How to start a parcel courier business

A great way to take advantage of the growth of e-commerce while enjoying the flexibility of managing yourself is to invest in a parcel courier franchise

During COVID-19 lockdowns in the UK in 2020, e-commerce transactions skyrocketed. Even after the vaccine rollout and things went mostly back to normal, the volume of transactions conducted online stayed above pre-pandemic levels, reflecting a permanent change in customer behaviour.

At the same time, the flexibility of furlough working led many people to want to change their working circumstances, whether by pursuing jobs that would enable them to work from home or by starting their own businesses to gain more control over their work-life balance.

A great way to take advantage of the growth of e-commerce while enjoying the flexibility of managing yourself is to start a parcel courier business. If that’s something you have never done before, then a franchise could be the perfect way to get started. Investing in a franchise means you can benefit from a proven methodology and the support of a franchisor, both of which are great advantages to help you start your business off on the right track.

What do you need?

It may seem that there are no requirements of a parcel courier business beyond things that most people have – an internet connection, a mode of transport and a printer will often be the biggest upfront expenses. However, even if you feel that you are already equipped with everything you need, you should consider whether the assets, resources and equipment you have will be suitable for the job.

You will need a reliable mode of transportation, but different types of vehicles are best suited to different courier applications. For example, scooters and e-bikes are ideal for fast food delivery, while vans are best for parcels and packages – so this is something you should take into account. You should also factor in maintenance, insurance and running costs for your vehicle when estimating your business’ outgoings, and set aside funds to repair your vehicle should it break down.

How much will it cost?

When researching franchises you may want to invest in, some of the most important things to consider are the financial factors. There are no guarantees when it comes to running a business, but you can make realistic projections about your own possibility for success by examining best-case and worst-case scenarios. Ask franchisors about their retention rates, and why they lose certain franchisees. Find out how many franchisees they have overall, and whether you will be competing with other franchisees in your local area. If possible, you should also talk to a range of franchisees about their experiences, rather than basing your expectations solely on the most successful examples. For instance, if your franchise performs below average, can you still afford to stay in business?

Another aspect of this will be your prices. You should choose a franchise with a higher number of active shippers as this higher volume of business drives carrier costs down, and you can pass these savings onto your customers. If you have access to more carriers, you will also be able to offer more choices and more competitive prices, so this is an important factor to consider when choosing the franchise you want to invest in.

You should also calculate how long it will take for your courier franchise to break even. Upfront costs to invest in a parcel courier franchise are often lower than other types of franchises, but you will need to save more money than just your initial investment to give you the best chance at success and to ensure you can support your lifestyle while your business grows.

Calculate your expected monthly net profits, based on your prices and your capacity, or forecasts from your franchisor, and divide this figure into the sum of the upfront costs you will need to invest in the franchise. The result will be the number of months you need to stay in business before you have made back your initial investment and start to profit from your venture. You will need to ensure that you can afford at least six months’ worth of living expenses alongside the upfront payment you need to make to invest in the franchise, to give your franchise enough time to take off.

How to make the right franchise?

If you are interested in a franchise business, you should research parcel courier franchises in detail. While they may look the same from the outside, every franchise business is different in important areas, including the methodology they employ, the upfront cost to invest and the levels of training and support you’ll receive when you sign up. A parcel courier franchise might seem simple, but there are several factors – including managing time, inventory and customer relationships – where franchisor support can make the difference between success and failure.

As part of your research phase, you should visit the headquarters of the franchisors you are particularly interested in to get a sense of their internal operations and to pose any questions you may have to their staff. Bigger franchisors also host events or conferences that offer you the opportunity to meet other franchisees, ask questions and learn more about how the franchise methodology works.

As well as asking about the potential for success, you should also try to understand the negatives in order to be properly prepared. For example, how often does your franchisor lose customers? If the customer attrition rate is high, your franchise may have to expend significant resources to attract new customers, which could affect your profits. Other things you may consider asking about include what kinds of training you will receive before you start and whether you need previous industry experience to implement the franchisor’s methodology.

Ultimately, the most important thing in ensuring your success when investing in a franchise, or when starting any kind of business, will be the work you put into it. For many people, starting their first business means taking on many different responsibilities, from sales and administration to managing finances. Ensuring that your business model takes advantage of your natural strengths will certainly help but you will also need to be adaptable and willing to learn in detail how many areas of your business function in order to see success.

The author
Sam Whittaker is the UK franchise sales and recruitment director of World Options.