What are the things to consider before starting a logistics company?
- Logistics Service Type
- Industry Knowledge
- Capital And Funding
- Technology and Equipment
- Licenses and Permits
Are you thinking of starting your own business? Then, you might want to open a logistics business. According to the best business podcast in the Philippines, the logistics industry is currently booming because there has been an increase in online shopping. Today, just about anything can be off the internet. Statistics show that the logistics market is expected to grow to about P1-trillion by 2023. But, just like any type of business, there are several things to consider before starting a logistics company.
Industries such as e-commerce, medical, manufacturing, food and beverage, hotel, and automotive require logistics services. One can say that the barrier to entry when starting a logistic company is relatively low. The real challenge, however, is ensuring the business remains profitable within a heavily competitive environment.
If you aspire to own a successful logistics firm, a solid business strategy is needed before opening up shop. Below are five things to consider before starting a logistics company.
Logistics Service Type
The first thing you need to do when starting a logistics company is to determine your target market and the service you can offer to them. Logistics businesses can vary from delivering local consumer goods to shipping products overseas. Decide on the logistics service type your business can cater to. Here are some of your options:
- Local Logistics – This refers to transporting consumer goods, materials, livestock, and more, domestically. Couriers fall under this category.
- International Logistics – This refers to transporting all kinds of items on a global scale. Companies that go for international logistics cross at least one international border during operations and offer either air-based or sea shipping.
Keep in mind that how much resources, workforce, and funding you require will depend on your choice. As a startup, it would be best to stick to choosing a niche that you are most familiar with. This makes it easier to gain consumer trust and competitive advantage over those who offer the same type of service.
Just like any type of business you want to start, you will need to have knowledge about the logistics industry as a whole. The logistics market has never been more competitive, with other players investing in the most cutting-edge technology to serve their clients better. As someone who wants to venture into the logistics industry, you will need to understand factors like procurement, inventory management, demand forecasting, warehousing, and order fulfillment
Make sure you familiarize yourself with all the types of logistical processes. Gather knowledge from industry experts and attend logistic seminars to know the ins and outs of the industry life cycle. Don’t forget to educate yourself and build your network to earn credibility.
Capital and Funding
A common mistake entrepreneurs make when starting a logistics company is believing that the initial customer demand will make up for any overhead costs incurred during operations. Take note that there are many unforeseen expenses in this line of business. This is why securing enough capital and proper funding can increase your chances of business success.
Have a clear understanding of all your costs. Ask yourself how much you will pay for increasing fuel prices, your manpower, vehicle maintenance, technological equipment, licensing fees, and more. Think about your source of capital for all these factors. Do you need to apply for a loan or ask for financial help from angel investors?
Technology and Equipment
As mentioned, the logistics industry has never been more competitive. In the Philippines, there are already several major logistics players. To ensure your business remains profitable and stands out from the competition, you need to invest in top-notch technology and equipment.
For instance, you can set up logistics software that monitors all shipping schedules. Additionally, you can invest in tracking systems to know the exact location of your delivery items. This way, you can ensure you ship goods on time and boost customer satisfaction rates. Offering better customer experiences can help you gather positive word-of-mouth, repeat purchases, and build good supplier relationships.
Licenses and Permits
Starting a logistics company means dealing with either exporting or importing products, or both. Hence, you will need several licenses and permits from local governments.
If you plan to go for international logistics, securing licenses becomes more crucial because you are delivering products across borders. The last thing you would want is to be penalized by customs authorities for not having permits for your operations.
Starting a logistics company is a profitable choice for many aspiring entrepreneurs today. Just make sure to remember the things to consider above to ensure your company stands out and attracts loyal customers amid the competitive business environment.
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