The COVID pandemic has massively increased the demand for specialist couriers, especially in the transportation of medical/healthcare goods.

Offering a specialist service is an effective way to infiltrate an over-saturated next-day/same-day delivery market, without performing miracles to gain customers.

Many industries have particular needs and demands, including the transportation of certain items in a controlled setting. As a specialist courier service, you could offer the conditions required to transport the goods, which is a great way to attract new clients for your business.

Verdict: If you can offer the conditions required for the industries that need specialist courier services, then you are certainly at an advantage compared to your competitors, and will be able to drum up way more business by attracting specific clients.

However, expenditure could increase as you’ll have particular operating expenses, including specialist training and equipment – for example, purchasing a refrigerated van for temperature-controlled deliveries.

Environmentally friendly/Eco Courier Services

The courier and delivery industry is a primary emitter of greenhouse gases, and in recent years, courier companies have been under increased scrutiny to reduce their carbon emissions and offer an alternative, greener courier service to reduce ecological footprints.

Businesses like CitySprint and Green Courier have capitalised on consumer demand for environmentally friendly courier methods, promoting sustainable solutions to their customer base and attracting positive media attention in the process.

This type of courier service typically operates a zero-emission fleet of pushbikes, cargo bikes, and electric vans. CitySprint is even in the process of trialling the first Hydrogen van to operate in the UK, which only emits water and can travel distances of 200+ miles per day.

Verdict: Sustainable and environmentally conscious couriers are more favourable to consumers and other businesses, which gives you a major advantage when competing with other courier companies. ‘Going green’ is an important goal for many SMEs, so providing a zero/low emission service will be an attractive selling point to work with your business.

Being accredited by an organisation like the ISO, or working alongside a conservation organisation like the World Land Trust, is important to build trust as a green courier – and be sure to record all carbon emissions you are responsible for. You’ll also need zero or low emission vehicles, which we will discuss in this guide.

Step 2: Plan

A business plan isn’t just the blueprint for your business – it’s the document that’s going to help you secure investment, and act as a guide through those rocky early months and years.

You don’t have to be a slave to the business plan – circumstances change, after all – but you can hit the ground running with much more confidence if you know where you’re going.

Step 3: Vehicle

After thoroughly researching the industry and developing a sound business plan, the next step is to choose the modes of transportation your company will be using. Vehicle choices will be influenced by the service you’ll be providing – for example, as a green courier, you won’t be purchasing high carbon-emitting vans or motorbikes.

There are plenty of options available, and to help, we’ve highlighted the best vehicles at your disposal.

Bicycles/Electric Bikes:

A 2019 report by the UK Bicycle Association states that bicycles are most suited to dense urban areas with relatively high concentrations of suitable delivery work, or where individual trips are relatively short. Consider this when assessing your vehicle options.

If your courier business will be operating across large cities, bicycles are one of the fastest and most efficient ways to get around. They can follow routes that vans and motorbikes can’t, and will help decrease delivery times, especially during peak travel hours.

They are also the cheapest transport method to run, as they rely on human movement rather than petrol. Other costs, including insurance, vehicle tax, and general maintenance, are also incredibly low or non-existent compared to other modes of transport. Not to mention they are a zero-emission delivery method, perfect for green couriering.

Motorcycles

While the motorbike can’t beat the bicycle for urban access, it’ll easily beat it for speed on a straight.

If your courier business is located in a bustling city and needs to cover distances fast, a motorbike is the most viable option. They are less affected than larger vehicles by traffic, including traffic jams and queues caused by traffic lights.

They also have the advantage of being able to carry larger packages than most bicycles, and can be parked pretty much anywhere (within reason).

In terms of cost, it’s usually cheaper to run a motorbike than a car or van, with average petrol costs of £494.15 per year for the typical rider, compared to £1,042 spent per year to fuel a petrol car.

Electric Mopeds:

Electric mopeds have gained popularity in recent years, largely due to their cheap running costs and environmental credentials.

