How to Start a Delivery Business In 5 Simple Steps [2023 Update]

Want to open a delivery business but unsure of where to start?

With a market revenue in the billions, many people want to tap into the thriving delivery industry.

Luckily, starting a delivery business isn’t as complicated as you might initially think.

All you need is a vehicle, basic licensing fees, and some knowledge of how the business works.

This article gives you a detailed breakdown of how to start a delivery business, as well as some ideas to get your business up and running!

How Profitable is Owning a Delivery Business?

With one-click delivery services gaining popularity worldwide, delivery businesses are becoming one of the fastest-growing start-ups in the world.

The food delivery market is projected to reach $900 billion in 2023 and $1.45 trillion by 2027, whereas courier services are expected to reach $658.3 billion by 2031.

As of 2023, the US has nearly 500,000 couriers and local delivery service businesses—an increase of 4.2% from 2022.

This figure is expected to grow bigger and bigger as technology-driven delivery platforms become a standard in everyday life.

The most profitable delivery business is the food delivery service, earning an annual revenue of $22.4 billion, closely followed by courier and grocery delivery services.

The popularity of delivery businesses is attributed to the convenience they create for consumers.

As people lead busier lives and work longer hours, they’re drawn to systems that save time and energy.

This is what makes the delivery business so vital: they make people’s lives easier.  

What You’ll Need to Start a Delivery Business [& Associated Costs]

With the right strategy, a local delivery business can be both low-cost and profitable.

Here’s what you need to start a delivery business, along with associated costs:

• Register a business name/corporation: $225 to $600, depending on the state and business structure.  
• Register for taxes, permits, and licenses: You may have to register for county, local, and/or state taxation. You may also need to apply for proper business permits and licenses. Processing and filing fees cost between $150 to $1500, depending on the state and delivery business type.
• Apply for business insurance: Depending on the type of coverage you need, small business insurance can cost around $300 to $500 per month. This expense covers employee injuries, vehicle collisions, lawsuits, and more.
• Get an Employer Identification Number (EIN): EIN is like a social security number, except for your business. You need it to hire employees, pay federal taxes, apply for licenses and permits, and open a bank account. You can get an EIN for free through the Internal Revenue Service.
• Consider fuel and maintenance costs: You may spend anywhere between $200 to $1000 a month for fuel and maintenance, depending on the distance, how many customers you serve, and the state of the vehicle.

Do I Need a License or Certificates to Start a Delivery Business?

Yes, all delivery businesses need to apply for licensing and certification.

If you’re a courier business, you need a Commercial Courier Service Business License.

If you’re a food delivery business, you need a Third-Party Food Delivery Service License. And so on.

The license and certification you need depend on the delivery business you run.

Why You Should Consider Starting a Delivery Business As a Side Hustle

People have become increasingly reliant on delivery services, so there’s no better time than starting a delivery business side hustle.

Here are some reasons why you should consider delivery business as a side gig:

• You only need a vehicle and a driver’s license to start working: All you need to start a delivery side hustle is a vehicle, an up-to-date driver’s license, and a government-issued ID.  
• No degree or special skill set required: As long as you can drive a vehicle, whether it’s a car, a motorbike, or a bicycle, you’re good to go. You don’t need a degree or experience to qualify as a delivery driver.
• Make quick cash: As a delivery driver, you get paid every day. You don’t need to wait until the end of the week or month to get your salary. Plus, there’s a good opportunity to make a decent amount of tips.
• Get more flexibility: By working as a delivery driver, you get the freedom of working at your own pace and your own schedule. You don’t have to follow a 9 to 5 working day if you don’t want to.  

How to Start a Delivery Business in 5 Simple Steps

Want to open a delivery business but unsure of where to start? This step-by-step guide is sure to help.

Step 1: Come Up With a Specialization

As with any business, the first step in starting a delivery service is to come up with a specialization.

The niche you choose will affect how you run the business and how much you’ll spend to keep the business running.

Here are some delivery business ideas:

• Grocery delivery service
• Food delivery service
• Courier business
• Flower delivery service
• Furniture delivery service
• After-hours delivery service  
• Pharmacy delivery service

When choosing a delivery service, take the time to do some market research.

