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The Small Business Logistics Firm vs. The Small Business Transporter

Logistics and transportation are often used interchangeably, but the two concepts are unique.

While transportation is related to logistics, it does not require the same level of planning and management involved in logistics.

What exactly is the difference between a logistics firm and a transporter?

Today, we’ll explain what logistics and transportation are, and how you can start a successful business in each industry.

What are Logistics? Logistics include several different steps and facets. The logistics industry handles material production and distribution, and it may sometimes include moving personnel. Logistics is a multifaceted process, including planning, implementing, and controlling all procedures necessary for efficient transportation.

What is Transportation? Transportation involves moving goods, people, or animals from one place to another. Different modes of transportation can be used, including rail, sea, cable, pipeline, space, and road. Transport facilitates trade and communication, which makes it essential for society. The field of transportation includes vehicles, operations, and infrastructure.

Logistics vs Transportation: What’s the Difference? Transportation is a part of logistics, which is a broader industry. Transportation only refers to moving goods from one place to another, but logistics includes the entire “flow management”. Logistics includes transportation, but it also covers packaging, storing handling, and other aspects of flow management.

Transportation is a mode of executing the planning that takes place during logistics. In addition to transportation, the logistics industry includes:

  • Documentation

  • Insurance

  • Storage

  • Managing partners and vendors

  • Risk mitigation

  • Packaging

Starting a Transportation Company in 2021 It’s not that difficult to start a transportation company, but starting a successful transportation company in 2021 requires diligence. Here are the steps and tips you need when starting a transportation company in 2021:

Pick the Type of Transportation Business There are several different types of transportation businesses you can choose from. Consider the access to vehicles you have, and the market you plan to operate in. Consider which transportation options are in-demand in your area. Some options include:

  • Car rentals

  • Bike rentals

  • Trucking

  • Taxi

  • Senior transportation

  • Limousine rentals

  • Moving company

  • Medical transportation

  • Scooter rentals

Refine the Details of Your Transportation Business Next, you should decide on a name and entity for your business. Consider choosing the entity first, as it may influence the name you choose. Depending on the transportation type you chose, certain entities may be a better fit. The options are:

  • Sole proprietorship​: An unincorporated business owned by one person or a married company. This is a common option, but it leaves you personally liable for debts and lawsuits, so it’s not often a good idea for transportation businesses.

  • Limited liability partnership​: This entity protects the partners involved from liability and debts of the business. It also shields you from the actions of other partners in the business. Partners manage the business equally and take on equal responsibility for liabilities.

  • Limited liability company​: in this business entity, owners are not personally liable for business obligations or debts. An LLC can decide to be taxed as a corporation or not.

Create a Business Plan This step is time-consuming and challenging, but it will set you up for success. During the process of writing a business plan, you’ll develop a clear vision for your transportation business. Your business plan should include:

  • A market analysis

  • A business overview

  • Marketing plans

  • Pricing plans

  • Financial projections

Register Your Business Register your transportation with the name you chose to reserve the name. You can also trademark the name. To register, visit the Secretary of State’s office, find the business bureau in your state, and get the paperwork you need to submit. Some states may allow you to do this online, while others may not. Most often, you’ll need to submit a form for your business entity and pay a fee. Once you register your business name, apply for an employer identification number (EIN). You’ll need the EIN to file taxes and establish business credit.

Permits and Licenses A transportation company is responsible for the people or products it transports, so you’ll need permits and licenses to do so. Head to the SBA for a list of what you need, and also research your state licenses and permits via your local municipality. It may be a good idea to consult a lawyer to ensure you meet all requirements.

Finances You’ll need a business checking account and credit card to keep your businesses’ finances separate. Make sure to pay your credit card in time to boost your credit and make you a better candidate for a loan.

Raise Funding Starting a transportation business costs money. Likely, you’ll have to invest in vehicles and equipment that can cost a lot upfront. This means you may need some financing, but fortunately, there are many financing options for new small businesses.

Hire Employees Most transportation companies will need employees. You never want to have to turn down work because you can’t do it on your own Take the time to find employees who are a good fit for your business, and that have the proper training and licenses.

Starting a Logistics Company in 2021 Starting a logistics company requires many of the same steps as a transportation company. You’ll need to determine an entity, come up with your business plan, get your finances in order, etc. however, some other things you must do when starting a logistics company in 2021 include:

Gain Industry Experience There’s a lot of different responsibilities for a logistics company, so it’s very helpful to work in the field before starting your own logistics company. Gaining industry experience will help you learn more about how it works and the different factors to consider. Additionally, you’ll be able to build relationships with valuable connections you can leverage when you start your own business.

Choose Market that Suits Your Expertise Much like transportation, logistics has different market sectors. Use the experience and connections you gained to create a business in the area of the market you know best.

Location Selection At first, you may not have much flexibility to choose a location for your business. You should consider remote working for office tasks, or renting a co-working space. As you grow, you can evaluate where you operate and if you need to create your own office. Another consideration is warehouse space and locations. Consider the proximity to ports, rail lines, and city centers based on the services and clients you work with.

Setting Your Prices During your business planning, you should get a sense of how much you will need to charge clients. When you have familiarity with the market, it’s easier to know how to set your prices. However, if you’re unsure then consider working with someone who has experience managing a carrier sales team. The price of your services should account for overhead like rental costs, equipment, payroll, marketing, and more.

Whether you’re looking to start a transportation company or logistics firm in 2021, you must carefully plan and research the industry and market. Check local regulations to determine what licenses and permits you need to safely operate your transportation and logistics business. With proper planning, you can successfully start a new transportation or logistics company in 2021.

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