Thinking how to start a shipping business? It’s a big deal, moving over 90% of global goods! The shipping container market was worth $6.41 billion in 2020 and could grow 12% yearly until 2028. Shipping is not only about trucks or boats. It’s about being part of global trade that is not easy to comprehend! No worries though, we’ll make it super simple.
Start with the basics. An excellent plan, licenses, and connections are key to winning. We suggest to start with a pack-and-ship business; it is easy and profitable for beginners. However, the market know-how is necessary along with a study of your competitors. Pick a funky name. The one that remains in people’s mind and works for trademarks and websites. Create a vivid plan regarding money, goals, and operations.
Settle on a simple legal setup, such as sole proprietorship. It will avoid tons of paperwork. Find cash through savings, crowdfunding, or loans. Set up in a lively spot, like near malls, but steer clear of nearby competitors. Grab an IRS EIN to open a bank account and hire people. This guide, built on tips from how to start a shipping business in 14 simple steps, helps you start strong!
Startup Costs for Launching a Shipping Company
Kicking off a shipping business isn’t cheap! You might spend $870,000 to $2,720,000. The total cost of ownership depends on where you set up, what kind of company you run, and how big you go. Here’s the breakdown in easy words:
- Office and Warehouse Space ($100,000–$250,000): Got to find a place for your office and stuff to store. City spots cost more than suburbs. Try sweet-talking for cheaper rent or grab a pre-used building to save cash.
- Trucks and Gear ($300,000–$1,000,000): Need trucks to deliver! Buy or rent them. Used ones or group deals can make it less pricey.
- Storage Setup ($150,000–$500,000): Build a warehouse with shelves and cool machines. Fix up old spaces or rent gear to keep costs low.
- Permits and Insurance ($50,000–$150,000): Pay for licenses to drive and insurance to stay safe. Bundle stuff or use online sites to cut fees.
- Tech Stuff ($30,000–$100,000): Get software to track trucks. Use cloud apps or free tools to save money.
- Workers and Pay ($200,000–$600,000): Hire drivers and bosses. Train them yourself or use part-timers to spend less.
- Ads and Branding ($40,000–$120,000): Make a cool logo and website. Cheap online ads and teaming up with others help you save.
Smart moves like renting stuff or sticking to small areas keep costs down. Save extra money for surprise fees or price changes to stay safe.
How to Start a Pack and Ship Business in 14 Simple Steps
Suppose you are looking for ways to join an emerging industry where you can make a considerable profit without investing too much. Starting a pack-and-ship business is the way to go. This industry is among the best startups for entrepreneurs seeking low entry barriers and high growth potential.
1. Storage and Inventory Management
Create a robust system for handling your inventory and storage. This is especially important if your business deals with warehousing or fulfilling orders. Consider investing in inventory management software. The software assists in pursuing stock levels, examining inventory turnover and make the best use of storage space. If necessary, you can also rent or lease additional storage space for your stock and shipping supplies.
2. Marketing and Customer Acquisition Tactics
Marketing is vital in capturing customers’ interest. Develop a strong marketing blueprint to push and draw new clients to your shipping business. Utilize online marketing channels such as Google, the biggest search engine in the world as per market share, search engine optimization (SEO), social media, email marketing, and content marketing to reach your target audience.
Traditional marketing methods, like participating in industry events, sending direct mail, and local advertising, can also be beneficial. Nevertheless, your main focus should be on delivering outstanding customer service. For instance, you can motivate your satisfied customers to refer your company to their friends, which can be a highly effective strategy to increase business profit.
3. Study the Packing and Shipping Market
Before you jump into this new venture, it is important to know more about the market. It is okay to take the time to become more familiar with the sector. Additionally, it would be best if you had an idea about your future customers. And, it would be useful to do some research on the demographics and competition in the area. Taking online business classes can provide valuable insights and strategies for navigating the packing and shipping market successfully.
4. Pick the Right Business Name
Before you can really find out how to start shipping products, you need an excellent name for the business. In this day and age, branding is very important and is a crucial step in starting a new business venture. So, it is necessary to devote some time to finding the right name. You need to pick something that is easy to remember and marketable. It also needs to be available as a trademark and domain name. Additionally, you should consider the costs of starting a business, which include registering the trademark and securing the domain name.
