Super Market Vs Fast Food Restaurant: Which is a more lucrative business to do in Nigeria?

This blog post asks this question because of the strategic nature investors and entrepreneurs seek out business and investment opportunities in Nigeria. There are many business opportunities one could look at in Nigeria but as I stated some months ago I’ll be doing a side by side review of business ventures in Nigeria as a way of guiding would be investors looking for new ventures to invest in and entrepreneurs on raising finance to fund their ventures. 

Let’s start with a hypothetical question - If you have N50 million today which of these two ventures would you invest in?

• A supermarket business or
• A fast food restaurant

If you haven’t read my article from 2013 about how to startup a mini supermarket in Nigeria the link is here for you to read.

Is there room for more investments in Supermarkets in Nigeria?

The supermarket falls under the retail sector of the Nigerian economy which has been growing at an average of over 13% per annum since 2009 and has led to many global retail giants coming to invest in Nigeria. Most people still shop informally at open air markets, which is not suitable for many busy city dwellers. There are also too many underserved market needs such as convenience, proximity, broad product range and attractive ambiance which many Supermarket customers look forward to but which many supermarkets are not still offering. This explains why huge investments have been made in this sector for instance Next Supermarket in Abuja, Grand Square, 4U, 212 Supermarket, World Mart, SPAR, Park n Shop and Sahad Stores have positioned themselves to grab a share of the market. In Lagos, Ebeano, Park n Shop, Domino Stores, Shoprite among others are making their presence felt.

Shoprite in particular has invested over $1 billion in less than 10 years opening many locations in Nigeria (at least 12) with plans to open more they even have some within stone throw from each other – Lekki has two in Lagos, there is one at Ikeja just to name a few whereas at Abuja there are three Shoprite locations built in less than 4 years and a fourth one is under construction at Lugbe Axis. Park ‘N’ Pay another big retail giant from South Africa is planning to enter the Nigerian market in 2018. Some other brands going online to grab a share such as Jumia, Konga and PayPorte have also invested heavily in reaching retail customers online. Overall less than 8% of the formal retail market has been captured by these big brands even with the huge investments they’ve made according to the Economist Magazine.

What can make a Supermarket in Nigeria profitable or otherwise?

In Nigeria a supermarket when located in a suitable area is a sustainable and profitable business to do. Of course bearing in mind that the operating costs have to be kept at a minimum for it to work but seriously if you setup a supermarket in a good location within any of the busy cities you can be sure of remaining in business for years even when other kinds of businesses are packing up left and right around you.

First the main costs of the business comes from inventory, rent, salaries and power supply all of which can be adequately met if your sales is within the breakeven threshold, the next question naturally to ask is what can I do to ensure that I meet my sales target. This is a closely guarded secret for supermarkets because there are techniques which you can apply to make people stay longer and buy more things when they walk in plus the way in which you arrange things in the supermarket can all contribute to how much sales you can make (more details about the marketing strategy available in a supermarket business plan on request)

Secondly there are challenges which can threaten the life of the supermarket for instance internal fraud by unscrupulous staff, high spoilage from perishable goods, repeated theft of various products even high value products by some customers, armed robbery attacks, rising energy costs and fire outbreak.

What about Setting up a fast food restaurant in Nigeria?

Fast food restaurants are very popular in Nigeria, in 2012 this industry generated over N250 billion gross sales from 800 restaurant locations nationwide which is an average of N313 million per year for each restaurant or N800,000 per day in sales per outlet. Mind you fast food restaurants have one of the highest profit margins of over 30% but they also have one of the highest operating costs among various industries - more than 40% of their operating income goes to powering and servicing their generators, they pay huge amounts for rent and pay higher salaries than most other hospitality businesses in Nigeria, despite all these they are still profitable businesses to do but they require qualified and technically sound people to manage them.

Fast food restaurant or Supermarket Business – where is the money?

While an above average fast food restaurant location does over N1 million a day in sales with estimated N300,000 daily operating income a supermarket outlet like Shoprite could be doing over N60 million per day in sales with operating income of over N1.8 million daily. This is because Fast food businesses rely more on value sales unlike Supermarkets that thrive more on volume sales. A fast food restaurant may actually prefer to specialize in selling a particular line of food if they can be sure of high profit margin and adequate patronage than for them to sell many food items with diverse profit margins. So it isn’t uncommon to find one restaurant known more for serving Pizza, another for great chicken based meals, another for continental food, some are great at confectioneries while some are better than others in Shawarma etc. Supermarkets must sell a lot of products in a short time and so must offer wide product selection to customers in addition to using other marketing techniques to prolong customer visits and encourage impulsive buying. 

I wish I could go on and on but I must stop here, if you have a strong desire to invest your money and you’re wondering which sector offers better prospects look out in future for more of these kinds of post but these two aren’t bad to look at. Thanks for reading.

