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Thursday, August 9, 2018

The Untapped Opportunities for Business Franchising in Nigeria

Franchising is the business of selling intellectual property rights (logo, trademark, brand etc), business model, process and expertise to a third party as part of a growth and marketing plan to reach a larger market. It is an indirect way for a business to expand its operations within a country or even beyond without actually using equity or approaching a bank for loan.

Think of it this way, you run a successful business that is making impact within a particular part of the country say – Lagos. You have built a successful business process and you are making desired progress as par frequent sales, serious brand awareness and have sizeable business leadership within your niche, you have a respected brand that can easily defeat the competition, but you only operate in Lagos but there are opportunities for you to expand into Abuja, Port Harcourt etc but you neither have the capital nor sufficient resources to branch out into these cities. This is where franchising comes in – you can sell your business process and identity to other business people to operate on your behalf, provided they abide by your terms in your contract.

Benefits of Franchising to both Businesses and Investors
Both investors and businesses can benefit from franchise opportunities - the company or business selling the rights is the franchisor while the other business/investor is the franchisee. 

  • Raise additional capital without approaching a bank or investors (For the Franchisor)
  • Your business can grow very fast using this model (Mcdonalds and Starbucks are two good examples of successful franchisors)
  • You can diversify your Assets to strengthen your business (Both parties)
  • Build a strong market position (Franchisor)
  • Tap into a new promising market (both parties)
  • Gain a strong market entry in a new region (both parties)

Opportunities for Franchising in Nigeria
There are many opportunities to franchise your business in Nigeria although they may all not be realistic. We live in a peculiar country and people do have work 

  • Turnkey business that requires mostly training and financial investment for the franchisee 
  • Source of new capital to franchisee - especially since raising capital in Nigeria is tough
  • Businesses need to expand can come at a lower risk since the franchisee can use a proven model to work with while the franchisor will not assume the risks of running the outlet
  • This model works well in retail which is very vibrant in Nigeria

Challenges Facing Franchise Arrangements in Nigeria
Even with all these opportunities, there will be foreseeable problems when trying to setup and run a franchise in Nigeria among which are;

  • Quality control is the biggest challenge of franchising. The same quality of product in the main business must be maintained even with franchisee locations
  • World class enabling environment is lacking in Nigeria which would frustrate the opportunity for both parties
  • Legal protection for patents and copyrights in the event of dispute. Nigerian litigation process is expensive and slow.
  • Business and Managerial Expertise is in short supply, this would make it difficult to find the right people to partner with
  • Large number of unprofessional business owners who think money should come at the expense of professionalism can tarnish the image of a Franchisor

The concept is very good for businesses that want to expand into other locations without incurring much cost, but the challenge is how to protect your brand and ensure that you can meet customer expectations everywhere without compromising. If executed well, franchising can make medium sized businesses global champions. If you are looking to research and exploit franchising arrangements in Nigeria, my profile below and contact details are starting points.

Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com

Thursday, July 12, 2018

6 Ways to Identify Business Opportunities in Nigeria

Before getting into the details of this article, I would like to apologise to my regular blog visitors – those who check weekly or bi-weekly for updates on my blog. I have been busy with work and business that I haven’t had the time to write lately. But I am glad to share this post with you and without further delay, let’s jump into the main course and munch away.

Identifying business opportunities in Nigeria is not an easy task especially when there are so many challenges preventing you from starting. That will change very soon for my dear readers who follow the recommendations in this article. I have researched these points and they are proven to deliver results when thoroughly pursued. So how can anyone living in Nigeria identify business opportunities in order to know what and where to invest in? While this article answers this, the follow up question of what should one do to effectively exploit the identified business opportunity? would come another day – I may do a blog post on it.

6 Ways to Spot a Business Opportunity in Nigeria
These are 6 out of many ways to spot a new business opportunity in Nigeria. Kindly note, there is nothing new under the sun and so if a business is common but you can find a new way of doing it, then there is a business opportunity. Listed below are 6 ways to spot business opportunities in Nigeria.

Improved Marketing Approach
Some businesses struggle with getting customers or keeping them and this shouldn’t be happening if the business is well managed. If you discover a situation in which a most operators in a particular type of business lack good marketing approach but there is sufficient demand for its products and services, that is something you shouldn’t overlook, the ball is in your court to device a strong marketing plan to change this.

Assess Government Policies
Government policies whether new or abolished can create new avenues for businesses to thrive. A particular government policy for instance may be frustrating businesses in a particular part of the country, if that policy is lifted things will change often meaning increase in sales whereas introducing a new policy can create new demand for a product or service or drive down obstacles affecting demand. So when government introduces or bans a policy, ask how does this affect businesses and in what locations?

