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Are you planning to start your own logistics company? Logistics businesses are becoming profitable ventures with the demand for logistics services rising rapidly since COVID-19. Setting up a logistics business can be a profitable trade and requires only limited capital compared to other ventures. To start a logistics business in India you would need the right tools, experts on your team, and resources at your disposal to ensure operations run smoothly.
What is a logistics business?
Logistics business involves coordinating transport, storage and delivery of goods to customers.
What are some business opportunities in logistics?
Logistics is a process that involves organising, storing, and transporting goods from the point of origin to their destination. Here are the core functions involved in logistics:
- Order processing: Deals with planning, executing, and controlling all the purchase orders from the customers using an order management tool.
- Material handling: Involves transporting goods from one place and includes loading and unloading, stacking, sorting, and packing materials.
- Warehousing: Storing goods at a warehouse or a distribution centre before they are shipped to customers.
- Inventory management: Tracking and monitoring the amount of inventory in warehouses and distribution hubs.
- Transportation: Transporting goods from one place to another via road, rail, sea and air.
- Packaging: Deals with preparing and packing items for shipment or storage.
- Monitoring: Tracking and monitoring the logistic operations to ensure that all processes are running smoothly and cost effectively.
There are different types of logistics services in India that deal with various aspects of logistics. Another trend in logistics sector is technology enabled solutions like apps and other tracking solutions that give end-to-end visibility of a supply chain.
How to start a logistics business in India?
Setting up a logistics business in India would mean registering your company and getting the necessary licenses to make it a legal entity. Here are the steps to follow to start a logistics business in India:
- Identify the gaps in the industry
This is a part of doing your homework before starting the company. If you want to start a logistics business in India, then you should identify the gaps that are present in today’s industry. For example, a Bengaluru-based SaaS startup Lorry Business to Business, or LOBB saw that a major pain point for transporters was finding trucks at the best prices.
LOBB created an app that can provide truck availability information, by region and markets. This app, used by transporters, agents of truckers and truckers themselves allows transporters to choose a truck from the available truckers in the desired area. Here transporters can choose a vehicle with the lowest trip sheet.
- Choose a business model
Setting up a logistics business startup means identifying a business model. Are you building your own firm or getting a franchise? Would it be a new firm, or will you take over an existing company? Building your own firm would mean that you would need sufficient capital and resources. By leveraging MSME business ideas, you can utilize your creative concepts to generate revenue. Setting up a franchise would be easier as you would have the resources and the technology to start the business. You can also explore partnerships, limited liability partnerships, etc.
- Draft a business plan
Once you have a business model ready draw up a business plan. Determine your financial plan, investment plan and marketing plan. Map out the initial costs for setting up the business. Create a budget that clearly mentions the details of how much funding will go towards each part of the set-up. Take a decision on whether you will be bootstrapping or applying for a business loan to fund your business.
- Register your company
Every startup has a registration process to be considered a legally operating business in the country. Here are the steps to follow to register your startup:
I) Obtaining the Certificate of Incorporation/Partnership registration
II) Register with Startup India (https://www.startupindia.gov.in/)
III) Get DPIIT Recognition number from Startup India website
In 1993, the Parliament of India enacted the Multimodal Transportation of Goods Act. It was later amended to make some improvements. This act gave logistics operators and goods owners access to a uniform system. The law mandated that to be a logistics operator in the country you must be registered as a Multimodal Operator.
These are some Acts you can read to gain some information on logistics laws of India:
- Carriage of goods by air
- Carriage of goods by sea
- Carriage of goods by land
- The Railways Act, 1989
- Carriage by Road Act, 2007
- Obtain necessary licenses
These are the licenses that are mandatory for the logistics services that are engaged in the air cargo services, freight services, courier, and for 3PLs.
- Freight forwarders should register under the IATA (International Air Transport Association), ACAAI (Air Cargo Agent Association of India), the Registrar of companies, and DGFT.
- Trademark registration
- Import Export Code (IEC) if you exporting or importing.
- GST registration
- Employees State Insurance (ESI) or PE Registration.
- Open a business bank account
A business bank account will help in expense management. All business-related payments and transactions can be linked to this bank account which leads to credibility. You can also apply for funding, overdraft facility, invoice financing services, etc., once you open a business account.
- Open a business website and register with local search companies
Build your website either by hiring a website developer or outsourcing the task. Once the website is functional, sign up with local search companies like JustDial. These companies will give you potential leads for your business who you can convert into customers.
- Promote your business
Once you have a business website you can start advertising your business. You can choose online advertising by opening pages on social media websites like Instagram and Facebook to expand the digital footprint of your business, or try other low-cost marketing strategies to promote your business among targeted audiences.
Logistics businesses are profitable enterprises and have a lot of demand in the market. Starting a logistics business in India gives you a wide variety of opportunities and easy access to credit via subsidy schemes for businesses.
With the right funding and the right opportunity, you can build a successful logistics business.