Factors to Consider Before Starting a Shipping Business
Shipping business is one of the major businesses in the current global trading trends. Many of the goods transported between countries are carried in a freight network. Therefore, the shipping business is a potentially lucrative business. However, before setting it up, there are many important considerations that an investor should make.
A Good Business Plan
Shipping business is like any other business, and therefore it needs a well-laid out business plan. A business plan sets a business vision. Besides, it assists in linking goals with timelines to achieve results. A business plan helps in budgeting. Consequently, a business plan sets out strategies to be employed to source funds and make financial plans.
A good business plan can help an investor to access external funding. Many banks or financial institutions need a business plan to make decisions on lending loans or grants. Hence, a business plan is one of the essential things to have when considering a shipping business.
One person cannot handle the shipping business. It needs a team of workers and a well-trained staff. Additionally, the shipping business is highly competitive; hence, success will depend on the quality of services offered. Experienced people are likely to deliver quality services; therefore, promoting the brand of a given business.
Shipping business requires personnel to handle orders, communicate with clients, maintain inventory, manage accounts and make deliveries. Some tasks may require professional expertise, unlike others. Therefore, it requires scrutiny in recruiting the right people.
Starting and Operating Capital
The cost of starting any business is a crucial consideration that many investors always consider. Many businesses fail because they ignore the starting cost. The starting capital depends on the type of goods shipped and the range of services to be offered.
A successful shipping company should have transportation means, safe storage facilities, efficient packaging materials, and powerful logistics software. Alexander Djerassi, a leading entrepreneur and founder of Mos.com, thinks investors should critically consider their capital before beginning a shipping business.
Operating a shipping business involves complex logistics that must be considered. Besides, tax clearance involving various countries may result in enormous expenses. Therefore, if the starting and operating capital are not enough, an investor should consider an alternative business.
A wise investor should set up a physical location. Setting up an office in a place with minimal or no competition will increase the chances of succeeding. The selected location should be easily accessible by importers. Additionally, a physical location will assist in creating a personal touch with the clients, and hence, likely to improve trust.
Setting up the delivery charges is always challenging and needs comprehensive consultations. Clients usually avoid the cheapest providers because they believe that their quality may be compromised. On the other hand, very high charges may drive the potential clients away. Therefore, setting the proper charges is vital. Consequently, the optimal charges must cover the expenses and also returns.
Alexander Djerassi thinks investors should consider incentives when starting a shipping company. Incentives may be free shipping for some categories of customers, for instance, loyal customers. Although incentives may appear to be expensive, they ultimately lead to increased sales.
Shipping business can be rewarding. However, it needs skill and sound market research. A potential investor should plan about the business before setting it up to ensure no obstacles to growth.