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Sunday, August 13, 2017

Sample Business Plan on How to Setup an Online Fashion Store in Nigeria

An online fashion store in Nigeria is a viable business venture but there are challenges which could potentially stifle its potential to be profitable, sustainable and ensure growth. Nigeria is one of Africa’s fastest growing and largest e-commerce markets and is expected to be worth at least N152 billion ($400 million) in annual sales by 2020. There are at least 150 existing fashion stores with online presence competing for a share of the ever expanding (16.1% annual growth) Nigeria target market. More of this breakdown will be explored in this article. 
An online fashion store is an online shop which stocks and sells a range of fashion items such as; hair products, clothing, bags, shoes, wrist watches, belts, cosmetic products, perfumes and designer fabrics among a host of other products. The online fashion store business hasn’t been around for very long with the major players in the market coming on board in 2011 with dealfish (now Olx.com.ng) setting the pace and the entry of other players such as; kasuwa now jumia.com.ng, konga, kaymu among others coming up at various times between then and 2015.

The Opportunity in Nigeria’ Online Fashion Market
In 2014, the Nigerian online retail market was worth at least N800 million per week in gross sales with fashion items capturing a sizeable 25 to 30% of that amount especially clothing and shoes. By 2016, the market has grown to over N1.5 billion a week with at least 105,000 transactions conducted on the two largest online retail stores namely; Jumia and Konga – despite an economic recession.

By 2020 when more Nigerians would have improved online shopping options with the expected development of online payments, the market would experience weekly sales of over N3 billion going by current market growth rates and expected market impact of technology and increased purchasing power of Nigerian shoppers.

The current demand level for online shopping is driven by several social and economic factors among which are; increasing urbanization, improved payment systems, increased brand awareness, cheaper internet access, stronger customer retention strategies and 12 other factors which will progressively increase annual demand by online shoppers for fashion items.

There are strong indications that less than 12% of Nigeria’s potential online market has been captured as at 2017 and this has implications for new entrants into the market as well as the top two market players – Konga and Jumia who currently control over 85% 
of all localized e-commerce transactions in Nigeria.

Challenges with setting up and running an online Fashion Store in Nigeria
There are at least 22 identified challenges that will adversely or moderately affect the success of running an online fashion store in Nigeria but here are a few to take note of;
  • There is very stiff competition in the market that new entrants must deal with if the hope to reach their target market.
  • Online scams in Nigeria is a major deterrent to online shopping among the potential target market
  • Cybercrimes like hacking, identity theft, phising and many others present serious logistical and financial challenges to online stores
  • How will customers in rural parts of Nigeria be served with their deliveries
  • The high incidences customer complaints which are left unattended to usually create negative backlash for online retail stores
  • Creating a trusted and respected brand is very expensive and many new startups must find less expensive ways of doing this which is painfully slow and inefficient

Financial Summary
The financial projections for this financial analysis is based on 5% sales conversion rate and average of N6,000 per transaction and 8 transactions per day for 300 days in a year, cost of sales 79.2% of gross sales.

Startup Summary
  • Premium e-commerce website: N250,000
  • Inventory: N500,000
  • Advertising Budget (6 months): N300,000
  • Operating costs (6 months): N630,000
  • Contingency: N300,000
  • Rent: N300,000
  • Other expenses: N600,000
  • Total: N2,880,000

Profit and Loss Summary  
  • Gross Sales:                 14,400,000   
  • Cost of Sales:               11,400,000
  • Gross Profit:                  3,000,000   
  • Operating Expenses:       1,260,000
  • Profit before Tax:           1,740,000
  • Taxation:                           522,000
  • Profit after Tax:              1,218,000
  • Return on Investment:       42.3%
  • Breakeven Period:           8th or 9th month
  • Payback period:              24th to 30th month

This is a challenging business to do but there are also plenty of untapped opportunities as the market is not properly served even by the big players. The success or otherwise of this opportunity depends on your ability to meet your sales target which in turn depends on having an effective marketing strategy and a thorough knowledge of market trends and consumer needs. Achieving these requires a detailed marketing plan and the right team to work with to make them happen.

