How to Start a Delivery Business

Benefits of Opening a Delivery Business

If you’ve got good time management skills, your new delivery business can start growing a customer base on nights and weekends. Once your company has a solid footing, you can decide if you want to go full-time. The average delivery driver in the U.S. makes $30,000 to $45,000 per year for single-driver operations, but as you scale up, that can grow fast. Plus, the overall earning potential is solid, with over $100 billion of annual revenue in the online meal delivery industry alone.

If you already have a set of wheels, your startup costs can be almost nonexistent. Growing a delivery business can be fun, and it offers the chance to provide excellent service that generates strong word-of-mouth advertising. You don’t need employees, extra equipment, or even an office space to start, so getting things rolling can be more straightforward than starting many other types of businesses.

How to Start a Delivery Business Checklist

Eager to get on the road? The process is simple, but following the right steps can keep you on a sure and steady route.

1. Create a business plan

Starting a delivery business takes careful planning and some industry knowledge. Don’t jump in with both feet before you’ve taken some time to lay the groundwork. Start with a sturdy business plan to shape your company and avoid common, costly mistakes other small businesses make.

• What’s your unique selling proposition, and how will you position yourself against the competition?
• Who is your target market?
• How will you bring in customers at first?
• Where will you base your new business? Do you understand the need for deliveries in that area?
• What problems will you face? Is there already a big, low-cost delivery company serving the area?
• What vehicle will you use? Will you need commercial auto insurance?
• How will you manage vehicle maintenance?
• Will you partner with other area companies? Some food stores and restaurants may not offer delivery now, but they may like to try it with you.
• Consider the delivery hours you’ll keep.
• Will you charge per delivery, or by mileage?
• Will you offer a rush delivery service at a premium?
• Do you qualify for any federal, state, or local tax breaks or grants?

2. Choose a business structure

Sole proprietorships are popular delivery business models because they’re easy to set up. They’re simple, one-person businesses that require very little upfront paperwork. But pump the brakes, because a sole-proprietorship structure doesn’t give you liability protection. If your courier service company gets in a legal jam, your house, car, personal bank accounts, and more could be on the table for your creditors.

An LLC (limited liability company) can stave off future legal troubles with liability protection. It provides a bumper between personal and business finances. If you’re in a car accident while operating your delivery service or you end up in business debt, an LLC setup can offer some protection for your house, car, and personal savings. This can be a key component when choosing a business model.

An LLC can also provide tax incentives, and it can have multiple business owners. These are some of the many reasons the LLC is such a popular entity structure for entrepreneurs starting a new business.

3. Name your business

Choosing a memorable delivery business name is an important step. Think about names that are quick to say, and easy to remember. Names like Speedy Wheels, The Rolling Zone, and Food En Route are fun and friendly. Link your delivery company name to the type of service you provide, and make sure it rings the right bells with your target market.

Once you’ve got a few concepts in mind, search online to see if they’ve already been snapped up. If you’re feeling uncertain, ask friends and family to pitch ideas or vote on the ones you have in mind. Once you’ve decided on a moniker for your delivery business, go ahead and register it. You might want to buy your domain name, too.

4. Register your delivery business and open financial accounts

Before you can start revving the engine, take care of a few steps to get your delivery business finances in order.

• Register your business as an LLC.
• File for an employer identification number (EIN).
• Open a business bank account.
• Make sure your vehicle is registered and insured.
• Consider taking out general liability insurance.
• Purchase commercial auto insurance.

Joining a trade organization like The Association for Delivery Drivers can help guide you through the twists and turns.

5. Determine your delivery business costs

One of the major benefits of starting a delivery business is the minimal financial input required. There are costs to starting any business though, so don’t go in with blinders on. Here’s a list of costs you can expect when starting up:

• Business formation: Forming an LLC for a delivery company can cost $50 to $500+, depending on your state. Our free (+ state fee) LLC formation package can help keep your costs low.
• Vehicle costs: Will you buy a new vehicle, lease one, or use the one you have?
• Vehicle maintenance: New vehicles cost around $1,200 per year for average upkeep.
• Insurance fees: You may need commercial auto insurance, which can cost $150+ per month.
• Equipment costs: You might need a dolly, hand truck, and ratchet straps, depending on what you’ll deliver.
• Fuel
• Cellphone
• Computer or laptop
• WiFi or internet access
• Marketing and website expenses

How do you fund your startup costs?

You may start by using your personal vehicle for deliveries. But as your business grows, you may want to increase capacity. Although the initial expenses for starting a delivery business are low, think through the costs of scaling up.

• Government assistance like grants and tax breaks can jump-start your delivery business. Check out new funding options that have popped up since the pandemic.
• Business credit cards can give you a push, but watch out for interest rates and pay off balances each month to avoid significant expenses.
• The Small Business Administration (SBA) can help point your new courier service to available grants and loans.
• Bank loans are a common option, and forming an LLC first tells loan officers you’re serious about your delivery business.
• Your family may want to lend a hand, but get all terms in writing to avoid damaging your personal relationships.

6. Purchase equipment for your delivery business

If you have a personal vehicle, you’re already on your way to launching a delivery business. However, you may still need to purchase added vehicles or other equipment. Take into account all the extras you may need.

• Reliable vehicles (box truck, refrigerated truck, etc.)
• Dolly
• Hand truck
• Ratchet straps
• Cell phone
• Laptop
• Fuel 
• Storage

7. Market your delivery business

Marketing is often the toughest part of starting a delivery business. You can rely on word of mouth at first, but if you want to earn real revenue, you’ll need a marketing plan. Pounding the pavement and approaching potential customers in person is often the quickest way to build a client list of food stores and restaurants in your area.

You can offer a free delivery at first to show what you can do. Once you’ve got a small but stable client list, set up a website and start email marketing. This may take a little extra work at first, but they can almost run on autopilot once they’re built out.

Create pages on social media platforms, including Facebook, Twitter, and LinkedIn, and use local business directories and newspapers to advertise. One great freebie that can potentially generate business is Google Business Profiles, which will allow your business to show up in more local searches. Also, consider partnering with local stores as their delivery service business of choice, and drop off some of your business cards for them to share with their customers.

Examples of Delivery Businesses to Start

As the demand for delivery services increases, so do the chances for your delivery company to grow. The online food delivery industry is buzzing, with annual revenue of $270 billion. Here are some different related business ideas to consider (that are also experiencing growth):

• E-commerce
• Fast food delivery
• Restaurant-to-consumer
• Grocery delivery
• Technology
• Errands