Logistics firms arrange, store, and transport products and/or services from one location or person to another. It might be a great distance (international) or a short distance (local).
Most people prefer to use the terms “delivery business” or “courier services” instead of logistics.
Because they provide transit between e-commerce businesses and customers, logistics services will continue to be one of Nigeria’s most profitable companies.
That is, when you buy something from an online e-commerce store, the vendor on that platform delivers the item to you via independent logistics services. Since it is an independent logistics firm, it is available to anybody who wants to run a logistics company.
As technology advances, many entrepreneurs are investing extensively in e-commerce. These enterprises, on the other hand, require a logistics business that is recognized and reliable to work with, as ineffective logistics can ruin an e-commerce firm.
To be successful in the logistics industry, you must be well-versed in all aspects of the industry and provide excellent service.
Therefore, in this article, I have outlined steps on how to successfully start and run a logistics company in Nigeria.
If you follow all the steps outlined in this article, your logistics business will be successful. Read on
Table of contents
- Steps to Starting a Logistics Company in Nigeria
- 1. Choose Your Method of Operation
- 2. Understanding the Logistics Industry
- 3. Create A Business Plan
- 4. Choose A Location and Research Your Competitors
- 5. Funding and Capital
- 6. Set Up a Website for Your Logistics Business
- 7. Register Your Business with CAC
- 8. Hire Staff for Your Logistics Business
- 9. Promote Your Logistics Company
- 10. Create a Brand
- 11. Insurance
- 12. Management
- Logistics Business Difficulties
- Reasons to Launch Your Own Logistics Business
Steps to Starting a Logistics Company in Nigeria
Here are the steps to start a successful logistics company in Nigeria;
- Choose Your Method of Operation
- Understanding the Logistics Industry
- Create A Business Plan
- Choose A Location and Research Your Competitors
- Funding and Capital
- Set Up a Website for Your Logistics Business
- Hire Staff for Your Logistics Business
- Promote Your Logistics Company
- Create a Brand
1. Choose Your Method of Operation
Start by answering the following questions:
- Do you want to start as an agent, a carrier, or a contractor?
- Would you like to run your business on bicycles, buses, or trucks?
- Will you be delivering interstate or intrastate?
- Will you concentrate your efforts on a specific industry?
Before you begin, you must answer all of these questions. That is practically the first step in establishing a logistics company.
As a first step, it is advised that you be precise about the type of item to convey; either fragile or infrangible.
There are many different types of logistics. Identifying your mode of operation can assist you to estimate the capital you’ll need to get started and will help you focus.
If you lack the necessary funds to purchase buses or bikes to begin as a regular logistics firm, you can start as an agent or contractor.
As an agent, you will act as a liaison between an established logistics company and the business owner that needs their services. You will be paid a negotiated commission for any business you bring to the logistics firm.
2. Understanding the Logistics Industry
A logistics company demands the adoption of skillsets. The training that follows is mandatory and highly necessary. Remember that these differ based on whether you are seeking global or local transport or both.
Transportation Management Systems (TMS)
This entails overseeing and tracking all of the many parts. such as vehicle maintenance, storage, communications, freight handling, and so on.
Management and Inventory Operations
Inventory management is an important aspect of the transportation and logistics industry.
Warehouse management collaborates with inventory management. You must understand how products flow through your organization.
Regulations and Laws Governing Transportation
Your transport and logistics company may provide both domestic and global services. Rules governing interstate trade, as well as global shipments, should be covered in your training.
3. Create A Business Plan
A business plan is a detailed document that outlines your company’s aims and objectives, as well as how you expect to achieve them.
Following the identification of your method of operation, it is safe and advisable to document your step-by-step preparations on paper.
The following information should be included in your business plan:
- A detailed description of your logistics company
- Mission/vision statement
- Business strategy
- Market Research
- SWOT analysis
- Your Team
- A marketing plan, that will make you stand out.
- Dealing with the competition
- An operational plan
- Financial projections as time goes on
4. Choose A Location and Research Your Competitors
A successful logistics firm must select the best base of operations. Ask questions like:
How close to your consumers are you?
The closeness of your target market is an important factor to consider.
- Are you planning to rent the property or buy it?
- To store and carry things, look for taller ceilings and smoother flooring.