Looking to setup an online fashion store in Nigeria and wish to have a professionally written business plan to help you accomplish setting one up? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com

Sunday, August 6, 2017

The Business Opportunity in Nigeria’s Demand for Foreign/Overseas Education

There is a booming market for overseas Education in Nigeria. Nearly 1 million Nigerians study abroad and they spent over 1.5 trillion naira in 2016 on foreign education according to the speaker of the house of reps – Yakubu Dogara. What makes it interesting is that the figure has been increasing yearly since 2010 because of identified gaps in local Tertiary Education plus the fact that securing overseas Education offers better job opportunities both within Nigeria and abroad, increased skillset and access to globally recognized professional networks which could offer opportunities for future financial and technical partnerships.

The demand for foreign education is one of the main reasons the Naira is losing its value against major foreign currencies but sentiments aside, if a business opportunity exists, it remains a business opportunity and is open for savvy individuals to exploit.  

The Market Opportunity for Foreign Education Service in Nigeria
There are many reasons why Nigerians especially the middle class group seek foreign education opportunities. The main reason is that when armed with a foreign degree, the sky is the limit indeed. You can secure foreign employment and be paid in dollars, pounds, Euros which is much better than being paid in naira. Alternatively you can be employed and paid handsomely in naira by a multi-national company based in Nigeria (oil companies, telecoms operator, United Nations, hospitality operator etc) or secure a plum job in one of the top government institutions such as; NNPC, CBN, DMO or Nigerian Customs to name a few. This means a lot of Nigerians associate it with improved future standard of living.

Second reason is Nigerian degrees are not well respected even here in Nigeria not to talk of overseas. Imagine you have a Masters’ degree obtained from a government owned University in Nigeria and you have to compete with a Bachelor’s degree holder from one of the best Universities in the UK for a position, the foreign educated graduate has a huge advantage over you. Nigerian Universities are notorious for; money for grades, sex for grades, exam malpractice, certificate forgeries, industrial strike action, cultism etc which contribute to declining academic standards and many employers both local and foreign are aware of this. So Nigerians who can afford it prefer to offer their children quality education they can defend and use anywhere in the world which sadly most of our local Universities are not currently offering.

Third reason is the possibility of emigrating from Nigeria if things don’t improve career wise. After toiling for years with little to show for it many Nigerians leave for better economic opportunities abroad and the reality is Nigerians living abroad are the third largest contributors to Nigeria’s overall foreign exchange earnings. Meaning that if after returning to Nigeria with your degree obtained abroad, you can relocate if Nigeria becomes too hot for your career to bear.

Where is the Money in this Business Opportunity?
If you wish to exploit this business opportunity you may want to look into the following outlets;
  • Overseas Educational Consulting: provide prospects with information about the best courses, schools, and countries they can pursue their Educational and career dreams. You can also provide them with information about scholarship opportunities, financial aid programs and other sources of funding for their tuition or even countries that offer free tuition opportunities and how to secure admission into such opportunities. You make money here by signing them up for your consultancy services.
  • Exams tutoring: most overseas educational opportunities require candidates to write different exams, which usually have cutoff marks which they must score before their application can even be considered. Getting that minimum score is always a problem and you can charge them money to prepare for these exams
  • Seminars, workshops and Trainings: you can charge a token fee when you organize seminars, workshops and training opportunities for intending students which will open their eyes to different opportunities that will fit into their budgets or even preferences. These seminars can show them various; undergraduate courses, post graduate courses (Ph.D degrees, Masters Degrees, post graduate diplomas), technical education opportunities, professional training courses, employment opportunities, scholarships, free tuition colleges, endowment funds they are eligible for etc  

