A direct mail service or courier service is a good business option in the present day, especially because of an increase in commercial activity in India. However, the business is not an easy one to set up and you do need to put up decent investment. One of the most important aspects of a direct mail service business is to establish yourself as a reliable name because goodwill matters if people need to trust you with important papers or belongings. So in a way, setting up the business is the easy part.
Important decisions you need to make
Parcel type: There are different kinds of parcels that need to be delivered. Define your capability and decide what kind of package you can deliver. If you start on a low budget, you can begin with small packages and envelopes.
As you grow, you can include large cargo.
Decision regarding the kind of cargo depends on the amount of storage capacity you have. If you start a small office at home, you can convert your garage or storeroom into storage space.
Otherwise, you can begin with smaller things.
If you plan to deliver sensitive cargo such as chemicals, medical articles or fragile goods, you need to take a lot of safety precautions for their safety. Besides, you need special permissions for transporting these goods. The box needs to be imprinted with suitable warnings such as “inflammable” or “fragile”.
Delivering perishable goods is also cumbersome because you need to have adequate and appropriate storage arrangements. Moreover, you need manpower to maintain storage machines and goods. Also, for these kinds of cargo, you need to have access to quick pickup service. So, considering these factors, such cargo is not suitable for low cost start-ups.
Delivery area: You need to decide the area to which you can deliver cargo. You could choose to limit your within city limits or deliver to the entire region. Do keep in mind that the more you expand the reach of your service, more will be the investment you need to make.
Payment: Deciding how much to charge a customer is a tough job because you need to consider numerous factors. Take into consideration the cost of petrol or diesel and other important operational expenses of your business.
Simultaneously, you must also ensure that your rates are competitive.
So, conduct a market survey and find out how much your competition is charging for the service. Since you start your business on a low budget and your operational expenses are likely to be low, decide on a rate that is less than the existing market rates.
You need strong leadership skills and managerial qualities to run a business. You should be able to communicate with people across different industries. You must also have strong employee management skills. Money and resource management skills are important.
Additionally, it is a major advantage to know about the local areas and the character of different areas in your city. This can help you in identifying areas where potential clients are placed. You also need strong research, observation and analytics skills in order to analyse your target customers.
Computer literacy is essential in order to manage data. In the business of logistics, you’ll have to maintain numerous accounts. Knowledge of simple accounting packages can save you a lot of time. Before you start your business, you can spend some time learning a simple accounting package such as Tally. MS Excel is a good option for tabulating expenses and other details. However, there is not much automation you can do with Excel.
Organisation and systematic approach to work is very important in order to avoid mix-ups of couriers. In the absence of a systematic approach, not only will you waste resources, but the reputation of your business will also take a blow. You need to establish a system of courier pickup and delivery and ensure that the system is followed by every employee in your company. You need to hire one employee exclusively to keep track of cargo, sort them based on address and arrange them so that delivery boys can attend to them without wasting a lot of time.
You also need to be meticulous and disciplined. Make sure that your accounts are documented every day so that you don’t get confused by pending invoices and paperwork. You need to be prompt.
Courier service is a demanding job especially because you need to be outdoors most of the time delivering and picking up packages. So, essentially, you need to be on call throughout your working hours, irrespective of the climatic conditions. You should be prepared to put in extensive physical work.
You can start with three employees – two for delivering and one for sorting cargo. To save money, hire delivery boys who own two-wheelers since they can transport small cargo easily. This saves you the cost of buying vehicles. However, you will to bear their travel expenses. This needs to be included in your working capital. You must also have working capital to cover salaries of employees. Make sure to check employees’ identity and whether they have valid driver’s license.
After you hire employees, organise two days training in order to acclimatise them with your established working methodology.
You need money for initial set up as well as working capital for a couple of months to sustain through the first few lean months. You also need to allot money to set up an office. A home office saves you a lot of money. Allot working capital to cover operational expenses of the business and staff salaries.
You need some money to prepare promotional materials such as banners, pamphlets, visiting cards and brochures. Initially, you will need to visit businesses to publicise your business. So, travelling expenses should be included as well. Also use good business software such as Zoostr.
Next, you need to set up a business bank account. Make sure that you keep track of the transactions taking place in the account because your income is taxable.
If you plan to transport bigger cargo, you need to buy delivery auto-rickshaws. You may have to apply for a bank loan since the cost of these vehicles is higher. You can apply for a loan after you register your business. Make sure that your project file and all details of your business are accurately mentioned so that you don’t have a problem obtaining a loan.
Set up a pickup and delivery system
The most important aspect of a direct mail system is delivery to the specific location and within specific times. For this, you need to set up a robust delivery system. Initially, you can invest in a two-wheeler and a driver to deliver goods within the city limits.
