Blog Post
How To Start A Transportation Business?

How To Start A Transportation Business?

Transportation is defined as the conveyance of goods and passengers from one place to another and is the inevitable link between most businesses, the link between manufacturers and retailers, between suppliers and manufacturers, between the retailers and the consumers or end-users. Transportation is an essential activity in the logistics function, supporting the economic utilities of place and time.

Transportation helps ease the process of doing business and is thus an ideal business opportunity to explore for entrepreneurs. 

Before getting to know about how to start a transportation business it is important to be aware of the importance of transportation and the contribution it makes to the business community at large.

Importance Of Transportation Business

Creating Industrial Growth

Transportation and the industrial growth of the nation are inter-linked because if the transportation facilities were not available or were not efficient enough the industries would find it very hard to get their produced goods to the consumers and reach out to wider market. Transportation, therefore, helps with industrial growth significantly.

Contribution To Economic Development

If you are wondering how to start a transportation business, you need to first understand the contribution it will be making to the economy. Transportation makes a significant contribution towards the economic development of the country as it facilitates the movement of raw material and other requirements from the place of supply to the place of production and that of finished goods from the production unit to the retailers or end-users. Thus proving that efficient transport is indispensable to the economic development of the nation.

Providing Employment Opportunities

Transportation helps create employment opportunities via direct and indirect ways. The transportation sector is known to create jobs for a significant portion of the population of the country, thus creating direct employment. Additionally, transportation facilities the movement of labour to the place of employment, thus indirectly creating employment opportunities for the people.

Creation Of Place Utility

By carrying out the movement of commodities from the producer to the final consumer whenever and wherever they are demanded, transportation helps create a place utility. The place and time utility are thus created by removing goods from the place of production to the places where they are to be consumed.

Bringing Nation And Countries Closer

Before you ask how to start a transportation business, you need to know the positive sides of this business. Transportation helps bring the nation and the various businesses closer to each other. Transportation is required not just to carry out business or employment but to travel for education and for pleasure and recreation. Thus transportation brings places closer and easies the pain of covering a vast distance of land or water thereby even bringing various countries closer to each other.

Creation Of Price Stability

Transportation helps address problems such as the monopoly of the retailers in terms of prices and availability of products. It also addresses competition in areas where there is a scarcity of certain products due to which the local producers or retailers charge prices at their will. At such times and places, transportation helps the movement of goods from the places where they are surplus and where prices are low to areas where there is scarcity and the prices are high. Such transfer of goods from the place of surplus to the place of scarcity enables to stabilise the prices of the goods and commodity.

Apart from these, transportation is beneficial in a number of ways, such as helping the agricultural sector, helping move the soldiers of the army, helping with the specialisation and division of labour and several other applications, all of which highlight the importance of transportation.

How To Start A Transportation Business?

how to start a transport business

Once the importance of transportation and its application is known, budding entrepreneurs looking to start a transportation business need to know the basics of how to start the business.

Choose The Type Of Transportation Business

The first step involves choosing the type of transportation business that is suitable given the finances and the feasibility. Transportation, as discussed above, involves a vast network of different modes to connect people, places and goods. It can be in the form of water transport, air transport, rail transport but the most significant and a suitable option to start a business is transportation is via road. This too can further be classified into various types of road transportation, such as daily transportation for commuting to and from work or elsewhere within a city or town itself or tourist vehicle operation between cities, or even States. Some of the lucrative and feasible transportation business types are elaborated here-