- Is there a sufficient number of warehouse rollup doors?
- Is there enough room outdoors for vehicles?
Highways and roads, as well as traffic flow, Other choices, such as highway access and local traffic density, must be considered.
A well-located logistics company is close to ports, railway terminals, and airports for easy pickups.
To up your game, you need to observe and understand what other logistics companies are doing. This can assist you in finding out what customers expect, thereby giving your company a competitive advantage.
5. Funding and Capital
Money will be needed to purchase the necessary equipment and also pay your employees.
The amount of capital required will be determined by your level of operations. You can start a modest logistics firm with as little as ₦500,000.
The business plan will assist you in applying for commercial bank loans and other types of company incentives.
With a decent business plan, you may also attract investors who are interested in your business concept.
Purchasing Business Equipment
Once you get enough money, purchasing equipment for your business is the next step that should be put into consideration. The most important equipment needed is:
A vehicle or a bus can be purchased, but they are expensive. You may begin by renting a vehicle or getting used vehicles to minimize your startup costs.
You should also consider your business environment when purchasing a vehicle.
In a congested region, a motorcycle is preferable for navigating traffic. A dispatch box may be added to the back of the motorcycle to enable the rider to take bulk items from the office along with him while making deliveries.
Your company’s cars should be branded so that they can be identified easily.
b. A Laptop or A Smartphone.
This is necessary for taking orders, communicating with customers, and maintaining accurate paperwork.
Because of their ability to execute several activities without slowing down or shutting down other applications, computers make it simple to track your bikes in real-time.
c. Office Space
Customers may want to visit your place of business, so you’ll need office space.
The facility should be large enough to accommodate workers as well as the storage of products to be delivered.
Keep in mind that your workspace will also be where you will keep your corporate vehicles.
Having a head office shows your clients that you are serious about business.
6. Set Up a Website for Your Logistics Business
Your website will act as a bridge between you and your customers. If someone wants to learn more about your company, they can go to your website, receive the information they need, and contact you straight from there.
You should establish a website that allows you to accept orders and track the delivery of things.
The website’s main page should be colourful and appealing, as well as simple to use and navigate. Customers might be encouraged to provide reviews on a website, which helps with exposure.
Let me know if you need assistance to create a website for your company.
7. Register Your Business with CAC
People have a higher level of confidence in registered firms. Choose a business name and obtain a permit to operate. This is critical to assist your business’s growth while avoiding unneeded shame and inconvenience.
The firm must be registered with Corporate Affairs Commission (CAC). You can register as a sole proprietorship or as a limited-liability corporation.
The business certificate you are given serves as proof of registration.
For company registration, to begin with, go to CAC’s site and do a name availability search. After your name has been approved, you may begin the registration procedure.
Due to the formalities required, many ambitious entrepreneurs find it difficult to complete the registration. That is why it is recommended that you employ a lawyer to assist you with the registration.
Apart from registering with CAC, you will need to secure other licenses and permissions from the government.
Make proper research about them and ensure that you obtain them so that your vehicles are not hounded on the road.
8. Hire Staff for Your Logistics Business
A driver or rider is essential in the logistics industry. As a result, it would be great if you were cautious in selecting and developing them to your standards.
Preferably, you should begin as your driver/rider to become acquainted with the areas you will be operating and the company system. As a result, you will have a clear understanding of how the firm operates.
Depending on the scale on which you conduct business, you may not be able to be the sole driver or even a driver at all.
However, knowing and understanding how the process works is advantageous. When you understand how things function, you can build successful tactics and effectively communicate with your employers.
Anybody you recruit must learn the company’s core values, act in a way that protects and promotes your brand, communicate properly with clients, and so on.
The further you grow, the more employees you can hire.
Aside from drivers, you will also require additional personnel to assist consumers that visit your offices.
You must teach, retrain, and continue to train your drivers and employees since their actions and inactions affect the success of the firm, particularly the drivers.
Staff for Logistic Business
The following personnel are needed for your logistics company, as you can’t do all the work alone.
A Driver or A Motorcyclist
When selecting a driver for your logistics firm, you must exercise extreme caution.
You must be completely certain that the individual is capable of driving. You may need to train him yourself. To prevent complications, the individual must also have a driver’s license.