Do you need a professionally written, bankable business plan? Give me a call: 0803 206 4106 or email me at: paulonwueme@gmail.com to have one prepared for you

How Lucrative is a Shawarma Spot Business in Nigeria?

The business of selling shawarma is a lifestyle venture and can also be called a branch of hospitality. The main customers are people who want to relax and have a good time and hence view shawarma as a snack or a light meal you take in between meals. It is very popular with girls in their late teens and early twenties and is very popular as a menu item on romantic dates or friendly get together.

Is Shawarma business lucrative in Nigeria and if so to what extent?

That is the crux of this article and I will be sharing ideas with you on how to start and run this business profitably. Kindly note my use of Abuja in this article is because I live in Abuja and my study area for research into this article is also Abuja but many similarities exist with other Nigerian cities especially Lagos and Port harcourt.

How high is the profit margin?

From my research I’ve discovered it could be as high as 200% but usually not less than 20% depending on who you are selling to. There are restaurants in Abuja where the cheapest Shawarma – usually a small size - goes for N2,000 while there are other places where a large Shawarma goes for N1,000. So location and target market can determine the price but how much is the ingredients used in making each Shawarma? The price is less than N600 per Shawarma meaning if you’re selling for N1,500 then your gross profit should be N900 per Shawarma but there is more to it than that this as several factors can make or mar this business.

How much sales can one look towards from selling Shawarma?

If you have a good location, your Shawarma is very good and you operate in a conspicuous, clean and very attractive environment you should be able to attract enough sales. I know a restaurant in Wuse 2 Abuja that sells over N200,000 per day worth of Shawarma and they also do deliveries which is not included in this estimate. So if you set out to sell Shawarma for N1,000 each and can do at least 80 a day you should be able to make N80,000 per day as sales

Related Sample Business Plans 

• Fast Food Restaurant Business Plan

• Event Center Business Plan

• Bed and Breakfast Hotel Sample Business Plan

• Bakery Business Plan

What are some of the Success factors to achieve good sales and high profit margins in Shawarma Business in Nigeria?

There are many factors that can determine whether or not you will succeed in this business and the most common factor is the taste of your shawarma. A very delicious shawarma has huge sales potentials because it can create loyal customers many of who will refer more customers to you, so ensure your shawarma will outclass every other one in the market. Another success factor is hygiene. The person serving the shawarma should be neat and presentable, also the environment where it is made must not stink, shouldn’t be close to a dirty place and should have something entertaining to it e.g feel good music playing in the background. Third factor is price of the shawarma, a good customer may want to buy more than one but your price could discourage him/her making them buy fewer number of your shawarma instead and there are several other factors that affect success in this business but not enough time to explain them.

How much do you need to start?

With as little as N450,000 you can start a shawarma business with a stand in a little corner on a busy street. The money can be used to pay for rent, buy second hand equipment, outdoor print adverts and initial supplies.

How quickly can you recoup your investment?

You can make back your money in as little as 3 months if you can achieve your sales target. For instance an investment of N450,000 working on 20% net profit margin (note I didn’t say gross profit margin) assumption and daily sales of N30,000 for 25 days in a month should recover your initial capital investment in 75 days or 2.5 months if you are able to achieve your sales target.

Do you want to start a Shawarma Spot Business and need a business plan to raise funds? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com and I’ll prepare a bankable business plan which you can show to investors or partners.

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

5 Lucrative Small Businesses to Start in Nigeria for less than N200,000

There are so many businesses you can start in Nigeria for a very little amount of money and you can within a couple of weeks be smiling to the bank. Let me state that I’m not saying you’ll become rich overnight with little stress, I’m merely saying these businesses don’t require much startup capital although they are very challenging and require a lot of attention at least at the initial stages for them to yield the desired results. Overall I’ll say if you find a suitable location and have a solid marketing plan in place you should be able to recoup your investment in less than 4 months and even increase your income two or three folds within 6 months. I’m confident in recommending these businesses because of the existing market trends which show growth.

5 Lucrative small businesses to start in Nigeria 2016

Here’s the list;

Shawarma and small chops

Shawarma is one of the most items on demand in outdoor evening hangouts for young romantics and it’s increasingly gaining prominence among young Nigerians especially in cities like Lagos, Abuja, Port Harcourt and Benin. At some shawarma joints in Abuja I know of more than 60 orders are placed daily at average cost of N1,000 that’s N60,000 from sale of Shawarma only, now think how much sales could come from offering roast fish with chips, suya and drinks.

Startup requirements: a stand for placing your machine, Shawarma machine, condiments and ingredients for preparing your shawarma, drinks, furniture, entertainment system and working capital.

Reselling Palm Oil

Palm oil is one of Nigeria’s best consumed agricultural produce although there are health concerns about the quality of locally processed palm oil and cholesterol levels however if you can prove to your customers that you sell well processed and health friendly palm oil you’re already in business as many middle class consumers are becoming increasingly health conscious.

