Last-Mile Delivery Services Financial Model Example

Our Last-Mile Delivery Services Financial Model Structure covers all the essential aspects you need to consider when starting or scaling a Last-Mile Delivery Services business. By following this structure, you can better understand your revenue streams, costs, and assets, helping you optimize profitability and strategically plan for growth.

Starting and operating a Last-Mile Delivery Services business requires a solid financial plan that takes into account various elements such as revenues, direct costs, employees, expenses, and assets. This Last-Mile Delivery Services financial model not only guides you through these aspects but also sparks ideas for new and profitable revenue streams. By aligning your financial strategy with these key components, you’ll set a foundation for sustainable growth. The Last-Mile Delivery Services financial model structure is crucial because it informs decision-making and helps to navigate challenges. Although this process may seem daunting, it ultimately paves the way for success.

Revenues

A Last-Mile Delivery Services business typically has multiple revenue streams:

• Per Package Delivery Fees: Revenue is generated based on the number of packages delivered, calculated by multiplying the fee per package by the total number of packages.
• Subscription Services: Fixed monthly or annual revenue from customers who subscribe for prioritized delivery services.
• Partnerships with Retailers: Revenue from retailers who outsource their delivery operations, calculated as a percentage of sales or per delivery.
• Rush Delivery Fees: Additional charges for expedited delivery services.
• Return Shipping Services: Fees for handling customer returns on behalf of retailers.
• Value-Added Services: Revenue from additional services like package tracking, customer notifications, and delivery insurance.
• Advertising Revenue: Income earned by offering advertising space on delivery vehicles or within delivery packaging.

Cost of goods sold

The Cost of Goods Sold (COGS) in a Last-Mile Delivery Services business typically includes various expenses; however, this encompasses not only transportation costs but also packaging and labor. Although some may overlook overhead expenses, they are crucial for understanding the overall financial health of the business. Because of these factors, it is essential to analyze all components.

• Fuel costs for the delivery vehicles.
• Driver wages, including overtime or performance bonuses.
• Vehicle maintenance and repair expenses.
• Logistics and routing software fees.
• Packaging and labeling costs if provided by the company.

Employees

The following employees are typically needed:

• Delivery Drivers: Responsible for transporting goods from warehouses to customers.
• Dispatch Coordinators: Manage routing and schedule deliveries efficiently.
• Customer Service Representatives: Handle customer inquiries and complaints.
• Warehouse Staff: Manage and organize inventory before dispatch.
• Operations Manager: Oversee daily operations and logistics.
• Marketing Specialist: Develop and execute strategies to attract and retain customers.

Operating expenses

The typical operating expenses include:

• Lease/Rent: Costs associated with warehouse or office space.
• Insurance: Covering vehicles, goods in transit, and liability.
• Utilities: Electricity, water, and heating for office and warehouse.
• Salaries: Payment for administrative and non-driver staff.
• Marketing and Advertising: Costs for promoting the business.
• Technology Expenditure: Software licenses and systems for logistics management.
• Office Supplies: General supplies for daily business operations.
• Vehicle Leasing Costs: Payments for leased vehicles.
• Professional Fees: Legal, accounting, and consultancy services.
• Training and Development: Programs to enhance employee skills and knowledge.

Assets

Typical assets required include:

• Delivery Vehicles: Essential for operational delivery tasks.
• Warehouse Facilities: Spaces for storing goods before delivery.
• Computers and Networking Equipment: Necessary for managing operations and administrative tasks.
• Inventory Management Systems: Software for tracking goods and deliveries.
• GPS and Routing Devices: Tools for optimizing delivery routes.

Funding options

The most typical funding options include:

• Bank Loans: Loan provided by banks that need to be repaid with interest over time.
• Venture Capital: Investments from venture capitalists in exchange for equity.
• Angel Investors: Individual investors providing capital, often with more flexible terms than venture capitalists.
• Grants: Non-repayable funds provided by government bodies or institutions.
• Leasing: Lease agreements for vehicles or equipment to reduce initial capital investment.

A truly professional financial model for a Last-Mile Delivery Services business is based on the operating KPIs (also known as “drivers”) relevant to the business.

• Number of Deliveries per Day: Indicates the volume of business activity.
• Average Delivery Time: Measures efficiency and service quality.
• Customer Satisfaction Score: Reflects the quality of service and customer experience.
• Cost per Delivery: Provides insight into operational efficiency by calculating costs associated with each delivery.
• Fuel Efficiency: Evaluates vehicle fuel usage relative to distance traveled.
• Vehicle Utilization Rate: Indicates how effectively vehicles are used for deliveries.
• Churn Rate: Measures the rate at which customers stop using the service.
• Revenue per Customer: Assesses average revenue brought in by each customer.
• Driver Retention Rate: Indicates staff stability and satisfaction within the driving team.

Driver-based financial planning is a process of identifying the key activities (also known as ‘drivers’) that have the highest impact on your business results, and then building your financial plans based on those activities. It allows you to establish relationships between the financial results and the resources that you need to achieve those results (like people, marketing budgets, equipment, etc.). If you want to know more about driver-based financial planning and why it is the right way to plan, see the founder of Modeliks explaining it in the video below.

The goal of the financial forecast outputs should allow you, your management, board, or investors to:

• Quickly understand how your Last-Mile Delivery Services business will perform in the future.
• Get comfort that the plan is thought through, realistic, and achievable.
• Understand what investment is needed to implement this plan and what will be the return on the investment.

To achieve these goals, here is a one-page template for effectively presenting your financial plan.

Apart from this one-page summary of your plan, you will need the three projected financial statements:

• Profit and Loss: Displays the projected revenue, expenses, and profits over a specific period.
• Balance Sheet: Provides a snapshot of your business’s financial position, listing assets, liabilities, and equity.
• Cash Flow Statement: Outlines the projected inflow and outflow of cash, ensuring you maintain liquidity.

A professional Last-Mile Delivery Services financial model will help you think through your business, identify the resources you need to achieve your targets, set goals, measure performance, raise funding, and make confident decisions to manage and grow your business. This comprehensive plan, built on solid financial principles and market intelligence, is invaluable for navigating the competitive landscape of delivery services. However, you must consider potential market shifts and fluctuations because they can impact your strategies. Although the model provides a robust framework, it is essential to remain adaptable to changing conditions, as this can ultimately determine success.

If you need help with your financial plan, try Modeliks , a financial planning solution for SMEs and startups or contact us at contact@modeliks.com and we can help.

Author:
Blagoja Hamamdjiev , Founder and CEO of Modeliks , Entrepreneur, and business planning expert.

In the last 20 years, he helped everything from startups to multi-billion-dollar conglomerates plan, manage, fundraise, and grow.