Starting a Transportation and Logistics Company – Business Plan

Transportation and logistics involve the proper movement of products and services from the maker or supplier to customers. One of the vital components of the US infrastructure, transportation companies are of several types catering to varying needs. For instance, aerospace, railway logistics, truck shipping, general freight services, etc. 

Remember that finances are a concern to start a company in this sector. Hence, ensure that you already have a financial cushion or a solid financial sourcing plan; you are good to go. 

Reasons to start a transportation and logistics company 

  1. A transportation and logistics company is an important company in the US economy and starting one can bring good opportunities and revenue for you. 
  2. It is a full-fledged business idea that requires thorough planning, and if this is done, you can reach amazing heights. This business idea is certainly not for the faint-hearted, but suitable for aspiring and ambitious people. 
  3. This business involves several risks but is coupled with growth and other avenues. Hence, if you are willing to walk on the path of success without fearing the consequences, this business idea is for you. 

Overview – Transportation and Logistics Company 

  • At the foremost, it is important to know that this industry depends largely on the economy. The more trade and consumption of goods and services, the more demanding is the transportation and logistics industry. 
  • More than 6414 companies are registered and licensed as freight and logistics services in the United States. They are mostly scattered all over the country but this industry is thriving, so starting a new one won’t bring down the business. 
  • This industry grows at 1.6 percent annually, and no company shares a prominent position in the industry. So, you cannot expect a giant dominating the entire market, leading to equal opportunities to harness for everyone. 
  • As per IBIS WORLD reports, the packing and crating services contribute to 71.7 percent of the industry growth. 
  • This industry is open for big-time investors and those willing to take capital-intensive risks and who can lead a massive team of employees at a time. 

Executive Summary 

  1. Specify the name of the corporation, which needs to be unique and denote the quality or value of your company. For instance, Superior Freight and Logistics Services. 
  2. Location is crucial as it will be based at a huge place where all packing and other freight services will take place. 
  3. Mention that the company is licensed, bonded, insured, and registered as per the laws as freight companies cannot afford to violate any laws. 
  4. Promises, values, and virtues of the corporation – brief these aspects. 
  5. Range of operations – For instance, the United States and Canada. 
  6. Customer service and other standards. 
  7. Ethical principles followed. 
  8. Work culture and passion followed by everyone. 
  9. Owners of the company, their qualifications, and experience related to the transportation industry, level of commitment, and aspirations. 

It is important to be detailed and more specific about your goals and values as you will be presenting this document to seek financial assistance and the creditors. They should seek an instant idea from this part that your business is financially viable and can bring better prospects in the future. 

Services

Though the range of logistics services is vast, you can provide any or all of the following services. You can add a few services as you grow your business but be clear of your orbit in this section. You and your team partners should know the direction in which your business is heading. 

  1. Packing, crating, wrapping products for transportation services. 
  2. Storage of goods till they are dispatched. 
  3. Consulting services relating to all logistics services and physical distribution, suggests measures how corporations can utilize these services. 
  4. Preparing trade and other documents efficiently. 
  5. Freight consolidation services. 

Mission and Vision Statement 

Corporation mission – “To create and establish a thriving freight and logistics company in the United States, and to rank in the top five logistics companies in the country and spread it to other places in the world.” 

Corporation vision – “To become the first choice for logistics and freight services for business giants and tycoons and provide them wholesome and efficient services with ease and convenience.” 

Business Structure 

You can create an in-house expert team of manual staff and administrative employees. At the same time, you can hire freelancers and part-time staff to handle specific jobs like marketing and try to balance costs in the initial stages of the business. Following are a few jobs positions you need to fill up: 

  1. The Owner or the Chief Operating Officer –  He is a responsible and dedicated person. He is the one to establish this business and needs to make key decisions for the company. 
  2. HR and Admin Executive – A person who can handle all the administrative and human resource-related tasks of a freight and logistics business. 
  3. Manager – Freight, transportation, and logistics services – He oversees whether all freight and logistics projects are being executed on time and as per the given procedures or not. 
  4. Business Development Executive – He needs to bring clients to the business. He takes care of all marketing and advertising-related functions. 
  5. Accounting Head – He looks after the accounts and has a team of assistants as he is required to report on several branches of accounting. 
  6. Manual staff – Depending on the type of transportation and logistics services you provide, you can hire material handling staff, forklift operators, and other staff. 
  7. Customer Support Executive – He deals with the clients in person and on telephone or email. 

