In this sample business plan for the setup of an electronics’
and gadgets shop, we are going to be exploring the local opportunities available
to the Nigerian market and some of the likely challenges that intending shop
owners and investors might face when they commit to this venture. Also explored
is a breakdown of the startup cost and sample 1st year financial
projection. In this sample plan, I am assuming that the shop will stock brand
new products rather than second hand products.
Introduction
An electronics shop is a business venture that stocks and
retails such items as TV sets, fridges, home theatre system and microwave oven
among others. There are also gadgets to know that such as; generator sets, air
conditioning sets, refrigerators, washing machines, electrical standing fans,
water cooling fans, deep freezers among others.
At present dealers in this business can specialize in making
sales using different avenues from online shopping malls such as; Jumia to
traditional brick and mortar stores and even use of word of mouth and repeat
business. The business is promising and the breakdown of this opportunity explains
it.
The Market Opportunity
for Electronics, Appliances and Gadgets in Nigeria
Nigeria is a consumer economy with a large market comprising
a very young population with the mean age being 23 to 25. This age group happens
to also be the main market that uses electronics or prioritizes usage of these
devices in homes and offices. The major drawback is that the population group
is not as financially empowered as the slightly older 26 to 45 year olds who
also makeup another spectrum of the consumer market.
On a good day most Nigerian consumers cannot afford brand new
devices above 90,000 naira and would most likely settle for second hand options.
Even when they can afford the higher end products they usually save up for
months before they can buy up their dream appliances.
Due to lack of specific market information about purchases
made by consumers, we are left with intelligent guesses and two market reports
from online merchants. Available data indicates that the largest market regions
within Nigeria are; Lagos, Abuja, Kaduna, Rivers, Delta and Edo states which
account for over 70% of total national demand if the report based on their own consumer
interaction from the ecommerce giant is to be accepted.
Local households in Nigeria can contribute about 60 billion
naira per annum to the overall market share while commercial centers such as;
bars, fast food restaurants, offices, hotels, banks, schools, government
agencies, media houses and factories to name a few also make up a more sizeable
portion of this market which could be twice more in value than households. The details
of this estimate are available on request by email.
A major factor driving demand is changing lifestyles with the
rise of social media and increase in access of affordable cable TV services to
low and middle income classes in Nigeria. There is also the rising use of
global ecommerce websites like 1688.com and Alibaba.com by Nigerians to import
unique but high quality products at very low prices which is an indirect driver
for new demand among the price sensitive segment of the consumer market.
Owing to
growing popularity of online shopping, cashless policy being accepted by a large
segment of Nigerians the traditional method of selling electronics is gradually
becoming obsolete - although more than 90% of Nigerian consumers still go
through this method.
The Major
challenges for selling Electronic Devices in Nigeria
- Inadequate consumer financing options. Where this is
resolved, it could encourage increased consumer spending
- Decreasing purchasing power affecting consumer
spending in Nigeria since 2016
- Challenge of logistics and shipping which makes online
shopping opportunities difficult to achieve
- High import tariffs which contributes to high price of
electronic goods which in turn decreases demand and slows sales for local
merchants
- Local dealers also have to worry about security of
their goods as break-ins and armed robberies are realistic threats which can
set a business back by many months. Security management is a serious issue.
|
Startup
Costs in Naira
|
|
|
Inventory
|
3,000,000
|
|
Office Furniture
|
120,000
|
|
Stationery
|
30,000
|
|
Logistics Van
|
2,000,000
|
|
Cash at hand
|
400,000
|
|
6 months salaries
|
720,000
|
|
Rent
|
900,000
|
|
Other costs including contingency
|
300,000
|
|
Total
|
7,470,000
|
The success factors for this business were not highlighted
nor explored in this miniature sample business plan but these and more details
are available on request. In the startup costs I have included a logistics and
delivery van which will also carry out marketing. Key to the success of this
business is being located in a strategic area. The estimate assumes the
business is situated in Lagos.
|
First
year financial projections
|
|
|
Gross sales
|
36,000,000
|
|
Cost of sales
|
28,800,000
|
|
Gross profit
|
7,200,000
|
|
Running expenses
|
3,600,000
|
|
Profit before tax
|
3,600,000
|
|
Taxation
|
1,080,000
|
|
Profit after tax
|
2,520,000
|
|
Breakeven month
|
8th month
|
|
Payback
|
Middle of 2nd year or
3rd year
|
|
ROI
|
34% (approximate)
|
Are you
interested in starting an electronics, gadgets shop in Nigeria and need a
bankable business plan written for you? Give me a call: 0803 206 4106 or email
me on: paulonwueme@gmail.com to have
one prepared for you.
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Other
Sample Business Plans in Nigeria
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