5. Have a Solid Plan
You have a great and unique name, and you did your research. It is time for a solid business plan. Whether you are going independent or buying a franchise, the plan will help keep everything on track.
This should be as comprehensive as possible. From management to finance, you need to know where exactly you are going as a business.
It has to be easy to read since, especially things like startup costs; you will probably present it to different people.
6. Form a Legal Entity
Since you are ready to start your packing and shipping business, you need to get in touch with local and federal authorities to register the business. There are different options here.
There are five possible legal structures: sole proprietorship, limited liability company, partnership, C corporation, and S corporation.
The sole proprietorship is easy and simple to set up because the owner and the legal entity are just one person. This entity also requires less paperwork and can be ready to go faster than the others.
7. Find the Right Source of Financing
The sources of funding are included in the business plan. The financing can come from different places. The first area to look is into your personal savings. It is also possible to reach out to family and friends.
In the era of social media, crowdfunding is an option that is worth exploring. Bank loans, credit card financing, and angel investors are traditional ways to get a business ready to go.
8. Pick a Location
If you want your business to be in a position to succeed, you need to pay attention to the location. This is an aspect of the project that should never be neglected.
Ideally, you want your company to be in an area that is vibrant and flourishing with other businesses. However, it is best to avoid being too close to another company in the same field.
Also Read: How to Start a Car Company: A Step-by-Step Guide for Aspiring Entrepreneurs
Shopping centers, colleges, and universities are places that may need your services. Doing some deep research in your chosen locality could deliver decent margins.
9. Register with the IRS
This is another crucial step. By registering your packing and shipping business with the Internal Revenue Service (IRS), you will be able to obtain an Employer Identification Number (EIN).
Thanks to this number, it will be easier to open a bank account and hire people. Sole proprietors do not have to obtain an EIN. They can use their Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
You can do some of these things on your own or get extra help from an expert like an accountant to put the right system in place for you.
10. Open a Bank Account
You can choose between a checking or saving account. However, if you can handle it, a business credit card can improve your general standing.
It needs to be said that interest rates might be pretty high, just like annual fees. However, thanks to a card like this, you can make larger purchases and build a credit history for your business.
To start this part of the journey, just get in touch with the bank of your choosing. There will be some forms, and you will have to share your personal information.
Furthermore, you will have to tell the bank a little bit more about your business.
11. Obtain the Permits and Licenses for Your Pack-and-Ship Business
To start shipping products, your city requires you to get a business license. There is also the retail sales license, which is a must at the local level.
You will need a license to operate a commercial vehicle and another one to transport goods.
Depending on where your business is located, additional licenses might be necessary. By contacting your local authorities, you will have a clearer picture of all the permits that you need to obtain for your business to be right with the law.
12. Get Insurance for Your Business
This is a step that should not be overlooked. It is, first and foremost, about protecting your investment and your dream. There are many options to look at. It will all depend on the kind of business that you are running.
Working with a professional could help make the right call about what is really necessary in your specific case.
Things you can look at; auto insurance, business interruption insurance, commercial property insurance, general liability insurance, professional liability insurance, and workers’ compensation insurance.
13. Choose the Right Equipment for Your Company
Getting the proper equipment will contribute greatly to the success of your business. And then, you will have to decide if you want to buy or just lease the different items.
The list includes a computer, printer, scanner for the different labels, and a credit card reader. Moreover, boxes, labels, and tapes are also needed.
14. Focus on the Online Presence of Your Company
After taking care of the previous issues, it is time to work on online presence for your business. So, this is a step that can help your business grow.
Start with a professional website and a logo that stands out. And then, you move to the social media accounts to increase visibility. Effective brand management is crucial in maintaining a consistent image across all platforms. To get to the next level, you can purchase software to help you and your clients track packages and be able to print labels. All of this is part of creating a real identity for your business.
Bottom line
In short, if you follow these different steps, you will remove a lot of pressure about how to start a shipping company. Now that you are ready for a big launch, it is time to start reaching out to the local community via newspapers and the chamber of commerce.