How to Start a Courier Business

Some big players dominate the UK courier market, such as the 500-year-old Royal Mail and Amazon Logistics, the delivery arm of the US marketplace behemoth.

With such established competition, if you want to start your own courier business then your first port of call should be to do some serious research into the sector. Investigate the other courier businesses in your area and find out what kind of services they offer, how much they charge, and what kind of vehicles they use. That will allow you to identify emerging opportunities and gaps in the market for a new courier business.

There are several types of courier services. Some companies specialise in a particular kinds of service, while others offer multiple types:

• Same day/express: An express or same day service aims to have goods delivered to the customer within a day. Such speedy courier businesses are likely to charge a premium for this expedited time frame.
• On-demand: An on-demand delivery service offers fast, reliable delivery of urgent or time-sensitive items. They can be even faster than same-day services, guaranteeing to have the parcel delivered within a few hours or even less than an hour. They also offer more flexible delivery options and can provide detailed tracking information as their customers’ parcels make their way through the network. 
• Standard: Standard courier services aim to deliver goods within around two to three days, and can be a much cheaper option if time isn’t an issue for the customer. They typically charge per size or weight. 
• Specialist: Specialist courier companies or services are equipped to carry sensitive, dangerous, or extremely fragile goods. Medical couriers are one example, which deliver lifesaving medical equipment or even organs. Hazardous materials that pose a threat to human health are another, and they need to be transported in a way that prevents them from harming the carrier or members of the public.  
• Eco-friendly: Logistics and transport contribute around a third of CO₂ emissions. No surprise, then, that there is a growing demand for eco-friendly courier options. This can be achieved with electric vehicles, bicycles or any other low-emission type of transportation.
  

Creating a budget is the next crucial step on the road to bringing your courier business to life. 

Not only will a business budget help you calculate your start-up costs, allowing you to put in place adequate capital, but it can also help convince investors to offer you funding for your courier business. 

Consider the following expenses as you draw up your own courier business budget:

• Vehicles: You could decide to invest in one particular type of vehicle or you could have a fleet of different vehicles to suit a variety of jobs. Bicycles are the cheapest vehicle option, as they don’t need to be refuelled and aren’t subjected to taxes. They are also environmentally friendly, can avoid traffic and take routes that are unavailable to motorcycles or vans. However, they are limited by the size and weight of goods they can carry. They are also limited by the distance they can travel. Motorcycles or mopeds, like bikes, can dodge round traffic queues but can go faster and further and carry more weight. Electric mopeds have the added benefit of being more eco-conscious. Vans can carry more and heavier items and travel further. This means they can be used to deliver multiple items in one trip. They are also more adaptable to specialist needs, such as temperature-controlled environments.
• Insurance: Driving or cycling around the city exposes you or your team of couriers to certain inevitable risks. They could injure themselves, damage their vehicles, or lose or damage customers’ goods. Because of this, a comprehensive package of insurance is essential. 
• Salaries: If you have a team, a big portion of your budget will be given over to salaries, ranging from around £18,000 up to £32,000 for more experienced workers.
• Uniforms: If you have a team of couriers, uniforms can give them a professional image and act as free advertising every time someone sees your couriers out and about. Couriers have to be out in all weather, so you should also budget for warm and waterproof layers. 
• Other equipment: Depending on the vehicles you use and the type of services you offer, you may need to invest in some specific equipment. For example, cycle couriers will need a handlebar phone mount so they can follow their route, as well as panniers and a rack to carry items. Or if you carry temperature-sensitive or hazardous materials, you will need specialist handling and transportation equipment to keep the courier, goods and members of the public safe.

For a more detailed guide to writing a budget, explore our five-step guide to creating a small business budget.

Now you know what kind of courier business you want to run and how much it’s likely to cost to get started, you can move on to the next step: registering your courier business.

First, you’ll need to choose a business structure. Most self-employed couriers run their businesses as sole traders – and it’s not surprising, given that this is the quickest and simplest company structure to set up. 

However, you also have the option of setting up a limited company or running your courier business as a partnership. For a rundown of the pros and cons of each option, plus detailed info on how to register your business, check out our guide to choosing a company structure.

» MORE: Should I register as a sole trader or limited company?

While there are no specific licences required to run a UK courier business, you will need a driving licence and road tax if you plan to deliver your goods with a motor vehicle. Make sure your licence is valid before you register your business and start trading. 

Now is also a good time to consider the various kinds of insurance which you’ll need to ensure you can operate your courier business safely and effectively. 

You should have goods-in-transit insurance, which will cover you for loss, theft or damage of cargo. You should also have vehicle breakdown cover if you use motorbikes or vans and public liability insurance to protect against an accident involving a member of the public or their property. 

Finally, it’s a legal requirement for all couriers to have hire and reward insurance, which covers the activity of transporting other people’s goods. 

Some providers offer courier insurance policies that include every type of cover you’ll need in one neat package. For example, a sole trader courier business with no employees could get a courier insurance policy that includes public and employer liability, as well as contents and business equipment cover, for around £45 a year. 

Bear in mind that if you employ anyone as part of your courier business (except for close members of your family), you’ll also be legally required to have employers’ liability insurance. 

By now, you should be ready to source some funding and get your courier business on the road. 

Although vehicle costs may make it harder to self-fund your courier business, funding your new enterprise doesn’t need to drive you up the wall. As well as looking into start-up loans and small business grants, consider asset finance. This is an option for businesses which require essential assets or equipment (in this case, a delivery vehicle).

You may also be able to access finance from specialist companies or lenders geared towards serving courier businesses.

For more information – and maybe even some inspiration – you can always turn to our guide to funding your new business.

Once you have secured investment in your courier business, you may need to open a business bank account to keep track of your earnings and outgoings. 

If you choose to run your courier business as a sole trader – and if your bank allows it – you’ll probably have the option of continuing to use your personal bank account for business transactions. However, limited companies and partnerships must legally keep their personal and business finances separate. 

Regardless of whether you’re legally obliged to have one, opening a business bank account will make it easier to keep on top of earnings and outgoings.

In the highly competitive courier business industry, securing your first customers can be tough. This is why you need to come up with a solid marketing plan to reach as many potential clients as possible. 

A website and social media presence are certainly worth considering. Include keyword-rich copy, which will help you rank in the search engine results when people search for relevant terms. For example, you can try to target terms like ‘best local same day courier service’. 

In all your marketing and promotional efforts, don’t forget to shout about what makes your courier business special. What’s your unique selling point or USP? How are you faster or more reliable than the competition? Do you offer a particularly specialist type of courier service?

Don’t just claim it, demonstrate it.