Imagine a scenario where you have some saved money and have no idea what to do with it. How do you spend this money? You could buy something, go somewhere on a vacation or you could do the smart thing and actually try starting a business by investing that money. If you are held back by doubt and uncertainty, remember all big things start from somewhere. You probably know about a lot of big companies or dominant brands through ads on TV or social media. Almost all of these corporations have had humble beginnings and it is astonishing how a careful business plan, good marketing strategy and quality service can change the entire landscape of a company. Now, starting business is no easy task. One must know the basics of the business model and all its essential requirements. Some people have brilliant ideas that could be turned into businesses but the end results suffer due to poor execution of said ideas. There have been instances where people have jumped directly into the business world without doing their homework and as a result have suffered great losses.
Of all the kinds of businesses out there, the focus of this article will be the shipping business and how you could start your own shipping business if you desire to. In last two decades, the shipping business has experienced great growth due to ever increasing effects of globalization and especially due to the prevalence of online stores. With exports and imports being made left and right due to international demand for certain products, shipping businesses have never been in more demand before. An American shipping company by the name of CH Robinson made 13 billion plus sales in the year 2017 alone. However, starting a shipping business (or any business for that matter) just doesn’t involve getting a ship and start delivering packages like no tomorrow. Here we will walk you through steps in how you could start your own shipping business and what are the things you need to be aware of before you step into the business world.
Things to consider before starting:
Before we move towards the actual portion of the guide, we highly recommend a few things you should consider before starting your own shipping business. As stated above, starting a new business is no easy task and if you are someone who is new to this line work it’s only going to get harder. With starting a business, comes new challenges and things could go wrong very quick if you are not mentally prepared to tackle these obstacles. Here are a few things you should go over before starting your own shipping business:
- Prepare yourself for a life as businessman. This might seem like a minor point but running a business is not an easy task especially something like a shipping business. If you are someone who is starting their very own business for the first time be aware there are going to be challenges. There are going to be times when you may have to suffer losses. Most of the businesses only payoff in the long term. There are no quick rich schemes when it comes to businesses. Take a good hard look at yourself before moving forward with your plan of action. Some people find the prospect of running a business boring or just not very satisfying. Some people just can’t cope with the stress that comes with the job. Making a mark in the business world requires a lot of determination and patience. Make sure you are in the right state both physically and mentally.
- Educate yourself regarding the ins and outs of the shipping business. You should have sufficient knowledge about all the entities and what role they play in the business. For example, in the shipping business there are shipping agents, customs brokers, freight forwarders, hauliers, clearing agents etc. If you are getting into a shipping business, you are probably going to occupy one of these roles. So it is important that you do your research and find out which role suits you the most. It also helpful as regardless of which role you take you may have to interact with one or more of these entities. It also gives you insight into how the whole shipping chain works. It is also recommended to familiarize yourself with stuff like the HS code and bill of lading. HS codes are basically codes given to the various products that are shipped for export or import. Not knowing which HS code a certain product falls under can cause a lot of problems in the shipping process. Wrongly assigned products can be confiscated and can even land you in hot water through fines or penalties. Similarly, if you take on the role of a shipping agent or a freight forwarder, you should know what a bill of lading is. You should know which bill of lading should be assigned to which shipment and who the bill should be consigned to. In this scenario, both the shipper and the consignee depend upon you to register proper information. Wrong information can lead to delays in shipment which affects your business reputation.
- Look for market opportunities in your region. Before you move forward with your business plan, it is always important to survey the market place. For example, if you are going to start a shipping business, look for other shipping businesses in your area. It is necessary to deduce if the market place is crowded or not. If there are already 7 or 8 shipping businesses, then it might not be a good idea to start your own. It is harder to make a name for yourself (or your brand) in a crowded marketplace. Even if the marketplace is not crowded, try to analyze how much growth opportunity there is. Study data from a well-established market research firm like Foresteror Gartner. Slower growth can cost you money in the long run.