Top 10 Countries Nigerians migrate to for Foreign Education - based on cumulative national cost of School Fees
The following countries based on the estimated average sums and population of Nigerians studying in these countries;

Top 10 destinations for Nigerians seeking Foreign Education as at January 2016 with estimated amounts spent as school fees in 2015 in each country
  • United Kingdom (nearly 18,000 Nigerians studying in the UK spent over N104 billion on school fees)
  • Ghana (71,000+ Nigerians studying in Ghana spent over N72 billion on school fees)
  • United States (7,300+ Nigerians studying in the USA spent over N39.4 billion on school fees)
  • Malaysia (13,000+ Nigerians studying in Malaysia spent over N19 billion on school fees)
  • Canada (3,500+ Nigerians studying in Canada spent over N13 billion on school fees)
  • South Africa (2,500+ Nigerians studying in South Africa spent over N9 billion on School fees)
  •  Australia (1,400+ Nigerians studying in Australia spent over N7 billion on school fees)
  • Russia (3,300+ Nigerians studying in Russia spent over N6.8 billion on school fees)
  • UAE (1,500+ Nigerians spent over N5.8 billion on school fees in Dubai and other UAE campuses)
  • India  (1,200+ Nigerians studying in India spent over N2.5 billion)

To study abroad in most foreign Universities, the least amount you will likely pay when converted to naira is roughly 1,200,000+ and that is for Ghana whereas in US universities you may pay as much as $15,000 per annum depending on the University and course of study. Also this breakdown does not include other expenses such as consultancy fees, accommodation etc.

There are many agencies already operating in the field which is highly competitive but there are still other opportunities which are emerging such as online degree courses, educational affiliations with very sound but less known Universities, webinars etc. This is a multi-billion dollar opportunity for which nearly 1 million Nigerians stand to benefit.

Looking to exploit this opportunity and need a solid marketing plan or a business plan in Educational consulting? Give me a call: 0803 206 4106 or email me for details: paulonwueme@gmail.com

Wednesday, August 2, 2017

How to Setup a Profitable Beauty, Hair Salon in Nigeria

A beauty salon is a place where mostly women visit to receive beauty treatment/services for their hair, skin, nail or facial needs. There are different forms of beauty salons such as nail salons, hair salons, beauty parlours, cosmetic shops or even spas. Each of these type appeals to different target market needs. Today’s article is merely dealing with the hair aspect of the beauty salon business in Nigeria.

Market Opportunity for Beauty Salons in Nigeria
There is a huge market for haircare products and hair treatment service in Nigeria. Nigeria is Africa’s second largest market for hair products with consumers spending over $210 million (N798 billion) in 2016 on hair extension products alone (both natural and artificial). The average middle class Nigerian woman (21 to 45 years) spends between N9,000 to N30,000 monthly on her hair mostly on extensions.

This is because for most women in Nigeria, their hair is a source of confidence and scruffy looking hair even for a not so classy lady is a nightmare they wish to avoid. As a result they go through a lot of inconvenience to have a really nice hairdo – spending hours at a salon ‘fixing their hair’, saving to raise the required amount to make the next hair style in say 2 or 3 weeks times – even sometimes the buck falls on the men in their lives to foot the bill of styling their hair.

A conservative estimate of this market reveals that at least 5.1 million Nigeria women qualify as target market who can spend within the N9,000 to N30,000 monthly range which means a beauty salon that in a big town or city such as; Lagos, Abuja, Port Harcourt or Benin should be able to attract sizeable patronage if they have an effective marketing strategy in place.

