Logistics is a big game both locally and internationally, because everything we use daily has been shipped and delivered across various destinations before it's sold and put to use. This is where you can cash in.
Why should I start a transport and logistics company?
Aside from the ease of access into the industry, you don’t need much capital to start off with – but you will need to do your homework. This is the only way you’ll build a sustainable business.
“In many instances the entrepreneur starts these businesses with little to no capital, relying instead on revenue derived from the business to cover all overheads from day one,” according to BizConnect. “Seek out customers and contracts before you start the business because transport contracts don’t magically appear later on.”
1. What costs do I need to consider when starting a transport company?
You don’t need to be a numbers genius, but a basic understanding of finances is helpful when launching any kind of start-up. First, you’ll need to establish where you’re going to source capital to get your transport business started. There are multiple options including the bank, investors and bootstrapping Next, you need to consider the specific expenses associated with the logistics industry, for example the license and toll expenses, aside from maintenance, fuel and driver skills development training costs. Although you haven’t started running your transport and logistics company yet, you need to consider operating costs and maintenance expenses when drawing up your budget. The latter is crucial for providing reliable service to customers as you must deliver the excellence you will market to them. While marketing may not seem important at this stage, it’s important to budget for this expense as your company grows. Remember that besides all the above costs, you’ll require money to keep your vehicles safe when they aren’t in use and when they are on the road. Invest in a secure location and other security features, such as trackers.
Lastly, you’re going to need to pay your drivers and other staff salaries on a monthly basis, so factor in that expense when budgeting for your transport and logistics business.
2. What should I look out for when buying my first fleet of trucks?
Choosing the right vehicles for your transport and logistics company means your drivers will have the right vehicle for the job. This leads to efficiency and speed of service. “Seeing someone driving a small van to deliver a huge load will make your company look unprofessional, as will using large bus trailers to carry minimal cargo,” say experts in the truck and trailer industry. Establishing what vehicles you need now will help you have a clearer idea of how much truck finance to apply for when you approach banks for transport financing options. This information helps structure your repayment plan and set your interest rate more accurately. You will be able to budget your finance accordingly. Experts recommend investing in a long-haul truck for larger cargo and longer trips. Babcock International, for example, has vehicles that will meet this need, although the cost is slightly higher than an average-sized truck.
If you’re already considering new vehicles instead of preowned trucks for your business, you’ll benefit from a full warranty and service plans.
3. How can I get truck finance for my transport and logistics company?
Regardless of how vehicles are paid for, the cost of financing a transport and logistics business is the biggest expense you will have to manage. Make sure you do your homework and understand the different options available when it comes to paying for vehicles. You can consider the following options: Financial lease and extended rental agreements, where the use of vehicles is funded from revenue, no upfront payment is required, but the ownership remains with the lessor; Instalment sale where a small amount relative to the total purchase price is paid as a deposit, your instalments are fixed, and you own the vehicle at the end of the term. Remember to factor in the running costs of operating a logistics company, such as maintenance and wear-and-tear. These expenses should be included when considering the amount of finance needed to launch and sustain your transport and logistics company. Before approaching a financial institution for financing, devise a budget and calculate your affordability.
4. Where can I find training to help me start a transport and logistics business?
The Road Traffic Management Corporation provides regulated, professional training courses such as a National Certificate in Freight Handling. Contact TETA for a list of accredited training institutions. The Department of Public Transport, Roads and Works is responsible for the issuing of operating licenses. A National Certificate in Professional Driving is a valuable qualification that equips owners and managers with a variety of capabilities. It’s advisable to look for a qualification that has been accredited by the Transportation and Training Authority. Remember that according to South African law, any vehicle on public roads needs to be deemed roadworthy by an official testing station. The roadworthiness test checks the following aspects of the vehicle:
- Identification and documentation
- Electrical systems
- Fittings and equipment (including mirrors, safety belts etc)
- Braking system
- Wheels (including tyre condition)
- Suspension and undercarriage
- The steering mechanism is in order
- The engine
- Exhaust system
- Transmission
- Instruments
- Vehicle dimensions.
5. How do I employ drivers to work for my transport business?
The key components of your business, besides your vehicles, are your drivers. Your drivers need to obtain the relevant licenses before they can be considered legal to operate vehicles in your transport and logistics business. “Know how to deal with staff, and understand all of the shortcuts in the areas they’ll be delivering to,” advises Business South Africa. “They will also require excellent communication skills to relay messages about their whereabouts.”
6. Where do I find customers for my logistics company?
As mentioned earlier, everything around us needs to be delivered from point A, to point B. So, while it may seem that jobs are scarce and getting business is difficult in the beginning, avoid grabbing the first opportunity to get your first client. It may sound counterintuitive to let chances at getting the wheels turning pass by, but, it’s important to assess whether it’s worth your while or not. Proper planning is essential so it’s advisable to avoid ad-hoc business.
Remember that all you need to get customers’ attention is a computer, a smartphone and an Internet connection.
Courtesy: best logistics company in Karachi
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