Starting your shipping business:
So with the necessary warnings out of the way, let’s take a look at the steps you will need to follow to begin your shipping business:
Construct your business plan
As mentioned above, if you are starting a shipping business (or any business for that matter) you are going to need a well-constructed business plan. A good business plan should be thorough, easily executable and should leave some room for some changes. It should be flexible so that changes can be introduced according to the variations in the marketplace. A good business plan will go a long way in helping you find investors for your business. If you don’t have enough money to start a shipping business on your own then finding investors is a viable option. Your business plan should cover all details on how you are going to start the business, how you intend to run it and what is going to be your long term goal. Convincing an investor to invest in your business is easier said than done so make sure your plan doesn’t have any oversights or flaws. If you are having trouble in creating a plan on your own, you can always ask for help from a financial advisor. Your plan should cover all the strategies that you are going to utilize for turning this business into a profit. Do your research and thoroughly state all the facts and figures.
This is the big one. The entire idea of a business revolves around money from investing to eventually turning it into a profit. Lots of people leap into business world for making money but a lot of them end up losing most of it. The obvious reasons behind their downfall is a poor business plan followed by poor cost management. Keep this in mind that there is no quick way to make money. These things take their time so you have to make sure that you are not over spending especially during the earlier days of your shipping business. You can start a business with your own saved money. If that is insufficient, then you could try looking for an investor. In case you fail to do so, you could try getting loan from a bank. More than half businesses usually die prematurely due to poor cost management. Always revise the startup cost required for a business. For example, for a shipping business you will need around 15,000 dollars each to get office and shipping equipment, around 5,000 dollars to get licenses and permits, 50,000 dollars to rent a warehouse and 10 million for a cargo ship. These are the prices for USA but it gives you an idea how much it can cost to start a business. Thus, it is important to manage money to ensure your shipping business is successful.
Setting up your office
If you are going to start a shipping business, then you are going to need a business office to go with it. If you have a room spare in your home, then it can play the role of your office pretty well. If you are not willing to do that, then renting an office room is the safest bet. Once again, the renting bit is going to cost you money. So make sure to get something that doesn’t cost you back a lot. You should also try not to get an office in an already crowded marketplace. When you are new to this line of business, people are initially hesitant to hand over their goods for shipment. So try avoiding crowded markets to the best of your abilities. If a location already has like 5 or 6 shipping companies, then you should avoid it at all costs. Try moving to location where there is demand for a shipping company but people there don’t have many options. It will reduce competition and increase your costumer numbers. Also your office should be easily accessible to people so that they can reach you easily.
Build your team
It is hard to go solo in the business world. If you are starting a business, you are going to need your team. When it comes to a shipping business, there are multiple roles that need to be filled so you will need to build your staff. It is highly recommended that you should hire experienced professionals as shipping is a very technical business. As mentioned above, there are multiple roles like shipping agents, customs brokers, freight forwarders etc. You will also need a good number of people to handle stuff like orders, accounts, inventory, customer requests, customer complaints etc. Finding the right people is always a difficult job especially for a new business as most experienced people are usually working with established companies. So choose your team carefully as a single mistake by one person can disrupt the whole shipping chain. You could even ask for help with hiring from professionals if you want.
Good marketing tactics
And last but no least comes one of the important aspects of starting a business, the marketing. Even if you manage to build a good startup for your budding shipping business, it won’t matter until large number of masses knows of its existence. Marketing is a good tool to promote your business and spread brand awareness. There are a few things that you can adopt to make sure that your business is not falling behind in the marketing department. The first thing is to keep note of your target demographic. Market your company to brands that use shipping companies to import or export their products. Another thing that helps any business stand out is their unique identity. Creating a distinct eye catching logo and offering services that are not available anywhere else can help pique customer interest. A good way of indirect marketing is to deliver quality service to your customers. If customers are satisfied with your performance, then they will automatically recommend your company to people close to them. Also remember to sue different platforms to market your shipping company. We live in an age of social media, so using social media to market your product will lead to more eyes on your company.
Diving into the business world is hard and making a successful brand or company is even harder especially in the current age. Thus it is essential for any new businessman to approach this task with proper care and planning. Understand and study the business model of the business you are about to commit to. Calculate costs and finalize tactics to spend this money properly. Build up a team of qualified professionals and people you can rely on. With patience, determination and good strategies you will be able to start not only a shipping business but any business you want.
Last Updated on February 9th, 2022 by Lachie Hiriart
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