1. Find your Niche
Starting a logistics business in India requires plenty of research and hard work to ensure success. First, you need to define your niche as a logistics company – what type of services will you provide? What geographical area will you cover? Identify a specific area in the logistics industry where you want to focus your business, such as transportation of goods, storage and warehousing, or supply chain management.
2. Define Business Model
Next, define the business model. Decide how you want to run your business, whether it be a sole proprietorship, partnership, limited liability company, or another business entity.
3. Map Out your Costs
Mapping out your cost is crucial before starting any business. First, establish a budget for your business, including costs for equipment, vehicles, insurance, marketing, and other expenses.
4. Obtain the Proper Licenses
Ensure you obtain all necessary logistic licenses and permits from relevant government agencies to operate your business legally. Depending on the type of services offered, logistics licenses may include a motor carrier license, customs broker license, warehouse operator's license, etc.
5. Advertise Your Business
Advertising your business is another important factor in starting a logistics business. Get your name out there to potential clients and stay connected with them through social media and other channels.
6. Open a Business Account and Apply for Funding
Set up a separate business bank account and apply for funding if needed, such as a business loan or investment. Securing enough funding is critical to sustaining your business and having an official bank account helps.
7. Build your Fleet
Ensure you have enough vehicles, equipment, and other resources necessary for your logistics business to operate and function.
8. Hire Staff
Recruit and hire employees, including drivers, warehouse workers, dispatchers, and office staff, essential for starting a logistics company.
9. Get clients
Most importantly, get clients. Reach out to potential customers and generate leads through various marketing and networking efforts. The marketing and customer acquisition strategy you employ plays a crucial role in getting clients.
3 Mistakes to Avoid While Starting a Logistic Business
How to start logistics business can be rewarding but not without its own risks and considerations. To make the most of your logistics business in India, it is important to avoid making certain mistakes.
Here are three key things to keep in mind when starting a logistics company:
1. Skipping Insurance
Whether you're starting a small courier service or an international freight business, looking into the right insurance coverage for your operations is essential. Without adequate protection, you could end up paying from your pocket if something goes wrong during delivery. Ensure to carry the right type of cargo liability, motor vehicle and workers' compensation insurance policies for your needs.
2. Not Using Contracts and Waivers
To protect yourself from potential liabilities, it is important to have all the necessary contracts and waivers handy before beginning operations. This includes written agreements between you and your customers and signed waivers for any risk-related services or activities. In addition, proper documentation will ensure you are protected in the event of any legal issues.
3. Forgetting About Neighboring Jurisdictions
If you're operating a logistic business that covers multiple jurisdictions, familiarize yourself with each location's regulations and laws. This includes allowable truck weight limits driver license requirements and hours of service. Failing to comply with local laws could result in hefty fines or even the suspension of your business license.
Transport and Logistics Business Registration in India
Establishing a business in India is much easier, with the Government of India introducing convenient measures for entrepreneurs. If you are venturing into transport and logistics services, there are three main types of company registration: Private Limited Company, Public Limited Company, and Limited Liability Partnership (LLP) or One Person Company (OPC).
Private Limited Company Registration
It is the most preferred and popular form of business entity among new entrepreneurs in India. In a private limited company, you can have up to 50 members. It provides benefits like limited liability, continuous existence, and legal identity. The government also provides numerous tax concessions for private limited companies.
The process of transport and logistics business registering with PLC is mentioned below:
- First, choose a for your transport company. Go for an easily recognizable and unique the industry
- Next, get a logistic license from the transport authority in your state or region or country
- Now, register with the Registrar of Companies (ROC). This could be done online or via post. While filing your documents, including a memorandum of association, articles of association, and any other documents required by the ROC
- Once the application is accepted, get a Certificate of Incorporation to enable you to open a current bank account and start trading under the new transport and logistics business name.
Public Limited Company Registration
A public limited company has more stringent regulations than a private limited company. For example, it requires seven or more members and also needs to list its shares on recognized stock exchanges. However, the benefit of registering as a public limited company is that you can raise capital from the public through offerings of equity and debt instruments.
Here's how you can register:
- Pick your company's name. Choose a name for your transport and logistics PLC ending in Public Limited company or plc.
- Get your logistics license to carry out transport and logistics activities. Depending on the types of goods transported, different regulations may apply.
- Register with companies house. You can register your transport and logistics PLC online at the Companies House website or submit a paper application form. Information like the company's name, address, directors, shareholders, and registered office is required.
- Open a bank account once you are registered as PLS for carrying out financial transactions.
- Don't forget to comply with tax requirements like VAT or corporation tax.
LLP Company Registration
This business structure allows two or more partners to combine and hold limited liability. In an LLP, the partners' personal assets are not liable for any debts incurred by the partnership. It is well-suited for businesses in transport and logistics that require high capital investments.
Here's how you can register your transport and logistics business with LLP Company Registration:
- Obtain a logistic license from the local transport authority to operate legally in your area of business.
- Fill out the registration form, including details of all partners, like their names, addresses and PAN.
- Collect the registration fee and copies of documents such as PAN cards, rent agreements (if rented premises), etc.
- Fill out the LLP Agreement with partner(s) details and other relevant information. The agreement should include clauses to ensure compliance with various regulatory requirements.
- Submit the registration form, documents, and LLP Agreement to the Registrar of Companies.
- After verification of the submission by the RoC, you will be issued a registration certificate.
- Once these steps are completed, your transport and logistics business will be registered with LLP Company Registration. This will open up a host of business opportunities for you.
This type of business entity combines the benefits of sole proprietorship and limited liability. In an OPC, one person can register a private limited company with just one member. It is suitable for small transport and logistics entities that do not wish to take on additional partners or members.
Steps to register for transport and logistics business for OPC are listed below for your reference:
- Apply for a logistics license at the government office or online in your state
- Once the license is received, submit an application form with details like identity proof, address proof, and basic KYC documents
- Pay for the registration online via net banking or debit/ credit cards
- If the application is accepted after due diligence, you will receive an OPC Registration Certification from the government authorities.
- Finally, file an annual return with the Registrar of Companies yearly and pay an applicable tax.
How to Register a Transport and Logistics Business in India?
To register a transport and logistics business in India, you will need to follow these steps: