How to start up a courier service

A blue uniformed courier delivering two large parcels from his yellow van Couriers have benefited from the explosion in the popularity of online shopping as well as from private individuals buying and selling items on eBay. Check out our practical guide for starting and running your courier business.

Research your target market

You will need to find out whether there is enough demand for your courier service in the area. You should be aware that the sector is very competitive. Several large firms dominate the market for national and international deliveries, while many smaller firms operate on a UK-wide level or specialise in local deliveries. What's more, many owner-drivers offer delivery services or undertake freelance courier work for larger firms. Doing some market research will help you to find out how much demand there is, what services people want, and how competitive the market is.

Estimating demand

Depending on the type of work you intend to undertake, you may be competing with a whole range of these other businesses, both large and small. These could include:

  • Royal Mail and Parcelforce
  • large national courier firms (such as Yodel, TNT Express and DHL) and franchises
  • mid-sized courier firms operating a fleet of several vehicles
  • other small courier firms (including single vehicle, owner-driver businesses)
  • local delivery specialists (bicycle couriers in city areas, for example)

Check out the local competition to see how many other businesses are already offering courier services in your area. It may be that you will only be competing directly against some of these because you will be targeting a particular segment of the market or offering services which are hard to find elsewhere.

Have a good look at existing courier businesses to establish:

  • the range of services they offer and the prices they charge
  • if they concentrate on local, national or international deliveries
  • whether they operate a fleet of vehicles
  • how knowledgeable and helpful their staff are
  • whether the vehicles are modern and smart

Why will customers choose your business

You need to make sure that enough customers will choose your business rather than existing courier firms. Your market research might indicate that there is a gap in the market that you can fill. For example, perhaps no one in your area offers a 24 hour service, or immediate local deliveries.

One of the independent's great strengths is flexibility and the potential to offer a high standard, personal service. Customers wanting valuable items or important documents delivered will be looking for a reliable, trustworthy service. Businesses sending goods to domestic customers will want to know that they will arrive in good condition and that customers will be treated politely. As an independent courier you have the potential to meet these requirements and offer a more personal level of service than the large firms. Make the most of this strength by emphasizing the high quality nature of your business as well as ensuring that customers are aware of the full range of delivery work you are prepared to undertake.

If you bid for jobs through websites like Shiply which allow customers to leave feedback, be sure to give top-quality service so that your feedback profile is as good as possible.

Find out what people want

Small independent courier services face tough competition from large national and international delivery firms as well as other small businesses. So it is very important that you find out what people want and whether there are particular services you can offer which will attract customers. If you plan to carry out a local survey, don't forget that potential clients include trade customers such as solicitors, accountants, professional photographers and publishing firms who require small items or documents delivered quickly. Specialist food suppliers might use your services too, for example to deliver organic produce direct to customers. Organisations such as hospitals or industries needing urgent equipment, supplies or machine parts might also be interested in your services.

Research current trends, plus legal and tax issues

Owner drivers/freelance work

Doing freelance courier work may be the easiest way to start out in the business for many. Freelance couriers use their own vehicle to undertake delivery work for local businesses or other courier firms on a subcontract basis. Many large courier firms regularly use van and motorcycle owner-drivers to make deliveries on their behalf. This arrangement works well for both the courier firm and the drivers. The courier firm gets access to a large and flexible network of drivers which it can call on as and when needed, while the drivers are able to source work from a range of firms with established customers.

Starting out as an owner-driver

As an owner-driver, you can work full or part-time, for example at evenings or weekends. You could use a car to begin with, but most drivers use a small van or motorcycle depending on the type of work they want to do.

You can start by contacting a range of local businesses to see if they have any delivery work, either on an occasional or regular basis. You could also contact local courier firms and offer to undertake delivery work for them when necessary. Larger national courier firms regularly use owner-drivers - ask them for details of how to be included on their register. There are also nationwide networks of smaller courier firms and you may be able to join as an owner-driver. Parcel delivery 'auction' websites such as Shiply and Anyvan can be a good source of work for owner-drivers too.

Riders and Drivers Associates is a branch of the Despatch Association which was set up for self employed courier drivers and riders. Members receive regular newsletters to help them to keep up to date with issues affecting the industry.

You can also find out more on websites such as Codforum, which is an independent forum for courier owner drivers.

Establish your customer profiles

If you decide to concentrate on local deliveries, your customers will be restricted to businesses operating nearby - this may be fine for specialists such as bicycle couriers in city centres. If you intend to offer a national delivery service the potential market is much wider - as well as a variety of local businesses, possible customers will include businesses based elsewhere in the country. To make your services known to this wider market you'll need to advertise. You could do this on the internet, in national business directories, or you could register with an organisation such as Courier Exchange. You could also consider joining the Despatch Association so that your business can be listed in their directory.

Potential business customers might include:

  • online retailers selling goods of all descriptions, from food items to footwear
  • retail firms of all types that offer mail order, internet shopping or home delivery of large items (for example furniture or electrical goods)
  • firms needing to send documents urgently, such as accountants, solicitors or publishing firms
  • maintenance firms carrying out on-site work that requires spare parts or equipment
  • any business with delivery fleets that might need occasional help during busy periods
  • medical supply firms delivering medicines or equipment to GPs and hospitals
  • IT suppliers offering replacement items under warranty
  • airports or airlines needing to deliver lost baggage to passengers' home addresses

A separate, but very large potential market for your services is made up of other courier firms for whom you may be able to carry out deliveries on a subcontract basis. You can try to obtain work with these types of business by:

  • approaching them directly to offer your services
  • joining a local or regional network of other courier firms
  • joining the Despatch Association and being listed in their directory
  • registering with Courier Exchange or a similar organisation

Of course, the huge number of items bought and sold on eBay every day presents an important opportunity for couriers to sell their services directly to private individuals. Parcel delivery 'auction' websites such as Shiply and Anyvan can enable you to target this market.

