How to start a Retail Pharmacy Store in Nigeria

A retail pharmacy shop is a place where you can buy genuine (because we are talking about the peculiar Nigerian environment) drugs and other health based products approved by NAFDAC as safe for public use and available for sale.

There is a huge money making opportunity in running a retail pharmacy store in Nigeria. The market statistics show that although it is highly competitive and capital intensive, there is still a decent net profit margin of up to 30% on many products and annual return on investment of over 60%. So an investment of N5 million could yield over N3 million as Profit after tax within 12 months. The good thing about this business is that you can combine it with several complementary businesses e.g retailing groceries.

My research into the pharmacy store business shows that on average the middle class customer spends N18,000 per annum on medication and medical supplements and we are talking of about 44 million strong individuals (if we include the health and dietary needs of father, mother and children). This means that the market can generate at least N792 billion per annum just from the middle class alone. Incidentally there are fewer than 12,000 pharmacy retail stores in Nigeria which means there is a lot of room for new entrants to compete in this market.

What are the Challenges involved in setting up and running a Pharmacy Store in Nigeria?

With regard to setting up a pharmacy the few challenges one could likely face are mostly with registration, licensing and legal requirements. Although financing can also be a challenge however if you can overcome the other challenges you are more than half way there. The other type of challenge involved occurs during the business itself namely the rise in fake and low quality drugs in circulation despite NAFDAC’s best efforts at curbing them. Many pharmacies also don’t consider the medical situation and history of their customers as they readily dispense drugs without medical prescription which could possibly harm the health of drug abusers and addicts. There is the problem of over competition as well because of what the average Nigerian would call “Chemist” – a local drug dispensing shop often manned by an unqualified druggist or in some cases uneducated trader. There are also social practices which can also interfere with smooth running of the business such as; patronage of local medicine practitioners by people who should naturally be seeking medical care from a good hospital.  These challenges not withstanding pharmacy businesses are not going anywhere recession or no recession.

What makes Pharmacy Shops profitable in Nigeria?

Many Nigerians have unhealthy lifestyles which somehow makes it possible for pharmacies to thrive. Maintaining poor hygiene can attract disease carrying vectors which can cause various kinds of fevers and illnesses. In Lagos for instance more than 12 million people live in slums and unhygienic surroundings. Less than 8% of Nigerians eat healthy, balanced diet meals 3 times a day, most people are exposed to stressful situations which negatively impact on their health. People must buy pain killers, multivitamin supplements, skincare products, diabetic medications and a host of other drugs meanwhile the average Nigerian pharmacy store is just a middle man between the pharmaceutical companies that produce these drugs and the people who use these drugs with just a few overhead costs besides rent, salaries and levies/dues/taxes to deal with.

How can I start a Pharmacy Shop in Nigeria?

Besides meeting the professional and legal requirements you’ll need to come up with adequate Startup capital or just don’t bother starting at all except if you want to operate as a ‘Chemist’ 

How Much is required to start a Pharmacy Store in Nigeria?

• POS retail system – N180,000
• 2 Fridges – N250,000
• Pharmacy Shelves – N600,000
• Inventory – N1,800,000
• Rent – N600,000
• Contingency – N300,000
• Cash at hand – N370,000
• Other expenses – N900,000
• Total – N5,000,000

Are you looking to start a pharmacy store in Nigeria and need a bankable business plan and actionable advice on location and market strategy and to also attract funding or guide you in the business? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com for details

How to start a profitable Interstate Road Transport Service in Nigeria

Interstate road transport service involves transporting people and products/cargo from one part of Nigeria to the other and this business offers a lot of growth for businesses which are well run as the business creates opportunities to expand by between 50 to 300% per annum depending on the route and how efficiently the business is run. From my research I’ve discovered that a road transport service than grow its fleet by 50% every 4 to 12 months.

A road transport service in Nigeria is in high demand because thousands of Nigerians use the road as the main means of moving goods and services from one part of the country to another.

An estimated 3.3 million people travel daily from one part of Nigeria to other via interstate transport services. The most popular road routes are; Lagos to Abuja, Lagos to Port Harcourt, Kano to Abuja, Lagos to Benin, Abuja to Enugu, Lagos to Kano, Lagos to Onitsha and Aba to Port Harcourt which record the highest volume of road travelers daily. The most common reason people travel is for business as traders to buy goods from one part of the country where it is cheaper to resell in another part. For instance people travel from Lagos to Kano or Kaduna to buy Tomatoes and Onions to resell in Lagos at Mile 12 market, on the other hand many people travel from Abuja to Lagos to buy consumer goods such as clothing and other fashion items, stationery, mobile phones, computer accessories etc to resell to residents or Abuja and Environs.

Another reason people travel albeit occasionally is for leisure or official trips. For instance NYSC corps members being mobilized to camp, civil servants on official trips, business executives on marketing assignments to name a few. In addition to these are people who travel for holidays such as Sallah, Easter and Xmas. We won’t also forget people who travel for weddings, burials, coronations etc.

