Transport businesses require to transport passengers or goods from one place to another place. These businesses provide services to a single person (passenger) or other companies. Transportation services are of different types based on the services that they provide.
3 Types of Transport Businesses
The major three types of transport business are:
It deals with one-on-one service that is for individuals or small groups. It includes taxi services and other rideshares.
Local transport can be private or even commercial. It includes the services like transportation of goods (livestock, materials and other such items)
It encompasses all categories of transport on an international level. It offers air-based and sea-shipping categories to the customers.
Steps to Launch a Transportation Service
All the below-given steps are important to be taken into account before starting a transportation business to avoid any frustration later.
1. Decide your Transport Market Niche
Before you get into the transportation industry, first think that what will you serve and to whom will you serve? How will you target the potential customers? Which niche will I work in? You need to stick to one type of transportation at the start to be successful.
Before choosing a specific niche, a business owner needs to do a proper market analysis to check the industry trends for attracting the ideal customers.
2. Establish Business Model
After finalizing the niche, now is the time to move to design a business model. At this stage, you need to properly set up the business structure and finalize all the operational information related to your business.
There are several business models that you can choose from:
- Individual Proprietorship: In this type, you work as an individual or as a couple. You do not incorporate others in the business. The loss of this type is entirely on a personal level.
- Partnership: In this type, you can have a partnership with another person. Each business partner equally shares the risks, debts and other business actions.
- Limited Liability Company: operation as an LLC protects you from personal loss based on the company’s performance. In this type, your personal and company information is entirely separate from each other.
3. Get a Federal Tax ID/ Employer Identification Number
For running a transportation business, you need to get a license from a local or state authority. The business license rules vary from place to place, so you need to consult the local government to know the entire process of securing a license.
4. Apply for Permits and License
Transportation companies require more permits than any other company because this business deals with different passengers, people and other cargo companies.
The types of permits and licenses in transportation services are:
- Fuel carrier licenses
- Commercial driver’s license (CDL)
- Heavy load or cargo permits
- Commercial vehicle registration for any fleet vehicle
- Insurance coverage for drivers, passengers or goods
5. Work on Finances
The operating costs entirely depend on the type of transportation business that you choose. A taxi owner’s finances will be much lower than a full-fledge logistic service provider.
For running a successful business, you should have a solid business plan written down. You should know the startup expenses, so you can plan on taking a business loan from any company.
Before getting into the business, write down the answers to the following questions:
- How much investment is required to buy supplies and equipment?
- How much can I spend for marketing purposes?
- How much loan do I need to get started?
- Which area will be suitable to start the business (office space/business location)
6. Equipment Purchases
Getting a hand on the right type of equipment can save you from a lot of trouble. The size and quality of vehicles matter in terms of giving a professional look to your business.
Answer these questions before purchasing any vehicle/s:
- Do I need to transport passengers?
- What will be the maximum size of transportation goods?
- What wear and tear will be expected on regular basis?
- How much fuel will the vehicle consume?
- How often do I have to go for vehicle maintenance?
7. Plan Hiring process
It is essential to incorporate the formal and standard hiring process at the start of a business. A transport company needs to hire people for the following positions:
- Truck drivers / Company drivers
- Administrative staff
- Human resource staff
- Sales and Marketing staff
How do I start a transport business from scratch?
1. Decide on transport niche
2. Get an employer identification number
3. Apply for permits and license
4. Think of the finances
5. Buy supplies
6. Hire the employees
7. Decide the marketing strategies