SWOT Analysis 

  • Strengths – Efficient management, well-positioning to manage all freight activities, network, cost benefits, customer loyalty, and employee motivation are the biggest strengths of your business, provided you establish this venture based on the above parameters. 
  • Weaknesses – Finance is a big concern for such businesses. Moreover, lack of scale of operations and challenges in tapping business clients are a few things you need to deal with. 
  • Opportunities – New technologies, expanding online market, central location, no fierce competition are a few opportunities to tap. 
  • Threats – Economic crisis, rising operational costs, and changing nature of this business are a few threats to the business. 

Market Analysis 

The transportation and logistics industry is dynamic and subject to changes in the whole country of the United States and Canada as well. But as you gain credibility by dealing with client’s consistency, you can acquire a hold over the market. You can enter into permanent contracts with corporate giants, merchants, and suppliers and cater to their needs. 

As your business inculcates values for success such as honesty, trust, timely services, excellent management relationships, it will be easy for you to succeed. 

Target Audience 

  • Retailers who need services to transfer goods from one place to another. 
  • Warehouse operators. 
  • Merchants. 
  • Corporate and government organizations requiring logistic services. 
  • Households requiring removal services. 
  • Manufacturers. 

Strategies for sales, marketing, advertising, and publicity activities

  1. Reaching out to the target audience by introducing them to our business and related services. 
  2. Tapping social media and online advertising platforms such as ad campaigns and much more. 
  3. Personally, meeting business clients and presenting them all the services along with deals and contract terms. 
  4. Creating an online presence. 
  5. Inviting the clients for presentations at the office, organizing visits to look at the premises and how logistic services are performed efficiently. 

Sales Predictions 

As you build your business organically, you will never run out of clients. Corporates, households, and government organizations will seek your timely services. When it comes to sales projections, you have to keep in mind the existing logistic organizations, current market conditions, and forecast sales figures accordingly. 

$240,000 is the sales revenue expected for the first year. It might happen that you might suffer a few setbacks due to a lack of knowledge. So, we suggest asking experts to be sure about the work processes and deal with reliable clients only. But you need not be unrealistic or over-aspiring about the sales figures. 

Later, you can expect the sales revenue to double up in the next year as your business takes off. 

Pricing 

Prices need to be negotiable and reasonable and must not exceed or be lower than those charged by the competitors. Do not try to entice your customers with cheap prices as they won’t believe the quality of your services either. Government jobs, one-time contracts are indeed profitable, but steady clients can be reliable and stress-free. Setting a monotonous price system isn’t a good idea for your venture. You ought to keep reviewing it on a regular basis to be intact with the market conditions and your own revenue figures. 

Start-up expenses 

The start-up expenditure depends on the kind and size of business you would like to start. But remember, it is a capital-intensive business, so you cannot expect the costs to be minimal. It will be high, and you should be ready to pour funds into your venture. 

One of the aspects that will require heavy funds is a facility to carry out the logistic operations, which can be estimated to be around $150,000. Similarly, the initial salaries paid to the staff will occupy a huge portion of your finances and be anything between $100,000 and $120,000. 

So, we suggest setting a start-up budget of $300,000-$320,000 for this venture. If it is a family business or of partners, contribution helps a lot. But financial assistance from institutions and banks is a great deal to tap. 

You can also add an Expansion Plan in this business plan template, but it will require rigorous market research and feasibility. Till then, we hope this information is sufficient.