Target Market Summary Hair Extension yearly gross sales in Nigeria
·         Total population: 24.45 million (2010 est.)
·         Urban Population: 13.45 million
·         Middle class Population: 5.1 million
·         Estimated spending for Nigerian middle class women on hair extensions:  N797.6 billion

Challenges of Beauty Hair Salons in Nigeria

  • Irregular Power Supply: the main challenge is having adequate power supply to power the different machines required. This doesn’t come cheap because fueling costs and maintenance cost fluctuate very unpredictably and this can affect the bottom line by as much as 30% of gross profit.
  • High cost of Rent: as if that is not enough, finding an ideal location for a premium hair dressing/treatment service is both expensive and difficult. If you want to target the middleclass and you can’t afford to find a place within their reach that you can afford, how can you possibly achieve your sales target?
  • Difficulty in finding competent hair stylists: professional hairstylists mostly prefer to be self-employed but when they are not, usually don’t come cheap. But that is if you can even find them because they are hard to come by. Which means you’ll have to make do with apprentices and inexperienced hairstylists which may delay your business growth for a while
  • Difficult customers: some customers don’t know what they want and even when they know may make ridiculous and frustrating demands. Others may be very rude and aggressive to your staff and may bad mouth you and your business. Dealing with such customers can be difficult especially if they have been patronizing you for long and have even referred others to you.
  • High amount of fake/counterfeit hair products: the market has been infiltrated with low quality, cheap imitation hair extension and hair creams/shampoos which makes delivery quality hairstyling difficult and frustrating if your customer insists on buying her own hair style products. 

How much is required to setup a Beauty/Hair Salon in Nigeria
For a small sized operation with 1 main professional stylist and 3 assistants/apprentices, a good breakdown should look like this;

  • 2 wall hair driers – N80,000 (N40,000 each)
  • 2 hand hair driers – N10,000 (N5,000 each)
  • 4 hair straighteners – N16,000 (N4,000 each)
  • Stock on hair creams/shampoos – N100,000
  • Stock on other hair accessories – N40,000
  • 1 year shop rent – N300,000
  • 3 months operating costs – N300,000
  • Signage and print advert – N90,000
  • Furniture – N300,000
  • Contingency – N300,000
  • Total – N1,536,000

Financial Summary and Projections
Assuming you can on a daily basis attract 6 customers and the salon is open for 300 days in a year with each customer paying on average N4,000 for your service then the projections should look like this;

  • First Year Sales – N7,200,000
  • Cost of sales – N2,880,000
  • Gross profit – N4,320,000
  • Total Expenses – N1,800,000
  • Profit before tax – N2,520,000
  • Taxation – N756,000
  • Profit after tax – N1,764,000
  • Payback period – 10th or 11th
  • Return on Investment – 115% within 12 months

You can recover your initial investment within your first year if you can achieve your sales target and minimize your operating costs. There is stiff competition in this business but there is also plenty of room to succeed - as this business favours innovative service and marketing approach.

Are you looking to start a hair/beauty inclined business in Nigeria and need a well-researched, well written business plan? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com for details

Saturday, July 22, 2017

How much does it Cost to Write a Professional/Standard Business Plan in Nigeria?

In this article, I will be attempting to answer this question - for any serious prospect ready to write a professional standard business plan prepared for his/her peculiar business needs. This question is important because it serves as a guide in the selection process so that you can actually work optimally with your budget and avoid wasting your money on the wrong type of business plan writer or even worse getting served with a watered down/poor quality business plan – usually copied online.

First before answering the question it is important for me to state there are two important facts you must not overlook when finding the right price for a business plan in Nigeria and these facts are;

Fact #1 - there are professionally written and low quality business plans being peddled for sale
There are low quality business plans which are craftily and dishonestly packaged as standard/professional business plans by people who clearly don’t know how to write any form of business document using standard business language and tone. Just as there is good quality, custom written business plans which are professionally written and which will be specific for your own business needs – not one that is written for any business and sold to you as if it will work for you. I’ll explain more about them shortly.

Fact #2 - there are real professional business plan writers and there are quacks pretending to be professionals
There are many quacks masquerading as professional business plan writers and there are few professional business plan writers in Nigeria. The quacks you can identify easily in three ways. First way and this is an easy giveaway is with their poor command of English. When you read their blog posts you can easily spot errors in their use of tenses, irrelevant ideas explored and poor analysis.

