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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 

Thursday, February 1, 2018

Sample Business Plan for Real Estate Property Development Ventures in Nigeria

Real estate property development in Nigeria has been around for decades and continues to attract huge foreign investments. It is one of the safest and most profitable investments available to serious investors looking for long term or medium term returns and there are additional incentives available such as; capital gains from real estate acquisitions and direct profits coming from sale and rent of real estate properties.  

Nigeria has a vast market for real estate property development – both Commercial and residential real estate opportunities exist in major towns and cities in Nigeria where the large urban population is in urgent need of qualitative housing. The quality of housing in Nigeria in relation to the amount its costs is exhurbitant because in comparison to developed countries Nigerians pay more per unit square meter for high quality housing than their counterparts in more developed countries. In comparison to most African countries Nigeria still pays more for even low quality accommodation which goes to show that real estate value in Nigeria is high owing to her huge population and fast rate of urbanization.

Let’s take a cue from a Place like Banana Island which is the exclusive preserve of the rich in Nigeria for instance would not even compare with many middle class estates in South Africa yet people pay as much as $150,000 per annum for so called luxury flats. Lekki district in Lagos Nigeria also attracts one of Africa’s highest rent costs for the middle class going at about 30,000 naira per square meter per annum which for a 3 bedroom flat would amount to roughly 2.4 million naira. The poor areas like Ajegunle were a “face-me, I face-you” single room apartment with shared toilet and kitchen starts from 30,000 naira per year show clearly that real estate investments  

  •       Nigerians from all works of life desire decent and affordable accommodation regardless of their income group but affordable housing remains out of their reach.
  •       Most Nigerians in the urban centers live in slums and other inhabitable surroundings for which they pay relatively more for than in other 3rd world countries

Opportunities for Investors in Nigeria’s Real Estate Market
There are many opportunities for investors to take advantage of in Nigeria’s vast real estate market. These cut across economic class, occupation, age, marital status and educational levels. For instance, recent university graduates in search of accommodation would typically settle for small flats (self-contained) whereas married couples with children may opt for 2 or 3 bedroom flats.

  • Nigeria has a huge urban population of workers employed in the formal which creates the right environment for property development
  • Government is unable to adequately meet the housing needs of Nigerians but has made strong commitments in the past towards this
  •   Property values in Nigeria historically go up by over 200% every 10 years
  •   Nigerians residing in towns and cities pay more for housing than most other Africans
  •   Huge population explosion has always been associated with Nigeria’s urban centers
  •   Investors are constantly pursuing new opportunities for investments which puts pressure on government to develop infrastructure
  • Over the last 10 years, there has been increased funding towards infrastructural development in many towns and cities which has seen real estate values doubling, tripling and quadrupling depending on the area

Types of Investment Opportunities in Nigeria’s Real Estate Market
If you are an investor looking to exploit the Nigerian real estate market here are some areas you should be looking into;

Residential Real Estate
This investment area should look towards providing housing access to the mass population but unfortunately this can only be for those who can afford it.
  • Blocks of residential Flats
  • Mini residential Estates
  • Luxury Apartment buildings
  • Single housing units (Duplex and bungalow whether detached or standalone)
  • High rise luxury buildings
  • Middle income serviced apartments
  • Sites and Services
Commercial Real Estate
  • Sky scrappers
  • Office buildings
  • Car parks
  • Event centers
  • Luxury Serviced Apartments
  • Theme Parks
  • Resorts and Hotels
Some Challenges of Real Estate Development in Nigeria
  • Presence and activities of touts and land speculators
  • Difficulty in accessing long term financing for home ownership
  • High cost of building materials
  • Activities of quack building professionals
  • Real estate management is almost an all comers affair with fraudsters parading themselves as genuine agents
  • Infrastructural decay and poor social amenities common in many towns and cities
  • Discrepancies and uncertainty about responsible authorizing agencies for land allocations in some states in Nigeria
  • Land use Act which presents hurdles for various kinds of real estate development
Startup Summary for a small scale Property Development Project in Nigeria
This startup summary is merely an estimate and for this particular example is assumed to be targeting low income residential apartment building in a major urban town or city.
  • Investment Outlay – 50,000,000
  • Office Furniture – 150,000
  • Adverts and Printing – 150,000
  • 2 years Salaries – 14,400,000
  • Office decorations and renovations – 300,000
  • 2 years rent – 1,200,000
  • Other expenses – 1,200,000
  • Total – 67,400,000
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