Logistics is all about planning, execution, and control of the procurement, movement, and stationing of personnel, material, and other resources to achieve the objectives of a campaign, plan, project, or strategy. When you plan to put up your own logistics business, there are certain rules and procedures that you need to know before starting the same. Also starting a logistics business can be a great idea especially if you love working on different kinds of people.
This type of business is seen as a quite lucrative business if you know how to start and run it and thereby grab the opportunities on it. Many industrialized nations today demand instruments and machinery that can be used in sorting, transporting, building, and for many other purposes. By following some suggestions and procedures on how you can successfully run your logistics company, your business will definitely grow. With our Support, you can easily start a business along with following all the compliances attached with it.
The Indian economy has grown tremendously in recent years, creating a huge market for logistics services. The logistics industry in India employs over 50 million people today.
An efficient logistics network can significantly improve business operations by reducing costs and delivery times. All these steps can lead to enormous profits for the firm along with a good market share.
What kind of Logistic Business can you do?
There are basically four types of logistic businesses that one can plan to do. We at Starters’ CFO can assist you in starting any of these logistic businesses.
Look out for Investors
The primary step in any logistics company is the way you choose to seek investment. Although the amount of investment in logistics business will depend upon the type of business that you wish to start but you can simply consult your financial assistant to help you know more about the amount required to set up your business. For Example a simple freight management organization will require less capital compared to a 3PL service. Identifying your niche services and creating an investment plan is crucial.
Finding logistics investment in India is simplified due to liberal FDI norms and significant interest from major private equity players. Also our government is taking certain big steps towards making the process of funding easier.
Follow the Compliances
There are certain compliances that like every other business, Logistics businesses are also required to follow them. Certain registrations and Government compliances are crucial that need to be complied with by all (or selected) business entities. In India, registration with International Air Transport Association (IATA), Air Cargo Agent Association of India (ACAAI) is very useful for freight forwarders.).
Being a part of industry forums like the Institute of Logistics or CII Institute of Logistics is essential for raising issues affecting the logistics industry further. Other important registrations in India include DGFT registration, Income Tax Department Registrations, Registrar of Companies and with other related Government Departments.
When we talk about the Income Tax Department Registrations, some of them include:
- Private limited company registration
- Import export code (IEC Registration)
- VAT Registration
- ESI or PF Registration
- Trademark registration (in case of unique brand name)
Examine the Risk in your Business
Whenever one thinks of starting a business, risk factor becomes the unavoidable characteristic of his/her business. In a developing economy like India, risk management therefore plays a crucial role, more importantly for logistics business.
In the dynamic logistics business with multiple partners/vendors, the risk of claims is high. Hence it is really important to cover liability by taking sufficient amount of business insurance. There are many large insurance companies in India which offer such insurance plans.
With proper analysis of your plans and taking all sorts of assistance available to cover your risk in case it occurs, can help you to a great extent. But still some serious liability issues can arise from cargo damage, theft, injury, environmental damage etc. While business insurances can help you in your business by addressing some of the liability concerns, they are not always very effective. For instance, most Cargo and Property insurance policies in India do not cover inventory shortages, as they consider this a normal risk when operating a 3PL business.
Before entering contracts or launching a business, be aware of potential hindrances.
How important are your Clients?
For any business to reach heights in the future, it is very compelling the way it engages its clients.
Understanding logistics needs through in-depth industry and product analysis is crucial for entrepreneurs looking to start a third-party logistics company. There are many sectors booming currently such as infrastructure, auto, services and manufacturing as India is primarily an export economy.
All the sectors above require logistics services. Providing operationally efficient solutions and identifying weak areas is the key to winning new customer in third party logistics services.
After establishing a regular clientele, invest in infrastructure and create solutions for the external market. Hence your clients are a very crucial aspect of your Logistics Business.
Know your Competitors
In this highly competitive world, it is extremely important to be well aware of your competition. Before even entering into any business line, competition is something that must be properly analysed to get into a level-playing-field. As it has been mentioned above, liberalisation of FDI (Foreign Direct Investment) norms have made it easier for multinationals to enter the Indian logistics sector, it is imperative to understand the competition that this business faces because these capital heavy players are ready invest heavily in marketing and infrastructure. Hence it is important to do a complete research on the competition and to focus on the company’s positioning in the market. Analyzing the competition enables us to assess our capabilities effectively, allowing us to develop essential core competencies to overcome challenges.
Therefore, when considering the commencement of a logistics business, it is crucial to keep the aforementioned essentials in mind. Starters’ CFO can serve as your financial advisor and can help you in solving queries on all sorts of matters.