How to start a courier business

Launching a courier business is a great way to capitalise on the booming ecommerce industry. Setting up a successful courier business requires investing in proper marketing and legal work, as well as delivering parcels on time. Read this comprehensive guide to learn the important steps involved in launching a courier business.

What is a courier business?

A courier business delivers packages and important documents to their intended destinations. Typically a small courier business will offer a fast, on-demand delivery service to a city and the surrounding areas.

How to start a courier business

Follow these steps to launch your own courier business:

1. Find your target market. As a small courier business, you will be competing with package delivery businesses such as Australian Post, DHL and other courier businesses. To remain competitive, pick your specialty. For example, your business can focus on one geographical area, offer time-sensitive delivery or specialise in delivery of certain products such as confidential documents, medicine or flowers.
2. Develop a business plan. Write a business plan that takes into account market research, the estimated income and expenses for your business, and the pricing of your services.
3. Create a brand name and logo. It's important to have a business name that reflects what you do and how you work. You'll also need to register the business name with the Australian Securities and Investments Commission (ASIC), unless you're using your own legal name. It's also a good idea to create a logo to promote your business. If you don't have the budget for a graphic designer yet, you can use these graphic design tools and services to create your own logo.
4. Get the right vehicle and licence. To run your own courier business, you may need to purchase a reliable vehicle. Many full-time couriers use a cargo van, but depending on your specialty and the geographical area you operate in, the right vehicle might be a bike, motorbike, ute or other types of vehicles. If you're using a heavy vehicle, you will also need to get a special licence.
5. Consider loan options. You may need to apply for a loan to purchase the right vehicle for your business. If you can't get a business loan, you could also consider getting a car loan or a personal loan.
6. Sort out storage space. You might need to use your garage or other space for storing packages and parcels that are going out for delivery.
7. Choose the right structure for your business. Most of the time, operating as a Sole Trader or Partnership will be the simplest and most cost-effective way to run a small courier business. However, there are advantages to registering your business as a Company if there are external investors involved or if you wish to better protect yourself against the Company's future liabilities.
8. Consider legal requirements. It's a good idea to get legal document templates such as a Service Agreement and Cancellation Policy.
9. Market your business. How you market your business will depend on who your target customers are. If your target customers are florists, bakers, pharmacies and other businesses who need fast delivery service, you can market your service directly to these businesses. This might involve cold calling and emailing or dropping off your business cards. On the other hand, if your courier business is aimed at individual customers, you will need to reach out to a wider audience. You can do so by responding to job listings on online job marketplaces like Airtasker and Oneflare or advertising your services on social media.

Skills needed to start a courier business

While there are no formal requirements needed to open up a courier business, having experience in deliveries and being familiar with your local area will be advantageous.

Running a courier business can be a physically demanding job, especially if you are just starting out and have limited resources. Couriers must have superb organisation and time management skills, as the speed and reliability of your deliveries are more important than ever.

As a courier business owner, you will need to be able to coordinate and schedule your workload by estimating how long deliveries may take, how many couriers you'll need and how much to charge your customers.

Vehicle licence requirements

If you are considering using a heavy vehicle, you will need to register the vehicle and hold the appropriate licence. The following types of vehicles are classified as heavy vehicles:

Courses and qualifications

You do not strictly need to have any formal qualifications to become a courier. However, you will need to have a valid driver's licence for the vehicle you are driving. If you want to learn more about planning deliveries or if you want to train employees, you can do an online course that is focused on courier delivery operations.

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Equipment and software needed to start a courier business

You can set up a courier business with relatively low overheads, which includes:

• Vehicle(s), such as a cargo van, pickup truck, motorbike, etc. The right vehicle will depend on the number of deliveries, size of the parcels and your budget.
• Hand truck trolley or dolly
• Cargo ropes, straps, moving blankets and tape to secure and protect items

To operate the business efficiently, you may also consider software for managing tasks such as:

Loan options for courier businesses

Depending on the level of your savings and the vehicle you need to buy up-front, you may need to get a loan to start your business.

Our guide to small business loans can help you figure out which option is the best for you. Keep in mind some lenders will require you to have been operating the business for at least six months to a year, while other lenders will require a minimum annual turnover of at least $100,000.

If you're just starting your business, you may need to think about getting car loans or personal loans instead. Before you apply, always make sure you're able to afford all repayments, including any additional fees or charges.

How to structure your courier business

When you officially register your business, you must identify the type of business you are operating. Common business structures in Australia are Sole Trader, Partnership and Company.

The amount of control you intend to have over the business, its costs and tax implications are among the key considerations for your business structure. If you're not sure which path to choose, reach out to an accountant for more guidance. Our guide to structuring your business can help too.

Do I need any legal advice or documents?

It is important to have all the relevant legal documents in place before you start operating your business. Legal documents help protect your business and clarify your responsibility towards your customers.

Documents that you may need to set up a courier business include:

• Service Agreement. It's a good idea to have a Service Agreement with customers which sets out your responsibility and who is liable for any loss or damage to packages.
• Cancellation Policy. It's a good idea to include a Cancellation Policy to deal with last-minute cancellations and no shows.
• Employment Agreement. If you're hiring other courier drivers to carry out the deliveries, you'll need an Employment Agreement to set out the terms and conditions of their employment.

You may also need to speak to a lawyer to make sure your business is run in a legally compliant way. You could speak to:

• Small business lawyers. They can help you with general legal issues affecting small businesses, such as structuring a business, drafting and reviewing contracts, and complying with consumer and employment laws.
• Franchise lawyers. In the courier industry, sometimes it makes sense to join an existing franchise where you work with an existing brand. Before signing a Franchise Agreement, it's a good idea to go over the agreement with a lawyer who can advise you on issues such as marketing and advertising fees, significant capital expenditure and intellectual property.
• Commercial lease lawyers. If you specialise in delivering bulky items, you might need to rent a commercial or industrial space such as a warehouse to store your vehicles and goods. It's a good idea to have the contract reviewed by a commercial lease lawyer to make sure the lease terms are in line with your business interests.

With many of the legal documents required, you can access a number of free templates (see the table below) to get started. You can request a free quote for lawyer services through a number of websites, including:

• LegalVision
• Sprintlaw
• Lawpath

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How to find customers

If you're targeting local businesses who need fast delivery services, it's a good idea to directly connect with companies in your local area. This might involve cold calling and emailing or dropping off your business cards.

If you're targeting a wider market, you will need to invest in building a digital presence. From social media pages to online reviews, there are many ways you can grow your customer base and, in turn, sales. Some practical, simple ways to do this include:

• Listing your business on online marketplaces for tradies, such as hipages, Oneflare and Airtasker.
• Listing your business in an online business directory such as Yellow Pages and Local.com.au.
• Listing your business on Google and Google Maps. Reaching out to your customers and asking them to post reviews of your service is also recommended.
• Word of mouth is a virtually free way to grow customers. You can encourage or incentivise your frequent customers to spread the word about your business.

How much should I charge my customers?

According to the online marketplace Oneflare, the average domestic courier cost is $9 for standard delivery, a base rate of $12 to $20 for same day delivery and between $15 and $80 for overnight delivery.

A courier business usually has fixed pricing, which varies owing to the following factors:

Take two of the major Australian courier and postal services. Sendle usually charges $6.96 for a one-off 500g & A4 satchel if it's being delivered to the same city, or $8.50 for interstate delivery. Australia Post typically charges a flat fee of $8.95 for a small, regular parcel. The figures stated in this article were correct as of January 2021.

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Frequently asked questions

Is owning a courier business profitable?

Thanks to the growth in online shopping, the Australian courier market is set to grow at a rate of 5.8% a year until 2021 to reach over $6 billion. While the courier business is currently dominated by the major players, such as Australia Post, we are also seeing a disruption to the industry with local startups such as Sendle, Go People and Zoom2u.

Should I join a franchise?

Becoming a courier franchisee allows you to collect and deliver parcels in an exclusive area with an existing brand. The advantage of joining a courier franchise is that you will benefit from the reputation, marketing campaigns, training and ongoing support with the brand. The disadvantages of joining an existing franchise include franchising and marketing fees, and restrictions on where you can operate.

How can I grow my courier business?

The most sure-fire way to grow your business is to provide exceptional customer service through speed, reliability and proactive communications. Effective marketing is also crucial when you're just starting out and this can be as easy as contacting local businesses in your area or listing your business on Google. You may also expand your local operations through online marketplaces such as Airtasker. Another effective way to grow your business is to reach out to your customers for reviews and referrals.

How much can you make as a courier?

According to PayScale, a courier in Australia typically makes between $19 to $29 per hour. If you need to employ couriers, keep these rates in mind as you grow your company.