Another option is to tie up with bigger courier companies, and use their network to transport your goods. Although your profit margin may come down, this way you can begin with a low capital. You can build your delivery fleet gradually.
You can register the company as a Sole Proprietorship company or a Limited Company. If you go into business with a partner, you need to register as a Partnership firm. Each of these business types has their own registration requirements.
Sole proprietorship firms do not need to register with any government agency if annual income is below Rs.2 lakhs. If the income exceeds this limit, you need to register your business with Registrar of Companies. Partnership firms are registered as per the code explained in Indian Partnership Act 1932 and limited liability partnerships are governed by the Limited Liability Partnership Act 2008.
Whatever the kind of business, you need certain licenses. PAN Card is mandatory for all businesses. You can apply for one at the income tax department. Online application is also available at a cost of Rs.94. You can expect to receive the PAN card within 7 days.
Additionally, you need TAN (Tax deduction Account Number) since you collect tax from employees and customers. This license is issued by National Securities Deposit Limited. For online application, you can fill and submit Form number 49B on the NSDL website.
Service tax registration is essential because Direct Mail falls under service sector. This registration is required for any service based business that exceeds a turnover of Rs.9 lakhs per annum. For registration, you can approach the Service Tax department. You have to pay 10 percent of income in the form of service tax.
Employee Provident Fund and Employee State Insurance registrations are necessary if you hire more than 20 employees. Since you start with lower number of employees, you don’t need these initially. However, as your business grows, you might need them depending on the number of employees you hire. You don’t have to pay for either of these two registrations.
Finally, you need to buy business insurance. This can be very useful if parcels being transported sustain damages during transportation since you have to compensate for the loss. Professional liability insurance covers such damages.
You can promote and spread word about your business in several cost effective ways. However, you will have to put in time and effort. Before you begin promotions, print a thousand brochures, pamphlets and visiting cards.
Direct promotion is the best way. Visit major offices, stores, educational institutions, industries and other commercial centres. Talk to them about your service and present them with your tariff sheet. Give them your visiting card and a copy of your brochure. Cover one area per day so that you cover most of the important areas within ten to fifteen days. Additionally, you could hire a worker to distribute pamphlets to businesses personally.
You can also consider promoting your business online. Set up a low cost website or a free blog and upload details about your business. Post attractive and engaging content. Optimise your website for geo-targeting keywords in order to increase the rank of your website in search engine result pages (SERPs).
Register your business with Google Places and again make use of your geo-targeted keywords. Online directories and yellow pages are also good places to list your business.
Social media is another very important means of promoting your business. Set up a Facebook business page. Identify Facebook communities formed by people in your region and promote your business in these groups. Social media promotions and marketing is free of cost, unless you want to hire a professional for the job.
Tips to attract new clients
Every business looks to save money on logistics. You can capitalise on this by offering special offers and discounts on delivery. You can run offers every month when you start out. Additionally, you can create package offers and also offer periodic contracts to commercial centres.
Door-step pickup service can be very attractive for prospective clients. Offer free pickup service within a perimeter initially. Start up offers and inaugural discounts are effective in increasing your clientele.
You could also attract new clients by leveraging your social circle as well as your initial clients. Provide referral bonuses so that you get more business. In the initial months, your focus should be on growing your business, even if you have to cut down on profit margins.
Retaining customers is as important as or more important than generating new leads. When a business or individual hires you, keep in touch with them so that the client comes back to you whenever he or she needs courier services.
Things to keep in mind
- Ensure seamless communication connectivity with drivers and delivery boys so that you can constantly keep track of the cargo
- Make sure that drivers are well versed with the roads in your city
- Before picking up parcels, ensure that address is written correctly. Train your delivery boys to note down phone number and address of clients when they pickup cargo
- Your charges should be reasonable and competitive
In courier business, you should pay a lot of attention to customer service. Always make sure that you receive all calls and speak courteously, even if the client complains. Make note of complaints and improve your service. Never argue with clients because bad word of mouth publicity can be disastrous for your business.
Use a good Business Software
When you are running a small business the main thing you need to focus on is spending as much time as possible on activities that generate revenue and as little time as possible on activities that don’t generate revenue. This is where Zoostr business software can help you.
With Zoostr, you can easily create price quotations, invoices, schedule meetings, send SMS marketing campaigns from you desktop PC, smartphone or tablet. For example you can work in-between meetings by sending price quotations or reminding people to pay an invoice from your mobile on the way back to the office.
And the best bit? It’s 100% free to use. To get your free Zoostr account click here