Startup requirements: N150,000 startup cash to purchase stock, 100 jerry cans of various sizes, capping machine and N30,000 for marketing

Hair and Beauty Salon

Anywhere in Nigeria you find women who earn an income regularly, you’ll always have a way to make money setting up a hair and beauty salon. The trick here is to be better than the average hair and beauty salon, if you make excellent hairdo women will flock around your salon like ants do to sugar.

Home and Office Cleaning

This business works best in top cities with a large number of middle class residents and offices such as Abuja, highbrow parts of Lagos and Port Harcourt. Your main customers would be hotels, schools, law firms, fast food restaurants, banks, IT companies and even private residences. Very few busy people who earn well have the time and energy to carryout basic home and office cleaning when they have plenty of work to deal with, so the demand is for professionals to render this service which is usually outsourced, the good thing is you only need basic cleaning reagents and tools which could cost less than N100,000 in total.  

Freelance Marketing

You can also start a small business as a freelance marketing/sales person approaching businesses with unique and lucrative products to help them find customers for which you get paid a commission for any successful sale made through your referral. For instance you may approach a real estate dealer, a car dealer, electronics shop, Education consultant/foreign school placement agency, hotel or car rental service. You make money by getting people who need these services to contact you for enquiries, when you answer their questions satisfactorily they’ll naturally want to know how they can make payment that is where you hook them up with the actual seller. But make sure you sign a contract with the seller so that you don’t work in vain. With as little as N50,000 you can start this business and what you mostly need is an online presence – website, twitter handle, Whatsapp number, email and thorough knowledge of whatever you want to market.

Thanks for reading my article, I’m Paul Onwueme a professional business plan writer contact me if you need a business plan or business proposal: 0803 206 4106

How to Start and Run a Profitable Car Hire and City wide Cab Service in Nigeria

There is a growing demand for car hire service whether for airport shuttle (pick up and drop off) or intra city car hire by visiting businessmen, executives or tourists within a city such as say Abuja or Lagos which are key destinations for business travellers to Nigeria. The Car hire service can be classified both under transport and tourism sectors of the Nigerian economy because of the very nature the services are delivered and to the target market which are mostly foreigners on visits to Nigeria.

The Market and Opportunity

The market for car hire service is quite huge worth over N7 billion in sales (based on my own research) and is very flexible as you can combine several related ventures with your business enabling you have more than one source of income.  It is hard to compute figures for this market but according to a report monitored on Leadership Newspaper about 5% of Nigerian business travellers use car hire services whereas not less than 360,000 people visit Nigeria annually for business and most of them have a budget to cover their stay while here in Nigeria. Part of that budget would go into airport shuttle service and car hire which many hotels have taken advantage of. Once you arrive in Nigeria as a visitor and have booked a hotel to stay in, naturally you’d enquire about cab services within the city you’re visiting but not all hotels can provide this service and even those who can may charge much or may want to focus on providing core hotel services that they’ll rather outsource the service to more competent companies. That is where you come in as a savvy business person.

The Car Hire Industry in Nigeria – Regulators, Operators and Associations

The main operators in this business airport shuttle service, car hire and cab services who on behalf of clients provide mobility and convenience to tourists and business travellers within key cities in Nigeria. One of the requirements for anyone intending on doing this business is registration with relevant government regulatory agencies such as Federal Airport Authority of Nigeria (FAAN) for airport shuttle. If you want to operate a cab service you need to be registered with the regulatory state government agency for intra city transport and that varies from state to state within Nigeria. It is also advisable to join the Taxi Drivers and Cab Operators Association within your resident state. Alternatively you may want to instead partner with reliable taxi drivers to provide this service instead of operating a taxi yourself. 

Some Challenges in Car Hire Business

• Armed Robberies and Car theft – there have been reported cases of armed robbers holding car hire and cab operators hostage while they perpetrate their crimes within Abuja for instance. Although these are isolated cases they have a way of preventing the business from running smoothly whenever they occur plus your company's reputation may take a hit if your clients are unlucky to be robbed while using your service.
• Bad Roads - this can affect your efficiency and cause some inconveniences for your clients 
• Uncooperative customers - Some customers are very difficult to work with. They might make unrealistic demands or set unreasonable targets for you to meet.
• Dishonest employees - some may go behind your back by giving out their own numbers instead of the company's number to potential clients and pocket the money they receive from such clients without informing the company.

Startup Costs

• Fairly Used Salon Car (preferably Toyota, Nissan or Peugeout 2008 model or later) – N1,300,000
• Office Space – N400,000
• Furniture – N100,000
• Marketing – N300,000
• Other expenses (including car tracking, insurance, operational costs etc) - N600,000
• Total – N2,700,000

The payback period is less than 1 year depending on how quickly you handle your sales efforts.

Related Business Plans

Car Dealership Sample Business Plan

Car Booth Business Plan in Nigeria

Auto Repair Service Business Plan 

Do you wish to set up a car hire service in Nigeria and need a professionally written plan you can take to the bank or show investors? I can write you such a plan. Just give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com