Starting an event center in Nigeria is a good long term investment. The business comes with a solid model with potentials for huge long term profits. Firstly, the property itself appreciates in value over time even without patronage. Secondly there is high demand for events hosting in Nigeria which means with good marketing and planning an event center can be a major source of passive income to its owners.
What is an
Event Center?
An event center is a place designed to host events and
provide support and hospitality for guests, visitors and people who the event
is meant for. It could be located within a single building or over an expansive
land area. They can vary in size, design, location and with or without in-built
facilities.
While a typical event center should host at least 400 people
at a time, most event centers actually host much more than that. There are
event centers such as the Muson center in Lagos or the Thisday Dome in Abuja
that can host up to 5,000 people at a time whereas others such as halls located
in hotels and botanical gardens may host 400 to 1000 people. We also have mega
event centers such as the Tafawa Balewa square that can host more than 30,000
people at time.
The Business
Opportunity
Nigeria is a bubbling, 'groovy' country known for numerous social
and corporate events. Typical events usually pull a large number of people
starting from 200 to as much as 40,000 people at times. At least every major
city in Nigeria holds events regularly that attract large crowds. A look at the market size - limiting this to just event centers in Abuja which can pull off over 6 billion naira a year from venue hall rentals from 300 event venues. Lagos and Port harcourt which have larger markets pull off much more than these figures.
Some examples of the most common events include; parties,
house warming, graduation ceremonies, kids birthday parties, church services,
music concerts, comedy shows, reunions, seminars, workshops and weddings to
name a few. The biggest opportunity for hosting events comes from Nigerians loving
to socialize and celebrate – our people can be very extravagant when spending
to host their social events.
Since we are a very accommodating, entertainment seeking and
sociable society with a large number of people who are obligated to share their
special moments with family and friends, you will expect a lot of spending to
accompany. When you hear about events pulling crowds with VIP tables or table
for 10 going for 5 million naira or more for an event that will last just 4 or
5 hours or sold out events (10,000 or more people in attendance) with cheapest
tickets going for 5,000 naira we can begin to see the potential market size.
The typical Nigerian would have a network of more than 100
friends and acquaintances and is an unspoken rule to invite as many of your
friends as possible for your child naming ceremony, funeral, weddings or
parties. You could lose some friends when you fail to do this.
Even in hard times, somehow there are still hundreds of
social events being hosted in Nigeria on a weekly basis. Take weddings for
instance, more than 24,000 weddings happen every week in different parts of the
country, and hosting a reception is always part of that wedding budget. Event
centers are part of the reasons weddings in Nigeria are very expensive. Renting
space can come as low as 100,000 naira per day to as much as 1,500,000 naira
per day depending on the event center and location.
Challenges
of Faced by Event Center Businesses in Nigeria
But it is not all rosy in this business. Large social events
tend to attract miscreants and lousy people who may cause unpleasant
experiences for your guests at your events center. So that means spending
heavily on security is a must. You would also have to worry about high startup capital
required for this business. You should be looking at 80,000,000 naira or more
for an event center as land is not cheap to buy in places like Lagos, Abuja and
Port Harcourt. Land prices are also going up in other cities.
Where is
the best place to locate my Event Center Business?
Since events typically tend to be of a social nature, an
ideal event center should be located in a very accessible part of town that is
well known to many people. This will make it easier for people to visit such
centers when events are holding. You would also have to consider parking space
as event centers lacking parking space along busy roads can cause nightmares
for motorists if they are hosting major events. Security is another factor. Places
with high incidence of crime and insecurity are not ideal locations for event
centers to name a few among other critical factors not mentioned in this blog
post.
How to Market
your event center and Finding Clients
Event centers are very easy to market and promote. Networking,
referrals and use of strategic partnerships are the main source of new business
for event center owners. Others such as SEO and directory listing can also
provide additional sources among a list of other marketing tactics.
How
Profitable is Event Center Business in Nigeria?
Imagine an event center that hosts 2 events weekly and
charging 200,000 naira each, that will be 1,600,000 naira monthly which is an
impressive revenue considering that you only rented out space (not equipment or
machines) and besides spending money on generating sets to power the events
venue and providing security which are based on demand, other running costs are
low. Then event centers can also profit from high number of social events which
can mean steady supply of clients.
How much
does it cost to setup an Event Center in Nigeria?
That would depend on how expansive the land area would be and
the size and quality of the building. For instance if you are using a marquee
tent for instance as your event venue, it would cost you less than if you erect
a building for the same venue. Also the area the land is located can also play
a part in deciding how much it would cost you to set one up. But here is a
breakdown of startup costs. In this breakdown I am assuming use of marquee tent
as event center venue. The event venue is this sample plan is assumed to be
located in Bwari, Abuja and will have parking space for at least 40 cars.
Startup
Requirements
|
Item Cost Land (80m by
50m) 40,000,000 Full Option
Marquee Tent (2,000 capacity) 1,500,000 Generator
house 800,000 Generating set
(15 kva) 1,900,000 Banquet Chairs
(2,100) 8,400,000 Other
furniture 3,000,000 Marketing
Budget 900,000 6 months
Expenses 1,200,000 Other costs 2,300,000 Total 60,000,000 |
First Year
Financial Projections
Total sales 19,200,000
Gross Profit 16,200,000
Operating costs 7,200,000
Profit before tax 9,000,000
Taxation 2,700,000
Profit after tax 6,300,000
Break even Period 6
months
Yearly Land Appreciation 2,100,000
(assumed)
Payback period 5
years (appreciation + retained profits)
ROI 14%
NB: While the return from profit and retained cash is an assumed 10% of total investments, yearly asset appreciation would make up for the low ROI.
Are you looking to setup an event center in Nigeria and need a bankable business plan for it? Then send me an email: paulonwueme@gmail.com or call 08032064106
No comments:
Post a Comment