A courier is a business that delivers a package from one place to another. Courier delivery services are extremely popular and offer their customers (businesses, households, general public, etc.) cost effective way to distribute products both nationally and across the world.
This “Pre-feasibility Document” provides details for setting up a business of “Small Courier /Delivery Services” (hereinafter referred to as “Small Delivery Services”). The proposed courier services business is aimed at serving corporate clients and general public within a city. The service model works on a sequential pattern; starting from the time when a client approaches the service provider and completing when the order is delivered at the required destination. The need for fast delivery in today’s well-connected world, especially with the growth of ecommerce cannot be denied which creates a market for the proposed project.
The small delivery services project is proposed to be ideally located in large cities like Lahore, Karachi, Faisalabad, etc. or medium cities like Peshawar, Rawalpindi, Quetta, Gujranwala, Sialkot, Sukkur, Multan, Hyderabad, Mardan, etc. due to high demand of courier services across the country.
The proposed business is assumed to provide services for maximum of 76,800 deliveries in a year based on number of delivery persons. During the first year of its operations, it is assumed that the project will operate at 60% of its total service delivery capacity, which is equal to 46,080 deliveries. The service capacity is assumed to increase at a rate of 5% per annum with a cap at 90% of total capacity. High return on investment and steady growth of business is expected with the entrepreneur having some prior experience or education in the related field of business.
The proposed project will be set up in a rented building having an area of 500 sq. ft. The project requires a total investment of PKR 1.88 million. This includes capital investment of PKR 1.63 million and working capital of PKR 0.25 million. This project will be established using 100% equity. The Net Present Value (NPV) of project is PKR 5.57 million with an Internal Rate of Return (IRR) of 54% and a Payback period of 2.60 years. Further, the proposed project is expected to generate Gross Annual Revenues of PKR 7.56 million in 1st year after coming into operations, Gross Profit (GP) ratio ranging from 29% to 43% and Net Profit (NP) ratio ranging from 2% to 15% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 55% (42,180 deliveries) with gross revenue of PKR 6.83 million in a year.
The proposed project may also be established using leveraged financing. At 50% financing at a cost of KIBOR+3%, the proposed project provides Net Present Value (NPV) of PKR 6.21 million, Internal Rate of Return (IRR) of 53% and Payback period of 2.67 years. Further, this project is expected to generate Net Profit (NP) ratio ranging from 1% to 15% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 55% (42,180 deliveries) with gross annual revenue of PKR 6.83 million in a year.
The proposed project will provide employment opportunities to 11 to 12 persons. The legal business status of this project is proposed as “Sole Proprietorship”.