Are you thinking about getting into the transportation sector? If so, be ready for plenty of competition as well as a high profit potential. That’s because the recent COVID pandemic has put the entire industry into a new, higher-demand category.
With so many consumers relying on home delivery, and millions of retailers still in need of timely shipment of goods, organizations that transport anything are entering a golden age of sorts. As one of the most exciting startup industries, transportation offers a lot of potential too, for the savvy entrepreneur.
However, if this is your first time to operate a business that moves things from Point A to Point B, it’s essential to get the basics right. If you don’t, the competition could be overwhelming. And while there is the chance to try a second time if you fail on your first attempt, it’s better to follow a few best-practices and avoid a costly setback on the initial effort.
What does all that mean for entrepreneurs entering this competitive, exciting business segment? It means the first step is to be exceedingly careful about selecting a geographical region and a target demographic.
After that, you’ll need to manage vehicle fleets for maximum efficiency, get competent legal advice, decide whether to lease all your vehicles or purchase them outright, and do extensive research on local and regional competitors. Here are details about four of the essential tasks new transport owners face.
Manage Vehicle Fleets the Right Way
Whether your organization runs two or two-hundred vehicles as part of its routine operations, every startup manager should be aware of the crucial role played by fleet management programs, systems, and software.
For instance, transportation and delivery businesses can use AI (artificial intelligence) dash cams to maximize the amount of useful data garnered from fleet management systems.
That’s because utilizing dash cams is an ideal way to see what the drivers see, and to gain real-time, accurate information about road conditions, weather, traffic patterns, and whether it might make sense to alter current route selections. When you manage fleets the right way, from day one, you have a much higher probability of long-term success, regardless of the level of competition.
Get Legal Advice
There’s no substitute for excellent legal counsel when starting a transport-related company, no matter how large or small the entity is in the beginning. Most new organizations in this niche grow relatively quickly if they get all the first-time components in place, work hard, and stand ready to fix errors on a moment’s notice. Consider shopping around for a law firm that specializes in working with transportation companies.
Answer the Leasing vs Ownership Question
At some point, you’ll need to decide whether it makes better economic sense to purchase vehicles or lease them. Many owners hire outside financial analysis firms or CPAs to help them make these number-crunching decisions. Generally, it’s typical for small companies to lease at first and then transition into ownership as they get larger and have more available capital.
Do Heavy Research on the Competition
Avoid the temptation to skip the competition research step of preparation. Too many owners want to devote 100 percent of their time to self-analysis. But part of knowing where you stand, as a business, is understanding the landscape, which means having a solid insight into who your closest competitors are and how they run their own organizations.