They are a cost-effective, eco-conscious alternative to petrol engine mopeds and motorcycles, running off a removable battery that can be charged from any standard socket.

Electric mopeds would be ideal for a green courier business, as they produce no noise or air pollution. Another benefit is minimal maintenance costs, as, unlike motorcycles, e-mopeds require no oil, clutch cables, filters, or fluids to check.

Keep in mind that the batteries require charging every 100 miles or so, so long-distance deliveries won’t be possible.

Drones

Drone delivery services are already operating in certain locations around the United States, but are yet to commence in the UK due to current aviation regulations banning drones from flying out of sight of their pilots.

Delivery trials, however, have been taking place at drone company Sees.ai over the last few months, meaning the courier industry is one step closer to drone delivery – and a complete transformation of the logistics sector.

Being at the forefront of this advanced technology would certainly propel your courier company into the big leagues, so why not get ahead of the game and start investing in prototyping your drone delivery service?

Vans

The vehicle you’ve all been waiting for…

Vans are the most popular and widely used transportation method in the courier industry. Out of the 31,315 courier businesses operating in the UK, you can guarantee the majority of them use vans to move goods from A to B.

They are incredibly effective courier vehicles for several reasons. Firstly, the large size means there is plenty of space to store parcels, big or small. Instead of drivers making multiple trips, courier services can reduce delivery times by delegating multiple jobs in the same area to one vehicle.

Vans are also versatile in that they can be transformed into specialist delivery vehicles, for example by installing refrigeration units for temperature control. They can travel long distances, and the engines are powerful and specifically designed for carrying heavy loads.

For green couriers, electric and hydrogen vans are a great way to deliver on a larger scale without harming the environment.

Although vans are an efficient vehicle option, they are expensive to run and maintain. You need to be aware of the costs involved before buying one, which we’ve summarised below:

Average Price of a Used Van = £7,348 (Figures from Aston Barclay)

Commercial Van Insurance = £1,080 (Per Year)

Average MOT cost = £35 (Per Year) 

Van Vehicle Tax = Ranging from £140 to £270 (Per Year) depending on specs

Pricing correct as of 26th July 2021

Best vans for courier work

Purchasing a van can be quite confusing, especially as there are so many options available. To ensure you make an informed decision, we’ve included a list of factors to consider whilst shopping around, and recommended a few vans ourselves.

Think carefully about a vehicle’s compatibility with the service you want to provide. You could have a fleet of different vehicles to suit the needs of your business, though this will result in significantly higher startup and ongoing costs.

Determining your target market when researching your business plan will help you establish what kind of need there is in your area and what kind of vehicle you need, which is why you should always do the research and produce a business plan before purchasing any vehicles.

Step 4: Business Costs (Equipment)

You need to be fully prepared before heading out on the road, and having a shiny new van and a business plan under your belt isn’t quite enough to succeed in the courier industry.

The next step is to purchase all the necessary equipment and services required to ensure your business operates efficiently, and remember: factor these outgoings into your budget.

We’ve listed a few important items below, but there are plenty of additional purchases to consider.

Cycle Courier Equipment

A courier operation can be a very accessible and relatively lean startup model. A self-employed cycle courier, for example, just needs a bike and a few other items, such as a decent phone (you might want to consider business phone contract options) to get going.

Courier Uniform

Whether you’re a self-employed courier or you operate a fleet, having a uniform shows professionalism, and creates a recognisable brand that could help you find more business. This could be as simple as a printed t-shirt, or a full, branded uniform.

Specialist handling and storage equipment

If you are going to be offering specialist courier services, then you, your vehicles, and your couriers need to be fully equipped with the correct tools for the job. Examples include safety gloves for handling hazardous materials and refrigerated vans for temperature-controlled deliveries.

Heavy lifting equipment

If your business will be transporting heavy goods, it’s important to provide lifting trolleys and ramps.

Business Insurance

Although costly, business insurance is fundamental in ensuring you are covered for any unexpected eventualities. These can include accidental vehicle damage, theft of company property, and workplace injuries, all of which occur across the courier industry.