Scope out competitors to see what delivery services are in demand in your area and ask yourself what makes them so profitable.

Looking at competitors can also help you identify a service type that needs to be filled.  

Step 2: Develop a Business Plan

Your business plan should include details about your business’s goals, finances, products and services, and future improvements.

It should cover the following:

• Competitor names, including business strategy, area of expertise, and services they offer  
• Pricing structure
• Target market
• Start-up and ongoing costs
• Supply chain and order fulfillment strategy
• Distribution strategy

Step 3: Get Proper Documentation

Once you’ve thought of a business type and strategy, it’s time to officially register your business.

Acquiring proper documentation can help avoid fines and legal consequences when opening a business.

You’ll need to register for state and federal taxes through an EIN, open a business bank account and business credit card, and opt for business insurance policies in case of accidents and other liabilities related to you, your employees, or your vehicles.

It’s also worth acquiring insurance for delivering packages, especially if you’re delivering fragile or expensive goods.

If you don’t have such insurance, you may be held accountable for damages and forced to reimburse the client.

Step 4: Acquire Vehicles and Software for Your Business

When opening a delivery business, you have to have at least one vehicle registered to your name.

If you’re opening a food delivery business, you can use a car, a scooter, or a bicycle.

If you’re a courier business or a business handling oversized items, such as furniture, you need to have a car, a cargo van, or a box truck.

As your business grows, you may need to optimize your vehicle by adding ratchet straps, blankets, GPS systems, boxes, etc.

You may also need to install CRM (Customer Relationship Management) software or fleet management software.

These platforms help you track and store customer details, note down service issues, manage marketing campaigns, and more.  

Step 5: Promote and Market Your Delivery Service

Once the business is up and running, it’s time to market it to your local businesses.

Take advantage of social media and advertise it on Facebook, Instagram, Twitter, Craigslist, and Linkedin.

While you’re at it, create a company website and list your contact info, the services you offer, what type of cargo you can deliver, the pros of using your business, and pricing.

You can also go door to door and tell your local businesses about your delivery service.

Let them know the advantages of partnering up with your business, your routes, and the prices you offer compared to competitors.

Things to Consider When Building a Delivery Business

Before opening a delivery service, consider the following factors:

Can You Run a Delivery Business By Yourself?

Is it feasible to run a delivery business by yourself, or do you need to hire several employees to keep things running?

What Is Your Budget?

Without the vehicle, the minimum start-up cost for a delivery service is $2,000. This cost covers gas, permits and licensing fees, advertisement, and website setup.

What Areas Will You Cover?

List down the route and areas your delivery service covers to let potential clients know what area or region you deliver to.

INSPIRATION: Delivery Business Ideas

Here are some ideas that align with today’s market needs:

• Gift delivery: Many gift-givers struggle to find the creativity or time to come up with a special gift for their friend or loved one. A gift delivery service not only delivers gifts but also offers pre-wrapped gifts that eliminate shopping trips and guesswork.
• Pharmacy delivery: With around four million Americans mostly or completely housebound, a pharmacy delivery service can be a lucrative business idea when advertised to the right market.
• Grocery delivery: Grocery shopping can be tedious and time-consuming. People pay good money to get access to personal grocery shoppers who’ll cater to their preferences and needs.
• After-hours delivery service: Do you prefer working at night? This delivery service might be for you. You can charge a premium for early-morning or late-night delivery services for people who desperately need something delivered after hours.

Frequently Asked Questions

Similar Businesses to Consider Starting

Is delivery not for you? Check out these business ideas instead:

• How to Start a Trucking Business: A trucking business can be highly profitable, with profit margins averaging between 2.5% to 6%. Trucking business owners earn an annual average of $245,000, with some earning as much as $400,000 a year.
• How to Start a Transportation Business: A transportation business requires a great deal of investment and market research, but once it’s off the ground, it can be extremely profitable.
• How to Start a Retail Business: The retail business is rife with opportunities, with the industry generating sales of over 26 trillion U.S. dollars.  

Wrapping Up

This concludes our article on how to start a delivery business!

With proper planning and advertising, a delivery business can potentially generate six figures in revenue.

The best thing is, all you need to start is a vehicle, some documentation, and basic knowledge of how to run the business.

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