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7 Steps to Starting a Transportation and Logistics Business Logistics is a big game both locally and internationally, because everything we use every day is shipped and delivered through various destinations before being sold and put into use. This is where you can earn.
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How To Start Your Own Transportation Business
Thinking of starting your own transport and logistics company? While breaking into the industry isn’t difficult, staying successful as a trucking company can be challenging if your business plan, finances, and recruiting strategy aren’t solid from day one.
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Whether you are starting with a van or a minibus, you need to ensure that you are prepared for high competition due to the low barrier to entry of the transport and logistics industry.
Apart from the ease of access to the industry, you don’t need a lot of capital to get started – but you will need to do your homework. This is the only way you will build a sustainable business.
“In many cases, these businesses are started with little or no capital, relying instead on the revenue generated by the business to cover all overhead costs from day one,” according to BizConnect. “Look for customers and deals before you start the business because transport deals don’t magically appear later.”
Now that you’ve established the type of market you’re going to enter, how do you go about starting your own logistics company? These are some of the main questions you should ask before starting a trucking company:
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You don’t need to be a genius with numbers, but a basic understanding of finance is useful when starting any kind of start-up.
Choosing the right vehicles for your transport and logistics company means that your drivers will have the right vehicle for the job. This leads to efficiency and speed of service.
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“Seeing someone driving a small van to deliver a huge load will make your company look unprofessional, as will using large bus trailers to transport minimal loads,” truck and trailer industry experts say.
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Establishing the vehicles you need now will help you have a clearer idea of how much truck financing you should apply for when you approach banks for transportation financing options. This information helps you structure your repayment plan and more accurately set your interest rate. You will be able to budget your finances accordingly.
Experts recommend investing in a long-haul truck for larger loads and longer trips. Babcock International, for example, has vehicles that will meet this need, although the price is a bit higher than an average-sized truck.
If you’re already considering new vehicles instead of pre-owned trucks for your business, you’ll benefit from full warranty and service plans.
Once you’ve determined how much you can afford to spend on your fleet, start looking at the models available for your business’s specific needs.
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“An important aspect to consider is what the vehicle will be used for. Now, this may sound simple, but it is an aspect that is often overlooked by many fleet owners. You need to have an idea of what the vehicle is going to be used for before you can go to the dealership.” – Truck & Freight
Courier companies will require different vehicles than moving companies, for example. Your idea of the ideal vehicle for your type of transportation and logistics company may need to be adjusted based on the amount of financing you qualify for or how much capital you have been able to set aside to purchase vehicles for your fleet.
You may need to consider viable alternatives to find the right vehicle. So, list features like safety, comfort and condition instead of looking for brand names and latest models. “Being open to a variety of vehicles is the key to successful fleet purchasing,” experts advise.
Regardless of how vehicles are paid for, the cost of financing a transportation and logistics business is the biggest expense you’ll have to manage.
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Make sure you do your homework and understand the different options available when it comes to vehicle payments. You can consider the following options:
Don’t forget to consider the ongoing costs of running a logistics company, such as maintenance and wear and tear. These costs should be factored in when considering the amount of finance required to start and maintain your shipping and logistics company.
The Road Traffic Management Corporation provides regulated, professional training courses such as the National Load Handling Certificate. Contact TETA for a list of accredited training institutions.
The National Professional Driving Certificate is a valuable qualification that equips owners and managers with a variety of abilities. It is recommended that you seek a qualification that is accredited by the Transport and Training Authority.
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Remember that under South African law, any vehicle on public roads must be deemed roadworthy by an official testing station. The technology test checks the following aspects of the vehicle:
The key components of your business, in addition to your vehicles, are your drivers. Your drivers need to obtain the appropriate licenses before they are considered legal to operate vehicles in your transportation and logistics business.
Avoid trouble later, with the law and your customers, by ensuring you recruit qualified and experienced drivers at launch and as your business needs grow. Not only do quality drivers increase productivity, but your reputation is enhanced when your customers know they can rely on your staff.
Invest in great employees and avoid setting the bar as low as the ability to drive and follow directions. Your drivers will need the appropriate driving licenses for different trucks and will require training to manage driving in dangerous situations, such as storms and heat waves.
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“Know how to deal with staff and understand all the shortcuts in the areas they will be delivering to,” advises Business South Africa. “We will also require excellent communication skills to convey messages about their place of residence.
As mentioned earlier, everything around us needs to be delivered from point A to point B. So, while jobs may seem scarce and work difficult at first, avoid jumping at the first opportunity to land your first client.
It may sound counterintuitive to pass up chances to spin the wheels, but it’s important to evaluate whether or not it’s worth the splurge. Proper planning is essential, so it is advisable to avoid ad-hoc business.
Remember that all you need to attract the attention of customers is a computer, a smartphone and an internet connection.
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“Cargo-focused technology has advanced dramatically over the years, as have customer expectations. “Most major companies allow customers to book and track all their packages or deliveries online.” – Business South Africa
The best part is that, not only is it inexpensive to get information about your transportation and logistics, but it is also relatively easy and fast.
Embracing technology doesn’t mean setting up an elaborate website, but you do need to make sure your customers can track their shipments and reach you quickly if they need to. Perhaps you should implement an SMS notification system so that customers can track their orders at the touch of a button.
Make sure your system is accurate when it comes to ETAs for deliveries and any delivery delays, giving customers the peace of mind to use your service and the confidence to recommend you to others.
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The best way to get noticed and gain regular business is to be confident from day one. People like that. They notice and appreciate good service and when you start your transport business, it is a good reputation.
When a business decides to use your transportation services, they need to be sure that you will not let them down. Satisfied customers appreciate reliable service, and it’s easier to retain existing customers when you offer quality service. It also helps good customers drive new business through referrals.
Despite the many challenges that come with running a successful transportation and logistics business, customers want to know that you are doing your best and that consistency is key to building loyalty from these companies.
It is advisable to start with the logistics you are best qualified to handle and go from there.
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If you have experience with smaller items, start there, but if you intend to eventually expand your portfolio to include other specialist services, gain as much comprehensive knowledge as you can while building a strong set of connections in relevant regions across the industry and perhaps and the country.
Diana Albertine graduated with a BA in Journalism in 2010 and has honed her skills as a newspaper reporter, senior communications specialist: strategy and media liaison, and feature writer. Since joining the South Africa team in 2016, Diana has honed her expertise in business leadership, content marketing and client account management.
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