Opportunities in Road Transport Service in Nigeria

There are many opportunities in interstate road transport service in Nigeria and this is something a few companies have taken advantage of. First consider the huge population of students in various secondary and tertiary institutions in the country. That segment alone comprising over 4 million students is worth billions of Naira per annum. Second opportunity as earlier mentioned are traders who number over 6 million who travel even more frequently. Thirdly, millions of people need to send documents and goods at short notice from one part of the country to the other. This has led to many road transport companies setting up logistics and courier services to meet this demand. Some successful companies in this business include; Ifesinachi Transport services ltd, Young Shall Grow, God is Good, Peace Mass Transit, Edegbe Line and Chisco Transport Services to name a few. So if you intend going into this business it is good to mention a few areas you can specialize in;

Short trips - These are trips that last less than 5 hours and usually involves moving people and goods from one state to a neighbouring state such as from Abuja to Jos, Lagos to Benin, Lagos to Ibadan or Abuja to Kaduna. Because these trips are quick it is possible to use one bus for two trips a day. They are usually less expensive and prices go from N1,000 to N3,000 depending on the distance and volume of traffic on the trip.

Long trips – These are trips which last for more than 5 hours and are usually between distant states and cities such as Abuja in North Central region to Lagos which is in the South West or Enugu to Kano, Lagos to Port Harcourt, Abuja to Uyo etc. They are usually expensive and price ranges from N4,000 to N8,000 depending on the location.

Cargo Movement – This involves movement of both goods and items from one part of the country to another. The amount charged for this service depends on the weight and the distance of the trip.

Courier Services – this involves express movement of parcels and items on short notice usually less than 72 hours. They are more expensive than cargo which can take longer than 72 hours.

Why this business keeps growing annually

·         Large population of local business travelers

·         High cost of flight

·         Insufficient Airport facilities

·         Fast growing population

·         The poor state of the Nigerian railway system

Challenges in Road Transport Service

However this business opportunity has many challenges which could negatively affect sales, increase the cost, reduce profitability and lead to loss of vehicles and even manpower. Some of these challenges are;

·          

      High Road Crashes – about 0.03% accident rate which makes Nigerian roads some of the most notorious for road crashes. A single crash can negatively affect the success of a small transport company and even lead to it closing down

·         Armed robbery – Highway Armed robberies are very common on some routes especially at nights and these has led to loss of lives and property

·         Fuel price crisis – which often leads to low patronage and hike in transport fares

·         Poor Road Network – this can reduce the efficiency rate of transport companies as they can only do fewer trips whereas with improved road network there could be more trips which means more income

·         Sharp Practices by workers – some drivers and cashiers can be very dishonest they could secretly load passengers and cargo on some vehicles and not remit the money to the company. This is even worse when those involved work as a syndicate.

·         Activities of touts – touts who harass drivers for illegal tolls also constitute a threat to income and sometimes security personnel are also involved in this

·         Scarcity of quality drivers – good drivers who have been properly trained and have very good experience in road safety management and defensive driving are in short supply which is bad for business because one bad driver can cause the company to lose a lot of money.

Legal and Financial Requirements to set up a road interstate transport company in Nigeria

·         Registration with CAC

·         Registration with NURTW and NARTO

·         Accreditation by FRSC as a mass transit service

·         1 NO of 14 seater bus in very good working condition – N1,200,000

·         An office location – N300,000

·         Furniture and stationery – N120,000

·         3 months’ salary for (1 Driver, 1 Cashier and 1 Manager) – N360,000

·         Insurance – N120,000

·         Contingency – N300,000

·         Total – N1,800,000

How to Write a Bankable Business Plan in Nigeria

What is a bankable business plan? It is any business plan which is ready for presentation to banks (commercial banks or specialized banks such as NEXIM, Bank of Industry or Bank of Agriculture), investors (high net worth individuals, angel investors, venture capitalists or Philanthropists) or development agencies including NGOS. It must be a well written document which must be both persuasive and reliable with facts and figures that cannot be disputed.

If you are looking for a comprehensive business plan guide to lead you in your quest to writing a well written bankable business plan for whatever purpose – raising startup capital, as a working document guide or both, then exercise a little patience and you'll have enough to see you through.

When it comes to writing a business plan that serves the Nigerian environment from my experience I have discovered that several factors affect the choice of an individual or corporate organization to use a professional business plan writer. 

For instance someone may want to expand his/her business and approaches a bank for a loan, the bank may present them with a business plan format but the skill of putting ideas into words that can be read and properly understood is their main challenge. On the other hand they may be able to write but just don’t have the time nor are they willing to see it through even if they had the time. On the other hand, some people may want not have access to a professionally written business plan and so have no choice than to outsource it to a professional business plan writer to do it for them. 

