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Complete Guide On How To Start Transportation Company Including Logistic Company In Nigeria

Discussion in 'General Business' started by Cytexglobal, Jul 7, 2019.

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  1. Cytexglobal

    Cytexglobal New Member

    A transport and logistics firm specializes in the movement and transportation of goods and cargo, whether it be shipping, trucking or air transportation.

    Are you looking to starting your own transport and logistics company in Nigeria? Then this article can guide you.

    This business has a lot of other businesses depending on it, because, without transport and logistics a lot of other businesses cannot survive. Hence, it is in high demand at all times. E-commerce businesses regularly outsource the transportation of their orders to transport and logistics companies.

    “Logistics” comes from the late 19th century, the Oxford dictionary defined logistics as the branch of military science relating to procuring, maintaining and transporting material, personnel, and facilities.

    Logistics was used during World War l and Il to enable easy movement of weapon and food after the war logistics moved from warfare to business.

    We have logistics companies in Nigeria that
    handle the delivery of goods from one place to another; we have Ocean Logistics, Courier Plus Services limited, GIG Logistics, Creseada
    International Limited, etc. And all of these
    companies started from somewhere.

    So you might ask, how do I start the logistics
    business in Nigeria? Let’s take a look at how to start up a transport and logistics business in Nigeria.

    Steps To Start Up A Transport/Logistics Firm in Nigeria

    1. Experience:

    Before you start up your own transport and logistics company, it is important that you acquire some level of experience in the sector. By getting attached with a logistics company you can gain rich experience and depth of understanding about how things work. This experience will help you to understand the ins and outs of the business. In addition, working in the industry will help you to establish networks with some companies that may represent future clients. Believe me, business is hardly theoritical than it is practical.

    2. Study the competition:

    Prior to launching a logistics business in your town, it is worthwhile to find out how you will fit in the competitive landscape. Is the competition much? Are their customers loyal to them? What’s their marketing strategy? What are they doing right and wrong? Can you do properly the things they can’t? Do you have something unique to offer that no other competitor can? Is there a niche in the transportation and logistics industry that no firm seems to be serving in your area? Answer this questions wisely, and no matter how established and powerful your competitor seems to be, you will find a weak spot to take advantage of.

    3. Choosing a Niche:

    Now, it’s important for you to determine from the onset what type of transport and logistics company you would like to run. You will need to decide on the type of goods your logistics company will be operating with, and the distance you would like to cover during operations.
    Would you be able to operate at a bus or
    motorcycle level, intra or interstate transport?
    The industry (oil and gas)? Do you want to start as an agent, transporter or contractor? You need to decide all of this. Once you can pin these down, you will be able to determine what your rates will be and how much you’ll be charging.

    You can start as an agent, an agent acts as a link between the transporter (truck owner) and the industry that needs the transport services. As an agent, you do not need to buy yourself a vehicle and your commission would be gotten from an agreed percentage from the freight fee.

    But if you wish to start as a transporter you’ll
    need to have your own vehicle and have a driver’s license to operate.

    You can also start as a contractor and once you receive the contract you can contact a
    transporter. You may ask can one person be an agent, transporter and contractor?

    Yes, it is absolutely possible, once you have your vehicle and your driver’s license you can handle any contract given to you.

    4. Build And Develop Your Business Plan:

    The very first official step involved to start up a transport and logistics company is obtaining the required capital. In order to do so, you will need to draw up a perfectly written plan which must be able to convince potential investors that you can make your business become very profitable and successful. In your business plan you should include any connections that you already have in the logistics industry who are willing to support your business. Getting a business plan written for your business is really easy. You can easily check for freelance business plan writers under the Business Services section in the Nigerian freelance marketplace, Rimakit. There you would find the cheapest and most reliable services in the country.

    Also, your business plan should be short and concise. As an entrepreneur who wants to venture into logistics, you’ll need to develop and build the business plan that would be able to get you to profit in a short time. You’ll need to search for businesses in your area that may require delivery services; you should also include large organizations that may also
    require your services or companies that will
    require delivery of foods or any other package.

    Writing out your exact plan will help you uncover areas of your business that you may have overlooked. It will also help you flesh out the details of how you would secure funding to solve your early cash flow needs. Are you going to self-finance everything you need to get started? It can be done, but growth will likely be slower than if you take out a business loan from the bank.

    But keep in mind; it is not uncommon for new logistics companies to need a high line of credit in order to pay carriers before they can get paid by the shipper. You will want to develop a good relationship with your bank or banker and show that you have excellent credit. Why? Because your business does not have any assets for the bank to come after should you default on your loan(s).

    5. Get Sufficient Funding And

    You need to start looking for funding options for your new startup. Once you have identified your level of operation,
    you need sufficient capital so as to acquire
    equipment and manpower.

    During the course of writing this article, I
    researched the amount of capital needed to start this logistics business and l found out that your capital can be as low N300,000.

    Now this N300,000 can be much to some people but considering what you can do with this amount, then l’ll say it’s a fair price. Afterall, if you prove that you can start and maintain a sucessful transport/logistics firm with that meagre initial investment, there is hardly any investor out there that won’t want to invest in your firm when you are ready for expansion.

    Read Also: Top 10 richest women in nigeria

    Amount of investment in any logistics business will depend upon the services that you wish to start. A simple brokering and freight management service will require less capital compared to a 3PL service. It is important to identify the niche services that you wish to target and prepare an investment plan based on it. You can obtain loans or get a partner to put up the initial investment for the business.

    You may get funding from family, friends, potential customers and well wishers or even grants (e.g. YouWin Program, Tony Elumelu Foundation), angel investors and venture capitalists. Commercial banks in Nigeria are a potential source of start up capital. Just go ahead and apply for a loan in any of the banks and try to meet their requirements.

