While industry-wide revenue fell by 2.8% between 2012-2016, IBISWorld has forecast 2.5% annual growth in the courier sector, to reach $4.8 billion in revenue by 2021.
Should these projections prove accurate, now could be a great time – when the market has dipped but sits on the cusp of growth – to buy a courier business. Especially when customers are so dissatisfied with many services and IBISWorld has noted that “potential deregulation of reserved mail markets could benefit couriers over the next five years.”
Starting a courier business from scratch is tough, with market share divided largely between a few big hitters. Buying an existing courier business gives you an established customer base to build on. You can bypass much of the pain of starting from nothing.
If you’re willing to forgo a certain degree of independence, then you can make your life easier still by buying a franchise, which also offers the marketing clout and ongoing support of a national or regional brand.
Paying the right price for a courier business
With generally few physical assets involved, a courier or delivery business can be among the cheapest businesses to buy.
And yet, naivety and a neglect of due diligence could still leave you short-changed. If $10,000 seems cheap for a business, then it’s not good value if the van’s worth $5,000 and the business has no customers. All you’ve done is buy an overpriced van with a valueless business name and some marketing materials thrown in – and, who knows, maybe some unpaid debts for your troubles.
So make sure you’re buying something of substance. Ask to see accounts and contracts to back up any claims about income and recurring revenues.
Your accountant can help you scrutinise financial documents – including trading accounts for the past three years – and whether this justifies the selling price.
The business’s online footprint is relatively easy to gauge:
- Is there a website? How does the website rank on Alexa compared to other courier businesses in the area or similar-sized courier firms?
- How does it rank for long-tail Google searches (courier giants like DHL and Australia Post will dominate major terms) like “courier in [location]’ or ‘delivery services in [location]’.
- Google the brand’s name to see what publicity – good or bad – tops Google listings. Alarm bells will ring if doing so uncovers court proceedings, for instance. More positively, community engagement such as charity work might come to light.
- How does the business fare on Google My Business? If it lacks a listing then setting one up is a quick and easy way to start attracting custom
- How do other businesses in Google searches tailored to your locality fare on these metrics?
Why buy a franchise?
A franchisor will train you up in executing a proven formula, provide ongoing support and run marketing campaigns, while you will benefit from a degree of brand recognition and trust.
Other potential benefits to joining a courier franchise – should you choose wisely – include:
- Low start-up costs – premises rarely needed
- Relatively simple business model
- Exclusive territory
- Experience in courier sector rarely required
- Financial assistance to buy equipment like vehicles
Finding the right franchise
Before you go ahead and sign on the dotted line, have a think about the following:
Do the maths. Ask the franchisor for start-up costs and financial projections. What kind of income can you expect to generate and how quickly will you break even?
It’s worth checking if the franchisor offers financial help with fixed costs like vehicles, fuel cards, phones and uniforms.
Franchise agreement . The franchise agreement stipulates the obligations of both parties, outlining things like opening hours, training and support, details of territorial rights and royalties and fees you have to pay the franchisor in return.
Your solicitor can help you assess whether the contract is a fair and attractive one.
Support. One of the main advantages to a franchise is the additional support they offer in training, marketing and mentoring. Make sure you’re happy with the help on offer. For example, do you feel you’d need extra sales help for customer acquisition?
Territories. Does your franchise offer you an exclusive territory? If not, you’ll be in direct competition with other franchisees as well as the big beasts of the courier world.
Innovation. Disruptive start-ups are gaining a foothold through innovation in both processes and technology. Reliability and competitive prices are the twin determinants of success in this industry and innovation plays a big part in achieving them.
So what does the franchise do to make deliveries more reliable and cost-efficient and to invest in the latest industry technologies?
Expansion. A courier business is highly scalable if you’re successful. But does your franchisor offer help to those wanting to expand their business from a one-person enterprise to additional employees and territories?
Ask about plans for ambitious franchisees who want to grow their business.
Arguably the most well-known courier franchise is Fastway Couriers. As with most franchises – regardless of sector – business experience is inessential. “Even with limited or no prior business experience, a Fastway courier franchise is a great entry-level business ownership opportunity,” Fastway insists on its website.
You'll need a driving licence, of course, and Fastway specifies that you’ll need a white, late-model LWB van.
Talk to other franchisees
When you are first starting out, it's an excellent idea to tap into the network of existing franchisees. Ask the franchisor if you can speak to existing franchisees of your choosing (otherwise they might handpick the most successful) and ask them about their experiences.
To get you started on this discovery process we interviewed a Talk to other franchisees.
Was this article useful? Once you’ve bought a courier business or franchise you might also want to read our tips on how to run a courier business or franchise.
You can get further advice on franchising from the Franchise Council of Australia.