Logistics isn’t exactly the most rock’n’roll career choice of modern times. But it can be extremely lucrative, as well as very interesting. Which must be why logistics startups are still commonplace! If you’re thinking about starting your own, you should go ahead and give this a read.
#1: What type of logistics company do you want to run?
When you think about logistics companies, a lot of images rush through your head. They can generally be described under the umbrella of “transportation”. You’ll think of trucks, ships, boxes, metal containers, cars, airplanes… As thrilling as all this is bound to be to you, you can’t start a company with all of these things involved! This is way too ambitious for a startup. I’m going to have to be a downer for a second: there’s no way you’re gonna get enough funding to enter every possible form of logistics.
So you need to choose precisely what’s going to be your focus. And I’m not just talking about the type of transport; I’m talking about the type of deliveries you’re going to do. A logistics company deal in local delivery, crowd shipping, international end-to-end shipping… And soon! You might provide advice for those looking to use delivery services. You might provide temporary storage solutions. Basically, you need to whittle the description of your company down. To say you’re starting a “logistics company” is a little too vague a statement, to begin with.
#2: Looking at some startup inspiration
When people start any sort of business, they often look to inspiration from big companies. This is understandable, of course. After all, you want to emulate as much success as you can. And the bigger logistics companies are the ones who have seen success on a much bigger scale. But they’re also likely to have started quite a long time ago, perhaps even decades ago. The environment in which they started up was completely different to the environment you have to start up in.
You should definitely look at the practices that the bigger fish have taken on board. But it’s not all you should do. You need to observe the little fish. It’s best to look at the logistics startups that were created over the past few years. You can find a pretty exhaustive list of these over at https://jonathanwichmann.com/my-lists/list-the-most-promising-start-ups-in-logistics/.
#3: Getting some experience
One of the most underrated assets in any business venture is credibility. And how exactly do you get credibility? Well, by doing good business. When you start a company, it’s you, as an individual, who has to display this credibility. The way you’re going to do that is by having a lot of hard logistics experience under your belt.
The vast majority of people looking to build a logistics company has already worked in logistics. They’ve probably done so for several years, and often at several levels. They may have been pretty high up in the hierarchy of a previous logistics company before decided to build their own. These budding entrepreneurs will all have an advantage over you if you don’t have logistics experience. Trying to get people to trust and invest in your startup when you don’t have hard experience is definitely going to be tricky.
One of the best things about working in logistics operations before starting your own is that you can get a bunch of contacts. You ever heard the phrase “it’s not what you know, it’s who you know?”. Well, it’s important not to take that saying quite so literally. But it’s definitely true that who you know can have a massive impact when it comes to business success. Having zero contacts before starting a logistics business is definitely something I’d advise against.
You need to get to networking. This can partly be achieved by working for a logistics company. But you definitely need to get more involved that that. These contacts aren’t just going to fall into your lap. You need to visit conferences. You need to go to trade shows. (Yes, they do exist in the world of logistics!) Going out for more casual, social events at work can even help. Heck, even going online and checking out some communities there can get you some great contacts! Read up on networking like a pro over at http://www.businessinsider.com/how-to-network-like-a-pro-2010-4.
#5: Getting the cash
My friend Captain Obvious just visited and told me to tell you all this: Starting a logistics company is expensive. Starting just about any business can be pretty expensive. But at least in most other businesses, it’s actually kinda technically possible to start with the very little capital. But a logistics company is very likely to fall outside of that particular category. Of course, this depends greatly on the precise kind of logistics company you’re looking to start. But, in general, you’re going to need a lot of capital. Those vehicles and containers aren’t going to pay for themselves, right?
The most obvious way of getting capital, though not always the best solution for everyone is going to a bank. Commercial banks will probably be willing to help you out if you can show off the right business expertise. (And, know, if you have the credit rating for it.) There are other options, though. If you fit the profile, then the U.S. Department of Transport might be willing to give you a grant. A grant is basically every business owner’s dream, though they’re hard to get your hands on. You can read more about this sort of grant over at https://www.transportation.gov/grants.
One of the downsides of logistic businesses? It’s kinda hard to get the public all that excited about a logistics startup. I can’t think of any logistics startup that found funding success on a crowdfunding platform like Kickstarter. (There is a company that has ‘Logistics’ in their name who go Kickstarted. But they’re not technically a logistics company.) I’m not saying it’s impossible for you to break that particular trend. But be careful about putting effort into a crowdfunding campaign for this sort of venture. Many have tried before – and it seems that they’ve all failed so far.
#6: The right equipment for the job
Before you can think about funding that seriously, you have to think about the equipment you’re going to need. Otherwise, how can you come up with an accurate business plan or a budget projection? Once you’ve decided what sort of logistics business you want to run, you should do some heavy research on the equipment you’ll need.
A lot of people with this sort of ambition are probably looking to start a trucking company. Getting a fleet of trucks, of course, is probably one of the more expensive transport endeavors. But it’s not just trucked someone would need. You’ll also need truck drivers. You’ll need a base of operations. And that goes for pretty much any type of logistics company. The more territory you want to cover and the bigger the packages you’re looking to transport? The more equipment you’re going to need. Which isn’t necessarily saying that it will get more expensive! Sometimes, operations that stick to the ground can be more expensive than global operations that take to air and sea. Less complex, yes, but not always less expensive.
As I mentioned above, it’s not just the vehicles you need to think about. You need to consider what it is you’re actually going to deliver the products in. If you’re just going to be an outsourcer for simple local deliveries, then you’ll probably just need boxes. A lot of boxes, but simply boxes nonetheless. If you’re dealing with heavy-duty or global shipping? Then you’re going to want to look at shipping containers. And there are loads of types of shipping containers, so you’ll need to do some research there. Check out http://portcontainersusa.com/standard-shipping-containers.html for more information.
#7: Remember licensing
So you’ve got the experience. You’ve got heaps of capital. You’ve got some vehicles. Potential employees are applying to positions in your company by the truckload. You’re on the verge of getting some long-term clients. It seems like everything is going to go okay, as long as you can avoid transportation disaster. But as you set out to deliver the goods, the government start knocking on your door. Or maybe the police start surrounding your vehicles. You’ve done something wrong. What is it?
You’ve probably forgotten to get licensed. It’s not enough to simply register your logistics business correctly with the IRS. You also need the relevant authorities across the country to know that you’re going to be transporting goods from place to place. Local deliveries probably won’t need to worry too much, though this will depend on what state you’re in. But if you’re going to deliver things by air? You need a license from the U.S. Department of Transportation. Want to deliver things by water? The U.S. Federal Maritime Commission need to give you a license for that. Even something as seemingly harmless as interstate trucking will probably need a bunch of permits. Make sure you’re on the right side of the law before you starting transporting goods for clients!