5 questions you must answer to write a quality business plan

When you are ready to start writing a quality business plan, the type financiers and partners are willing to relate to you should be able to pass a simple acid test – 5 questions that will ensure that you have what it takes to write your dream business plan. Let’s start with question #1 below;

Why do you need to write a Business Plan?

A business plan is a well thought out document that details how a business opportunity can be converted into a viable business venture and how long it would take for that business to become; profitable, grow and capture a market share. It is a write-up which tells a banker, an investor or a potential partner on what is required to start a business, what the promoters of that business are going to do to make that business achieve its goals and how much they should expect from it if they put their money into the business. 

It is the best way to describe a business opportunity and show in facts and figures whether or not that business opportunity is worth anyone’s time. So if you have an idea which only you understands but need capital to turn that idea into a wealth and job creator you need a business plan to convince the right people.

Who needs a Business Plan?

#1 Investors They would like to know how much they’ll get when they invest their money into a business. What is the prospect for the company’s growth, what would be their market place against the competition, what exit plan is there in the event that the business doesn’t succeed among other things mentioned in the business plan.  

#2 Banks and other financial institutions 
Obviously no bank or financial institution would give a loan to a first time business without requesting for a business plan. Even if your business has been in existence but the bank has limited relationship with you, your request for a loan to expand will come with conditions one of which is a bankable business plan. The bank has financial analysts who are experts in assessing business plans and opportunities, they will give a nod to your request depending on whether your business plan is viable or not.

#3 Entrepreneurs
As an intending business owner, you’ll need a business plan to guide you so that you know what goals to set for yourself, what management structure you should employ, company objectives

#4 Government and Developmental Organisations giving Grants 
There are many development agencies and government institutions which give grants to small scale entrepreneurs and business people to either start a business venture that will employ other people or expand their existing business.

How can I get a professionally written business plan?

There are several ways to write a professionally business plan that will attract the kind of attention you need such as;

Option #1 - Hire a professional to write one for you

You can hire a professional business plan writer to do the work for you. This is a more expensive approach at face value because you pay a fee usually a hefty one to an expert to do the research, analysis and writing for you. However if you are to do this research yourself it may take you longer, you may do a shoddy job and still spend more money on field research, buying materials, consulting experts etc all of which may frustrate your efforts at getting your job well done.

Option #2 - Purchase a sample business plan template online

There are companies that sell business plans online. Although these business plans are complete the disadvantage is that they are mostly written for a foreign market such as the US or UK with no consideration for people living in Africa especially Nigeria. So this business plans may not be tailored to your specific needs

Option #3 - Write the Business Plan yourself

Writing the business plan yourself is the third and final option which most entrepreneurs with plenty of time to spare opt for. It may come as a surprise to many that writing a business plan is not so difficult but writing it well in a professional and persuasive way is the difficult part. However a very savvy and articulate business owner/entrepreneur should be able to write a very good business plan by merely following an outline either given to him by a bank or one he found online or through another means.    

What should go into a well written Business Plan?

The following parts are essential in a business plan. If you must write a business plan and omit anything it must not include any of the following - Ideally a standard business plan should contain 25 to 40 pages

1.0 Executive Summary: A summary of the entire business plan in as few as 2 pages or even less
2.0 Company Summary: An overview of the company, profile of its directors and promoters, legal status of the company, company startup requirements etc
3.0 Market Overview: is a situation analysis of micro and macro-economic factors, projected industry/sub-sector size and growth, projected GDP growth, market size, existing government policies etc 
4.0 Industry Analysis: statistical analysis of facts and data from relevant industry associations, government agencies and media outfits give investors clues about the economic direction and whether or not to invest in a sector
5.0 Target Market Analysis. This must include customer profile and segmentation, growth potential and trends. It must answer questions like; what is the population of people likely to buy your product or service within your defined target market region? How much do they spend collectively, what is the trend of 5 year sales like? What are key buying factors in the past, present and possibly future?
6.0 Managing Risks and Control factors: every business has risks, what are the likely risks you’ll face in your business.It would include; SWOT and PESTLE analysis and crucial answers to questions like - what are the opportunities and threats to your business? How can you overcome them?
7.0 Operational plan – what would be the company’s operations, operating hours and days in a year, which employees will handle what operations etc
8.0 Management Plan – organizational structure, management team and employment policy plan
9.0 Financial goals and Projections: what are the short, medium and long term financial goals and projections? What would be the financial position of the company in 5 years time? Other projections such as; profit and loss statement, cash flow statement, balance sheet, breakeven analysis, business ratios etc
Appendix – this would consist of references and addendum

How long should a well written business plan take?

There is no defined period for this but it depends on the kind of business and how much information is available. If you have 90% of available industry data and other necessary information about the business you could have the business plan ready in 24 hours for a small business or over a week for a large business, however when research and financial analysis is needed with little information, you should be looking at 10 or more working days.

  

Are you in Nigeria and need a professionally written business plan tailored to your business' specific needs? Then you should contact me either on: 0803 206 4106 or email me at: paulonwueme@gmail.com