Another way to identify them is their lack of originality. There is no way a good business plan writer would be an expert in copying and lifting contents from other sources and still have the right imagination to write a business plan for you that will measure up to the minimum standard which very well informed bank officials and investors would be looking out for.

Thirdly you can identify the quacks with their lack of specialization. They are into many things, promoting network marketing programs, affiliate products, claiming to be motivational speakers, trying to sell you worthless ebooks they themselves can’t use because of the irrelevance of the expressed ideas and poor research put into writing it, claiming to be experts in many fields e.g agriculture, ecommerce, internet startups, supply chain management etc but the age of the business plan writer often shows he or she is both very young and is at best qualified for a junior management position – imagine being an expert in many fields but at the same time doing full time, small scale business plan consulting, how do they tally?

Prices of Different Business Plan Options in Nigeria
Here is a shortlist of different business plan options with their respective price range;

Free/Sample Business Plans – this costs nothing
You can easily find these business plans online when you do a search on google or bing. They are usually complete and have standard formats to work with but if you choose one of these business plans make sure you edit it well and paraphrase properly especially if you want to show a bank or investor. Secondly adapt the business plan to the Nigerian environment and in particular to your own business but also ensure that you also tweak the business plan format to match with your business opportunity and business plan needs. 

How much is a Pre-written Business Plan in Nigeria? - N5,000 to N15,000
These are already written business plans available for sale and for this price range it seems very attractive but I must warn you here, do not buy any of these types if you want to present it to a bank, business plan competition or investor because it has not been written for your own business. The person who wrote this is dishonest to claim you can submit this type of business plan to any bank, investor or submit to any business plan competition.

Imagine if 100 people buy this type of business plan to submit for a business plan competition and many of them are in the same business. That means there will be many similar business plans which will scuttle your chances of getting funded and this is even worse when you are dealing with banks.

Secondly when he wrote it, he wasn’t thinking about whether your business is located in Abuja, Lagos, Benin or Port Harcourt. Business success sometimes depends on location and also target markets differ and consumer behaviours in one region may differ from another region.

Thirdly, the business plan is outdated. Imagine a business plan for Maize farming for instance written in 2007 being sold to you for use in 2017. There have been a lot of changes in Agriculture over the last 10 years in terms of government policies, farming practice, resources farmers can access, new market situations etc but the person who wants to sell this to you doesn’t care about this except of course taking your money.

How much is a Custom written Business Plan in Nigeria? It’s N20,000 and above
For this type of business plan there are many price options so it is hard really to say it would cost you so and so amount. But here is what you should know about the price, it depends on the business plan writer, the type of business, the expected delivery date of the business plan and sometimes even the amount of capital the client is targeting.

Some business plan writers have a flat rate which they charge for any kind of business and they don’t negotiate prices with the client – either you pay what they are asking for or you simply have to move on to patronize someone else whereas some other business plan writers are willing to negotiate price with you provided you can agree to their terms.

With the bank of industry though many of their accredited SME consultants can charge you as little as N20,000 to prepare a business plan but there are others that don’t charge less than N150,000.

There are also other specialist business plan writers who charge at least N600,000 for a business plan but these are high level, highly experienced and very competent business plan writers who on their own are business consultants to large organisations and only do business with high net worth individuals and groups. 

Final thoughts on how much you should pay for a Business Plan in Nigeria

But for small sized entrepreneurs looking for affordable business plans to buy in Nigeria this is my suggestion. If your budget is between N20,000 to N50,000 and the business plan writer is not willing to negotiate his fee with you, try another business plan writer – but be careful so you don’t patronize quacks. If your budget is above N50,000 first ask the business plan writer for his fee, if he mentions it and it’s non-negotiable but within your budget then you are good to go.

If you wish to buy a custom/professionally written business plan in Nigeria, you can give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com for details