How to price your services

How will you decide on your prices?

Getting the price right is very important. You must make sure that the price you charge is high enough to cover all of your operating costs, including your own drawings. But bear in mind that the courier industry is very competitive and you will have to price in line with your immediate competitors unless you are targeting a niche market that your competitors do not cater for.

Calculating the price of a job

Many courier firms set a minimum charge per delivery. This might vary depending on the size of the vehicle used. On top of this, it is usual to charge a set price per loaded mile - again, rates vary depending on the type of vehicle. You need to consider the running costs of your vehicle when setting the price per mile, but you must also bear in mind your competitors' rates - you don't want to price yourself out of the market. Also bear in mind that on many deliveries you will incur 'there and back' costs - these can be offset if you can combine a number of drops (or get a return load) and work out an efficient route from one drop to the next, but sometimes you will inevitably find yourself driving extra 'non-paying' miles that need to be covered by someone's delivery charges so that you don't end up making a loss on the job.

Some firms use satnav to calculate the distance between collection and delivery points and use this mileage to work out the charge. Alternatively, you may decide on a fixed fee for popular routes - for example from London to Heathrow Airport or from Leeds to Manchester. Whichever method you use, the overall pattern is the same - the longer the journey, the higher the charge. On top of this basic fee, a separate charge might be made for extra drops, or if the driver has to wait to collect a return document or delivery.

You might also decide to charge extra for deliveries made at night, on Bank Holidays or at the weekend.

Bear in mind that fuel prices can increase very quickly - make sure you review your charges regularly to make sure you're covering your costs.

Remember that potential customers will appreciate a friendly, efficient and polite service, and will be prepared to pay a fair price. But they'll also be aware of the prices charged by your competitors, so bear this in mind when working out what to charge. If you bid for work on websites like Shiply and Anyvan then you'll need to make sure that your prices are competitive if you want to win jobs.

Special offers and discounts

You might decide to offer a one-off introductory discount to all new customers to encourage new business. You could also offer a discount for regular daily or weekly delivery work. How much discount will depend on your pricing policy and the level of local competition.

Services offered

Courier businesses vary enormously. They include bicycle couriers offering local deliveries, drivers using their own van or motorcycle and firms making national deliveries by van, or overseeing international deliveries by air or sea. You may decide to offer a wide range of courier services, or you might concentrate on a particular type of work.

Courier services include:

  • immediate local deliveries
  • same day local and national deliveries
  • next day deliveries
  • cash on delivery service
  • specialist eBay and Gumtree deliveries
  • international deliveries (perhaps together with a courier network or larger firm)
  • overnight deliveries
  • night and weekend deliveries
  • regular delivery rounds
  • hand courier service for packages travelling by air or sea
  • pallet services and outsize/heavy parcel delivery
  • specialist item deliveries, such as antiques, pianos, motorcycles, live animals like reptiles or hazardous goods

You could also offer storage services if you have enough space.

If you decide to concentrate on local deliveries, you could use bicycles or motorcycles, which may offer an advantage in urban areas. Longer distance deliveries can be made by motorcycle (for documents or small items), or by van.

The right image

As the sector is so competitive, it is important that your business projects the right image. It's important to make sure that you (and any employees) look smart and that the vehicle/s you use are clean and well maintained.

Advertising your business

Whatever the nature of your courier business, it's essential to make sure that your potential customers know about you and the services you offer.

There are a number of things you can do to promote your business:

  • advertise in your local newspaper and any local directories
  • have leaflets printed and distribute them to local businesses
  • join the Despatch Association and be listed in their directory
  • launch your own website, showing all the features that will attract customers and perhaps including an online quote feature
  • join a regional courier network
  • register with schemes such as Courier Exchange
  • bid for work on websites like Shiply and Anyvan
  • advertise specific services on eBay - for example 'motorcycle delivery £1 a mile to anywhere in mainland UK'
  • use online social media, forums and blogs to market and promote your services

Buy an existing business

You might decide to buy an existing courier business rather than start your own venture from scratch. Buying a going concern can mean that the vehicles, storage space, insurance, and staff are all in place.

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.

Be aware that courier businesses may not be particularly well suited to being bought and sold, as they often have little in the way of assets. If you're thinking of buying a courier businesses, ask yourself whether you are getting much more for your money than a van and a business name.

Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.

Other matters to consider include:

  • the state of the premises, fittings, equipment, vehicle/s and so on. Will you have to spend money refurbishing or replacing assets
  • is the existing owner prepared to give you some training after you take over
  • existing staff rights
  • how to retain key personnel once you've taken over
  • does the business owe money that you will be responsible for
  • if you are paying for goodwill, to what extent does this depend on the knowledge and personality of the seller

Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.

Franchises

Acquiring a franchise is another alternative to starting up a new business from scratch. There are a number of franchise opportunities available for independent courier businesses. Franchising means that you still start up your own business, but you can benefit from a well established brand and format. You should be allocated an exclusive territory, and you may get work referred to you through the franchisor's delivery network. A good franchise will also offer business support and other useful services. However, all this comes at a price - the franchise fee that you'll have to pay to the franchisor.

Sometimes it may be possible to purchase an established franchise from a franchisee who is retiring. You may also be able to buy a portion of a franchisee's territory from them.

Before entering into a franchise agreement, it is advisable to compare the terms of different franchisors to be sure that you are getting a good deal. Go through the contract with your solicitor before signing anything.

What does the * mean?

If a link has a * this means it is an affiliate link. To find out more, see our FAQs.