Goods-in-transit insurance is a must if you want to protect any goods from damage or theft whilst on the move.

Courier van insurance is a specialist type of cover that protects your van for business use, and it’s also a legal requirement. Be aware that you will need to purchase hauliers’ insurance if driving large goods vehicles (such as lorries) over long journeys.

If you want to learn more about what type of insurance your business needs, we’ve got you covered.

Hiring Couriers

As your business becomes more successful, your workforce will expand.

You need to be aware of the costs involved in hiring drivers. Typically, a lot of couriers are self-employed, and will work for multiple courier companies at the same time.

You want to attract experienced, professional, and hard-working couriers to work for you, as this is a key element of building a positive company reputation and providing a high level of customer service. To do this, you need to offer a competitive salary, and certain benefits not offered by your competitors.

A competitive salary in the courier industry varies, but most self-employed couriers would aim to be earning roughly £300 a day, or between £15,000 to £40,000 a year depending on experience. If you can offer this, plus employer’s liability insurance, you will certainly attract the highest calibre of drivers.

Employer’s liability insurance ranges depending on the riskiness of the work involved and the industry. But for courier drivers, the average cost is around £213 per year.

You and your drivers should have a full and clean UK driving licence, and additional qualifications depending on the type of vehicles in use.

We’ve also produced a comparison table of the top vehicle tracking software providers below:

Step 5: Customers

So, you are now fully equipped and prepared to begin offering the best possible courier services to your customers. But first, you need to find them…

Identify your target market. The service you are providing could determine your target market. For example, if you are offering medical courier services to deliver prescription medications, your clients will be independent pharmacies and care homes, so you’ll be marketing to those types of businesses.

Focus on the quality of your customers. You want reliable customers who will regularly repeat deliveries. Onboarding SMEs who have an immediate and ongoing need for your service is the best way to ensure a sustainable income, as well as maintaining a high level of service and keeping your customers satisfied.

Underwood, of Circuit, says: “Make sure you focus on unit economics; you need to know how you can make a profit on just a single customer before you start scaling.”

Target small, local businesses. Local businesses are a great place to start, especially ones that rely on a high volume of orders to be delivered regularly. If they already have a courier delivery partner, make them a better (and more affordable) offer.

Charge reasonably for your service. Check the local market rates for courier services in your area, and consider offering better value than your competitors to attract clients. You can start lower than the going rate, then once you’ve built up a loyal customer base, increase your prices. Not hugely though, or you’ll risk a backlash.

Join Shiply. You can compete with other couriers for contracts, and thousands of delivery jobs are posted on the website daily for you to choose from.

Invest in outreach media and marketing. Same-day delivery service Beelivery, which delivers its customers groceries in as little as fifteen minutes, has been focusing heavily on outreach marketing to promote the service.

Step 6: Acquire

If you don’t want to do the legwork of setting up a courier company and have the capital, you could just buy an existing one. This gives you an established customer base and brand image which you can build on.

BusinessesForSale.com lists many courier and despatch businesses for sale across the UK. They range from around £30,000 to more than £350,000 depending on their facilities and turnover.

Make sure to do your due diligence on any business you’re interested in buying to see if the figures add up. Establish clear reasons for why they are selling the business before making any commitments.

Also, do your research – a Google search can bring up a wealth of valuable information about a business you are looking to purchase, including any good or bad publicity.

Make sure to find out:

• Turnover
• Net profit
• Facilities
• Employees

Alternatively, you could think about joining a courier franchise.

Read more: How to start a parcel courier franchise

Conclusion: Key Points

So, there you have it – all the steps you need to take to start your own courier business.

Remember that the courier industry is tough to break into: competition is high, and certain services (such as next-day delivery) are over-saturated.

Try and find a niche, like offering temperature-controlled services in environmentally-friendly electric and hydrogen vans.

Make use of experienced, professional courier drivers, and consider your customer target market carefully.

If there is anything else you think should be added to this guide, please don’t hesitate to get in touch.