Social Trends/New Social Behaviours
The behavior of people at a particular season/time of the year, in a particular place or in response to changes/fads can become a new source of income to businesses. For instance the selfie stick for mobile phones is in response to selfie taking as a social trend, the rising demand for Gucci slippers in Nigeria (although most are fake) is in demand because of social media frenzy by Hushpuppi

Competitor Flaws
When people in a particular business are not doing something right – in terms of satisfying the client or offering quality service - it is a chance to make a bold statement by setting up a business which would avoid making those mistakes. Take for instance the most popular Amala eatery in the Abuja is fast losing many of its customers because of their costly service as well as rude, dirty and lousy waitresses. At this eatery, you can be on the queue for long and when it’s your turn you receive a cold and unhospitable treatment, the waitresses look unkempt and some may even insult you. Some people have noticed this too and opened other Amala eateries in response and of course I patronize the newer ones because they are also cheaper and serve better food.

Underserved Market Needs
Some particular markets are not well served. Take for instance the lucrative Abuja to Lagos transit route. People rarely ride in good buses with well-trained drivers and pay an affordable fee. If a bus company can provide good drivers, comfortable buses and affordable fares, naturally travelers will chase them. The leading interstate travel businesses in Nigeria started this way (I won’t mention names) before the hiked their fares. It is a proven strategy that creates quick big sales. Just provide the correct market need and you are good to go.

Defective Product Features
A particular product may not be very good in terms of how well it can serve the customer needs. Some products for instance have low shelf life, others may be hard to move while some others might satisfy the customer one way but create problems in other ways. A savvy entrepreneur will see this and look for a newer better process that will produce a superior product.

I will conclude this post by saying, look for problems that a product or service creates or fails to solve or look for customer complaints or problems affecting people in groups, the operating business environment and therein lies the business opportunity and when you find one, remember it makes sense to plan to have it up and running profitably with a professionally written business plan to guide you.

Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com

Thursday, March 29, 2018

Sample Small Scale Poultry Business Plan in Nigeria

There are two types of poultry businesses in Nigeria namely; backyard poultry and commercial poultry. The backyard poultry is usually a small sized poultry business which most times is run from residences and have a capacity for less than 1,000 birds which are reared for either meat or eggs. Most operators of backyard poultry business in Nigeria run them as an extra source of income for the family hence it’s not surprising to see civil servants and housewives running this business.

The commercial poultry on the other hand is run from farm houses owned by business enterprises engaged in rearing chickens for meat or eggs. Unlike the backyard poultry, commercial poultries need huge capital outlay, technical expertise and complex marketing strategies. It’s not just enough to have birds for sale but getting those birds to the market on time is the real deal with commercial poultries. The faster the sales they make, the more profitable they can become.

Market Opportunities for poultry products in Nigeria
Nigerians consume about 1.2 million tons of poultry meat annually according to Poultry Association of Nigeria whereas all the poultry farms in Nigeria produce 300,000 tons per annum leaving the outstanding 900,000 tons to smuggling since officially there is a ban on importation of poultry products in Nigeria since 2004. 

Secondly, egg production poultry is more lucrative than meat production hence why Nigerian poultry farms generate 650,000 tons of eggs per annum. On average it costs N15 per day to feed an egg laying fowl but that fowl which will likely lay between 180 to 288 eggs per annum can fetch you between N4,500 to N7,200 per annum for each bird. 

The average daily cost of feeding a meat producing fowl is about N13 per day and they can be sold off within 22 weeks after being purchased as day old chicks for between N1,200 and N2,200 depending on their size and breed. The poultry business can also involve large scale hatchery i.e production of day old chicks in large quantities for resale to poultry farms. 

Poultry Industry Challenges in Nigeria
There are many challenges poultry businesses face in Nigeria regardless
  • Inadequate finance to fund expansion for small poultries due to risky and unusual nature of poultry business which commercial and micro finance banks are not eager to lend to. 
  • Disease epidemics are a recurring theme in this business with bird flu resurfacing in February 2016. This has led to loss of birds by unfortunate poultry farms although government sometimes pays compensation 
  • Bird feeds are very expensive 
  • Transportation and logistics are major operating challenges for poultry farms in getting their products to their target market 
  • Presence of many middlemen and competition leads to low profit margins for poultry farmers 
  • Smuggling and illegal importation of poultry meat mostly from Brazil which is much cheaper than locally produced poultry products leads to reduced demand from local consumers 
Financial Projections on Poultry Farming Business
  • Total sales for egg laying poultry of 1,000 birds is N8,640,000 and N6,000,000
  • On average annual net profit per egg-layer is between N1,200 and N2,400 per annum multiplied by total number of birds = N1,200,000 to N2,400,000 for 1,000 birds
  • On average net profit per broiler is between N100 and N400 per quarter multiplied by total number of birds = N1,000,000 to N1,600,000 for 4,000 birds reared per annum
  • Return on investment is between 10 to 40% per annum, that means if you invest N1 million into this business you should expect between N100,000 to N400,000 depending on the location of your poultry and proximity to your customers and other operating costs
How Much does it cost to start a poultry business in Nigeria?
The assumption for this startup cost is based on setting up in a residential part of a town or even a village. The second assumption is that the profits will be ploughed back into the business to fund expansion

