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Tuesday, June 23, 2020

Sample Business Plan for Kiddies Toy Shop Setup in Nigeria



In this sample business plan, we are going to be looking at the opportunities and the constraints for setting and running a profitable toy shop in Nigeria. The toys and kiddies shop market in Nigeria is estimated to be at least NGN 420 billion yearly in sales serving a market with a population of between 12 to 15 million consumers (roughly 30% of the actual market size). This business is easy to start with a very small amount of capital required and running costs are also low. But there are challenges involved in running a kiddies’ toy shop in Nigeria. For instance, how to reach your target market to rapidly changing tastes in consumers that need keen observation to spot among others.

Business Opportunity for Kiddies Toys in Nigeria

According to UNICEF, Nigeria has at least 31 million children under the age of 5 years and 7 million children are born yearly. That means we have between 40 and 45 million children between the ages of 1 and 7 years who make up the overwhelming majority of consumers of kiddies toys in Nigeria. That means we are looking at a potentially sizable and growing market based on yearly growth rate in population and slowly growing middle class.

That makes this business very sustainable both for short and medium term although mass production of toys for kids’ use in Nigeria is largely unexplored for different reasons. High cost of production discourages investors from setting up factories that will mass produce toys of different grades. 

Counterfeiting, cheap imitations, cheap imports and inconsistent government policies notwithstanding, this market will grow yearly by between 5 and 20% (bearing in mind counter effects of recession, declining purchasing power and high running costs) based on increasing awareness of the market of the benefits of toys for children and changing lifestyles as more millennials become financially independent and responsible.

Some Kiddies Toys Market Opportunities in Nigeria  

  • A toy is a tool for aiding learning and self-discovery for children through play and games. It is not just a play thing but an educational tool but also a recreational tool. This is a selling point that should drive up demand for toys by parents.
  • Parents currently buy toys out of love for their children not necessarily for educational purposes but mostly for recreational purposes. That should change once they see the mental and social benefits toys can have on the development of their children, giving rise to a new consumer revolution
  • Currently parents spend between 500 naira and 3,000 naira monthly for the middle class. The upper class spend much more than this and are even more informed about the importance of toys to children’s development
  • The range of products include; Toy guns, Lego, super hero toys, baby dolls, tricycles, skating boards, hover boards, board games, computer games, video games, sports wares to name a few. These products have high profit margins
  • The market is poorly served by businesses with very little depth in understanding consumer needs and market opportunities
  • There is growing influence of western lifestyle on Nigerian parents and kids alike and this influence is expected to increase further as internet access becomes more affordable
  • There are opportunities to create franchises for major global players in toys retailing in high and middle income cities in Nigeria

Challenges of Kiddies Toys Market in Nigeria

  • Poor understanding of the benefits of toys for children by large segment of parents and even society at large
  • Poor marketing systems due to poor state of infrastructure for regional distribution and marketing
  • Counterfeiting of highly demanded products is inevitable coupled with the poor legal framework for protecting intellectual properties means investors in this market may likely be bugged down with similar frustrations suffered by the creative industry
  • The local technology for mass production is inferior to competing overseas players
  • Inadequate financing to fund growth and pursue new lines of production among other challenges

Startup Costs for setting up a Medium Scale Kiddies Toy Shop in Nigeria

This is just a sample to give an impression of what to expect in terms of pulling resources together to setup a toys shop. This is also for a medium term investment period targeting 4 to 7 years payback and ROI.

Sample Startup Costs for a Kiddies Toy Shop

Item

Cost

Inventory

2,400,000

Shop Shelves

400,000

Rent

900,000

Decorations and Renovation cost

300,000

Furniture

300,000

6 months salaries

900,000

Marketing budget

420,000

Working Capital

600,000

Contingency

900,000

Other expenses

480,000

Total

6,600,000

This is also a sample projection based on assumed average daily sales of 80,000 naira for 300 days in a year. More details about this breakdown or proper analysis available on request by email.


1st year Financial Projection for a Kiddies Toy Shop

Item

Figure

Gross sales

NGN 24,000,000

Cost of sales

NGN 16,200,000

Operating expenses

NGN 3,600,000

Profit Before Tax

NGN 4,200,000

Profit After Tax

NGN 1,260,000

Retained Profit

NGN 2,940,000

Breakeven month

10th month

Payback

2nd or 3rd year

ROI

44.5%

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

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