  • Office transportation– this refers to the transportation facilities that ferry employees and staff of particular companies or from a particular area to and fro from office/work. These vehicles have fixed routes to pick and drop the employees and work at fixed timings through the day. This helps entrepreneurs considering to start the transport business to plan the schedule for their vehicles and also the vehicle will have fixed clients all year round.
  • School transportation- this type of transportation ferries school-going children to and from school and this too works at fixed timings and fixed routes. Additionally, the vehicle is not used during the holidays and can be employed elsewhere. Vehicle owners will, however, have to ensure safety within the vehicle and arrange a caretaker to supervise over the children.
  • E-commerce goods transportation- in the age of e-commerce and online shopping and delivery at the doorstep, business owners in the transportation sector never had it so good. Transportation of this type involves the delivery of goods ordered online, including clothing, shoes, gadgets, books, and even food items, both perishable and non- perishable.
  • Logistics or transportation of manufactured goods or raw material – this transportation is the key form that helps make a significant contribution to the industry (specifically the manufacturing industry) and helps with the economic development at large. It is the crux of the transportation business and aids with the transportation of raw materials to the production site and the manufactured goods to the market. Further, in logistics, the vehicles can be tracked and a distribution network can be created and viewed.
  • Mover and packers- this involves the use of vehicles for the transportation of furniture and of household items when families move from one house to another, within the city or to another city altogether.
  • Medical transportation- this type of transportation usually involves regular ambulances as well as vehicles that drive through an express corridor for the delivery of organs and such vehicles have special facilities inside to accommodate patients in emergency situations as well as to transport the delicate organs (facilities such as oxygen pipes and masks, temperature-controlled vehicle, etc.) Also, there is now non-emergency medical transportation (NEMT) service available for patients whose condition does not impose an immediate threat and such services help patients access care easily.

Choosing Vehicle According To Business

After narrowing down on the type of transportation business to start with, the next step is to choose the vehicle or number of vehicles to start the business with. The choice of vehicle will depend on the type of transportation business, for instance, a van or bus for school or office transportation, a truck or goods carrier or trailer trucks for a logistics-related business, a tempo or a container car, a refrigerated truck for perishable goods, etc.

Arranging For Finances

Once the nature of the transportation business and the vehicle type and the number of vehicles needed for starting the business are decided upon, the next logical step involves the procurement of finances for making the purchases and starting the business. The ways of arranging for funds include applying for a bank loan, approaching a non-banking financial institute or self-financing the project with saving or by borrowing from friends and family. A bank loan is a favourable option out of these and the loans are also approved easily if the bank loan documents and business plan are in order.

how to start a transportation business

Obtaining Licences And Registrations

Along with arranging for funds to start the business, it is equally important to get the business registered and obtain all the necessary licences and registrations that are required to run the business without hindrances. This includes deciding upon the type of business entity to register the business as, whether a sole proprietorship, a partnership, a one-person-company, a limited liability partnership or a corporation. Upon evaluating the pros and cons of each entity as suited to the transportation business and its needs, the business must be registered. Other permits include GST registration since it is vital for taxation and especially convenient if the transport vehicles will ply between States in the country. Another registration is to register the business as an MSME which can be done via Udyog Aadhaar registration. Other registrations to carry out the business can be found out via deAsra. Apart from registrations and permits, it is important to avail insurance for the business, including the vehicles. Obtaining insurance is mandatory and must be done while starting the business itself.

Other points to heed while starting a transportation business include deciding on the number of employees to hire, listing all the equipment required for the business, chalking down a marketing plan to spread the word about the business and creating a transport business plan where all these requirements and objectives are elaborated while starting the business as a checklist to go back to from time to time. 

This sums up the important steps of how to start a transportation business and run it smoothly.

"No matter how good a driver you are, you have to have a good car and the right team behind you, in order to succeed". While this quote is true for life in general, taking it literally, a good driver ...

When talking about the automobile sector, the first thought that comes to mind is the cars that help us commute and take us from place to place. In addition to these are the several transport vehicles...

Compare options and apply for MSME business loan from different financial institutions and get funds to restart your business. And what's more! The process is now Online. ...

T-shirts speak louder than words! Yes, you read it right. T-shirt is no more a ‘comfort clothing item’ but it is also a fashion statement. It tells a lot about your personality and considering the...

deAsra's Emergency MSME Loan is now available in Mumbai and in most Pincode areas of Thane. Get Loan up to Rs 1 Lakh at the friendliest terms. Compare options and apply for MSME business loan today...