  • Second hand Poultry bird Cages – N96,000
  • Poultry House/shed – 250,000
  • Animal Feeds – N120,000
  • 100 Birds – N120,000
  • Rent on 1 acre of Land – N50,000
  • Contingency – N150,000
  • Total – N786,000
Paul Onwueme is a professional business plan writer since February 2014 and has achieved respectable results with his business plan writing service with some of his clients attracting funding to their business or securing bank loans. He can be reached on: 0803 206 4106  or email me: paulonwueme@gmail.com

Monday, February 19, 2018

Sample Business Plan on Car Repair and Service Center in Nigeria

The Auto repair and vehicle service center in Nigeria is largely dominated (at least over 90%) by informal and small sized providers. These are mainly poorly trained car technicians with very little formal education who repair, maintain and service cars belonging to usually better educated people. This often creates many unpleasant situations for the clients who may misunderstand the technicians and vice versa or less than satisfactory service rendered.

If you ever had the displeasure of working with a road side mechanic who is poorly educated, doesn’t know his/her job well enough, lies to you about prices of car parts you need to replace and still behaves badly while working for you, it won’t be a surprise if someone insists that car service centers are a must for Nigerian car owners.

A professionally run Auto repair and Vehicle service center would have certified and well trained mechanics and technicians, adequate equipment for technicians to work with, more current with professional service standards, can accurately tell you want is wrong with your car and won’t waste your time and money because of trial and error work which many road side mechanics are used to doing.

The market for this revolves mostly around corporate bodies with fleet of vehicles, that includes; government agencies, transport companies, manufacturers, schools, banks, telecoms companies, embassies, security agencies (police, civil defense, DSS etc), hospitals etc
  • Auto Service Centers service a gap which roadside mechanics have created
  • Their services tend to cost more because of higher overhead costs but offer greater value for money to end users in comparison to roadside mechanics
  • They serve the formal sector better because of the professionalism, measurable performance and value they have to offer 
  • Road Mechanics are usually unorganized and unreliable.

Opportunities for Auto Service Center in Nigeria

  • Nigeria has a huge number of second hand vehicles which are in need of corrective maintenance meaning the market pool is large
  • Nigeria has one of the highest incidents of road crashes
  • Most Nigerian roads outside of the major cities are not ‘motorable’ which is one of the major causes of frequent breakdown and damage of cars and car parts
  • Nigerians attach a lot of importance to second hand car spare parts which only offer temporary reprieve for car owners trying to service their vehicles
  • At least 55% of vehicles on Nigerian roads are for commercial use which contributes to their increased mileage, need for servicing and tendency to breakdown
  • The business operates within a range of commercial ventures meaning multiple revenue streams
  • The unprofessional and dishonest attitudes of most mechanics often times means those who can afford it would rather patronize the auto service centers
  • The Nigerian middleclass is sizeable and despite the economic challenges is still growing annually
  • The second hand market value of cars continues to drop (in dollar terms) and there are indications that this would continue for years to come as newer car models keep hitting the market yearly
  • Large number of organisations operate fleets of cars in Nigeria and they have managerial requirements which most road side mechanics cannot meet but well run auto service centers can
  • Car ownership numbers in Nigeria keeps going up, combined with rapid urbanization means potential annual sales growth
  • Most of Nigeria’s transportation needs (at least 98%) is by road with interstate transport services conveying at least 19 million people daily
Challenges Auto Service Centers may Face in Nigeria include;
  • Professionalism and Competency issues with Auto service technicians is more common than rare
  • Many Nigerians still believe they pay too much for car maintenance which means acceptance towards Auto service centers would be rather slow
  • They are often plagued by high operating costs and low profit margins
  • Securing crucial contracts from large corporate clients can be very difficult
Startup Costs for a Car Service Center in Nigeria
  • Rent – 960,000
  • Auto Service Tools and Equipment – 1,240,000
  • Adverts, printing and stationery – 60,000
  • Furniture – 340,000
  • Salaries (6 months) – 1,800,000
  • Operating Costs (6 months) 1,800,000
  • Other costs – 3,259,680
  • Total costs – 9,360,000

Financial Projections for first year
  • Gross Sales – 19,800,000
  • Cost of Sales – 3,960,000
  • Operating Costs – 7,200,000
  • Profit before tax – 8,640,000
  • Taxation – 2,592,000
  • Profit after tax – 6,048,000
  • Breakeven – less than 10 months
  • Payback period – Second Year
Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com