A Store Supervisor
He or she ensures that the products to be delivered are kept intact to avoid harm.
A Computer and Phone Operator
He or she receives orders and communicates with clients.
If you carefully follow these steps, there is a very high chance of having the best employees around who will take your business to the next level.
9. Promote Your Logistics Company
If you don’t advertise your company, no one will know about it. To promote your logistics company both online and offline, even as you make contact with proprietors of e-commerce businesses.
Thankfully, with the advancement of the internet, it is now simple to promote your business.
Popular methods of business publicity and marketing channels include:
- Advertising on social media (Instagram ads, Twitter ads, Facebook ads, linked in, Snapchat ads)
- People’s recommendations
- Radio and television adverts
- Publications in newspapers
- Google Ads
- You can contact me for the promotion of your business.
10. Create a Brand
It is critical that potential consumers, or customers in general, have the means to distinguish your logistics company from others.
Branding provides you with a significant advantage over your competition by creating a permanent reason for customers to keep sending orders your way. With your uniqueness, you can stand out and surpass other competitors in your niche.
These are the elements to consider while developing a solid business brand.
- Outstanding client service.
- Quick delivery
- Online visibility (an app or web page or both)
If you truly want to have a logistic business where you can be at ease, even if you hear part of the items were burned, you must have your firm fully insured by a reputable insurance provider.
You must ensure your logistics company avoids loss due to delivery theft or damage. As a result, you should consider the following insurance coverage.
It covers property damage caused by events such as floods.
General Liability Insurance
Personal harm is one of the topics covered.
Business Vehicle Insurance
All business cars must have this feature. Accidents involving commercial cars are covered.
Insurance is not a new concept in the Nigerian business world, but it is frequently disregarded by new entrepreneurs.
Management is essential to the survival of any organization, and for your company to thrive, it must be well-managed.
It doesn’t matter how many employees you have; you must master management skills to get the most out of them. Make cautious decisions to ensure your business thrives in all conditions.
To beat the competition, you must have a unique selling point.
Competition in the logistics industry has always been a source of concern for new startups, but developing a unique selling point is critical to staying ahead of the competition.
Your unique selling point sets you apart from the competition and aids in the growth of your logistics company.
Here are the best ideas for unique selling points in business.
- Send SMS messages to your customers on their birthdays or at the start of a new month.
- Delivery should be really quick.
- Staff should be polite and kind.
- Providing little gifts at events like Christmas, New Year, etc.
- Money-back guarantee, especially in the case of damage
Logistics Business Difficulties
Every business has its difficulties, and a logistics company is not an exception. Challenges will undoubtedly arise, but it is critical to understand how to overcome them. This is how the company expands.
Below are some challenges that you may encounter in the course of running a logistics business.
- The consumer may change his or her mind about purchasing an item, which can frustrate both the driver and the firm, resulting in a loss of fuel and man-hours.
- Product Damage: They may be damaged in transit and rejected by the consumer.
- Customers may be slow to pick up the phone to ask for instructions.
- The Traffic: this might result in a delay in the delivery of products.
- Customers may refuse to collect products if they believe they are damaged.
Reasons to Launch Your Own Logistics Business
There are several compelling reasons for establishing a transportation firm. Here are some of the reasons why you should think about starting this new business.
- It Is Adaptable
- They Supply Products
- Customer Preferences
- Cost Savings on Transportation
- There Is Room for Improvement
i. It Is Adaptable
Various people, like accountants, drivers, warehouse workers, are employed. It’s something that even a married couple can achieve.
ii. They Supply Products
These logistics companies play a vital role in supply chain management.
iii. Customer Preferences
People anticipate that things will be delivered more quickly. Good logistics are an important aspect of meeting these rising demands.
iv. Cost Savings on Transportation
A logistics company saves clients money on transportation. It increases the availability of your items.
v. There Is Room for Improvement
This occupation is linked to global supply systems. These can be scaled up or down.
Like in every other business, you have to be determined and consistent before you can succeed.
The logistics business is very profitable in Nigeria and can earn you thousands of Naira monthly if done rightly.
I believe that having read this post to this point, you can start your own logistics company and succeed.
Do you already own a logistics company? Or are you planning on starting yours?
We can’t wait to read your comments.