How to Start a Courier Business

But don’t let that simplicity fool you. Couriers are not a postal service; they’re in the business of transporting their cargo in the most efficient and cost-effective way possible. Whether you’re carrying consumer goods or vital medical equipment, speed, security and customer service are paramount.

In the UK, the courier market is booming, with billions of parcels sent every year. And despite the dominance of many large and established courier companies, the vast majority of the 35,000 courier businesses in the UK employ between zero and five people, suggesting there is still room for new market entrants to succeed by offering a more personalised, local service.

Here’s how to start a courier business in five steps, including researching the market, budgeting, finding funding, and securing your first customers.

Why start a courier business?

Here are a few great reasons to start a courier business now:

Be your own boss: You will have a tremendous amount of freedom as a self-employed courier, able to work as many hours as you choose and pick the most lucrative jobs. If your courier business grows, managing a team of couriers can also be a rewarding and satisfying job.
It’s accessible: At its most simplistic, you could start a courier business with just a bicycle and a mobile phone to find and contact customers.
It’s rewarding: Transporting essential items can be a satisfying, money-making enterprise, and you could make someone’s day by delivering a crucial or precious package.
It’s a thriving market: Between 2022 and 2023, 3.6 billion parcels were sent in the UK, and the courier market is expected to experience a compound annual growth rate of 3.35% between now and 2030.

Start a courier business in 5 steps

1. Research and choose your market

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.

2. Create a budget for your courier business

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.

3. Register your courier business

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.

There are a few options in terms of business structures. Take your time to research the options below so you can choose the one which will be best for your courier business as well as your personal circumstances:

Sole trader: A sole trader is the exclusive owner of their business. If you choose to run your courier business as a sole trader, then you’ll get to keep all post-tax profits. But the drawback of being a sole trader is that there will be no separation between you and your courier business – making you personally responsible for any losses your business may make. Sole traders need to register for self-assessment to pay their taxes to HM Revenue & Customs (HMRC).
Partnership: Business partnerships see two or more people sharing the responsibilities, risks, profits and losses of a business. There are three main types of partnerships: general business partnerships, limited partnerships and limited liability partnerships. If you are the ‘nominated partner’ – the one responsible for filing the partnership tax return – then you must also register with HMRC. Bear in mind that all partners will need to submit their tax returns as individuals as well.
Limited company: If you choose to run your courier business as a limited company, then you will be legally and financially distinct from your business. As a limited company, you will have shares and shareholders and can keep any post-tax profits your courier business may make. You can register as a limited company at Gov.uk.

» 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 if you plan to deliver your goods with a motor vehicle.

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.

4. Fund your courier business

By now, you should have settled on a company structure and have an idea of how much capital you’ll need to realise your package-delivering dreams.

With that, you’re ready to source some funding and get your courier business on the road.

Consider which of the following funding options will work best for you and your courier business, and bear in mind that you can always combine multiple sources of capital if you need to:

Personal savings: If you’re in a position where you can use your personal savings to fund your enterprise, then you can retain full ownership of your courier business. Just don’t invest more than you can afford, and be careful not to endanger your financial health in the process.
Friends and family: Borrowing money from friends and family can be tricky and may lead to disagreements further down the line, so it would probably be wise to draw up a written agreement well in advance. If you go down this route with your courier business, then you certainly won’t be alone: 19% of new UK businesses are launched using cash from the owner’s parents.
Small business grants: There are a range of non-repayable and partially repayable start-up business grants available across the UK – some of which may be suitable for a courier business. Specific grants can be accessed by businesses in Scotland, Wales and Northern Ireland.
Government business loans: Various government business loans may be available to your courier business. Research your options and see if any appear suitable.
Business loans: Traditional small business loans can be tough to secure as a new business since lenders generally prefer to back ventures with an existing track record. Still, securing a business loan for a start up is not impossible.
Angel investors: Angel investors are generally wealthy individuals who invest in new businesses in exchange for equity or convertible debt. Typically, an angel investor will look to take a hands-on approach to mentoring you and helping you grow your courier business.
Crowdfunding: This usually involves securing funding from lots of individuals in exchange for rewards, such as equity or early access to products. Crowdfunding often takes place through an online campaign.

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.

5. Find your first courier business customers

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.

How much do courier businesses charge?

There are different kinds of courier pricing models and several factors that play into the cost of each delivery.

For heavy items, a courier can charge based on the weight band that the package falls into. The distance between the pick-up and drop-off location can also be a factor, as well as how much fuel is likely to be used during the transportation.

The type of service used will also affect the cost of professional courier services. Same day or on-demand services cost more than standard shipping options.

Meanwhile, specialist courier services, which require particular equipment and could be dangerous, can also charge higher costs to account for the greater expense and level of risk.

As a rough guide, typical courier charges fall in the region of between £6 and £18 depending on the factors listed above.

» MORE: How to start a taxi business

Image source: Getty Images

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