    6. Set a budget:

    It is imperative that you first set a budget before fully launching the business. That is why it is necessary that you must have gained some kind of experience even before deciding to start up your own transport and logistics company. A budget will help you iron out strategic financial issues that will likely come up when you’re operating your business. So draw up a budget for your intending business, sort out costs like acquiring equipment, Power supply, Advertising/marketing, rent, cost of registering the business, cost of preparing a business plan, salaries (for up to 6 months) and so on. Make sure that all these costs are able to cover the period it will take for the business to break even.

    7. Register your company name:

    Plan on incorporating your company, as it is very important for how the public perceive your company. You want to come across as professional as you will be dealing with other corporate bodies. So get your business name fully incorporated and registered with the Corporate Affairs Commission of Nigeria (CAC). Choose a catchy name for your company and make it as professional as possible. You can easily register your company online within a matter of two weeks. Need help? You can find legal services on Nigerian freelance marketplace, Rimakit.

    8. Look into tax permits:

    You will also need to file taxes with the government, which requires registering your business. Your business will need a federal tax identification number. You will need to apply for one at the closest Federal Inland Revenue Service (FIRS) office. Note that you need a tax identification number to open a corporate bank account with any commercial bank in Nigeria.

    9. Figure out what kind of licences and permits you need:

    As a business, you may need a variety of licences and permits. The necessary licences, as well as the processes involved in obtaining said licences, may vary greatly. You should also talk to a business lawyer throughout the process to make sure you’re following all regulations properly.

    10. Acquiring The Necessary Equipments:

    With sufficient capital, you can now move ahead to acquire the equipments you will need to successfully startup and run your business. Basically, a transport and logistics company requires loading equipments and vehicles capable of moving large quantities for goods such as trucks, ships or air planes. Buying these equipments are largely cost intensive; so it is recommended that you start by first renting equipments or purchasing fairly used vehicles until your business begins to turn a profit and grow bigger.

    Depending on your particular niche; you can start up by using motor bikes in delivering your services. In an environment with heavy traffic, it’ll be advisable to use a motorbike that is equipped with the plastic container to carry the products. You will also need to get a mobile phone for communication and other necessary items that can be used for proper documentation.

    Read also: How to start a poultry farming business in Nigeria

    11. Choose your business location:

    You should probably consider locating your company in a region in which your business relationships and connections are centered. Hike closer to your target market. And then you can easily focus on getting their business support and patronage.

    12. Get An Office Space/Design Your Delivery Vehicle:

    As the business keeps growing you’ll need to get yourself an office space, a computer and employ more staff if necessary. Get a physical office for your company. It will give your clients enough confidence in your company.

    If you are extending to warehousing, you need to get a secured space for your warehouse. It should be located near the wharf if the warehouse will be used for short time storage for shipped consignments.

    And the vehicle you use in delivering your product should be well maintained because it represents your logistics company, it should have the name of your logistics company on its body and it should be well designed, as they say in the business “Packaging Is Important”.

    13. Get Insurance Cover:

    Running a logistic company is kind of risky. For instance, if your company’s truck with a load full of product gets involved in an accident that resulted to the loss of the products, your logistics company will be responsible for paying back the cash worth of the products damaged. One way to reduce the risks involved is by getting an insurance cover for your logistics company that will cover both foreseeable and unforeseeable damages in the future. The insurance premium may be expensive but it will save you a lot of expenses and court matters in the future.

    14. Set Up A Website:

    This is absolutely crucial for your company. There is absolutely no way you can successfully run a transport and logistics company without putting up a website. This is one of your business’ most important front, using your website, your customers can easily track their goods from the point of purchase till it eventually gets delivered to them. So you want to ensure that your website is easy to use and responsive. Ensure that it is user friendly and easy to navigate. Your customers should be able to get email notifications, receipts, and delivery status. This way they get to exercise some level of control over orders/deliveries.

    You can use this website as a means of
    attending to customers that need your service by creating a page in the website that has your contact details and where customers can place their delivery orders and make complaints.

    15. Employ Workers/Staff:

    You need to think of the labour requirements to running this business. Hire drivers, warehouse staff, dispatch riders, customer care personnel etc. These personnel will enhance the effectiveness of your business operations.

    The driver is an especially important person in
    this business. As a beginner it’s advisable to be your own driver, being a driver is very important because you need to be very conversant with your environment and the delivery city, you must be polite at all cost, you must be trustworthy, you must be able to communicate with the public and you must be smart. Once your business grows, then you can hire more drivers and then coach them on how to handle deliveries.

    16. Create A Business Card Or Bulletin:

    As the business keeps progressing you’ll need to create a business card or bulletin and your business name, location and phone number should be engraved in your business card. This can be used as another means of creating awareness of your brand to the public.You can find graphic design services here to help you design the perfect card for your business.

    17. Get Formal Receipts:

    You need a receipt where the recipient signs as proof that he/she has gotten the items he ordered for.

    Top transport and logistics companies in Nigeria

    Following is a list of top transport and logistics companies in Nigeria;

    1. Kobo
    Kobo is a global logistics platform which leverages technology and efficient processes to serve its customers.

    2. GMC logistics
    GMC logistics is an international freight forwarder for African businesses. GMC is intensely technology focused to deliver on its promise fast and on-time delivery.

    3. Red Star Express
    Red Star Express provides a portfolio of full logistics solutions which includes but not limited to:

    – International and domestic express delivery,
    – Freight forwarding,
    – Integrated logistics solutions,
    – Information and documents management solutions,
    – Warehousing and E-commerce solutions.

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