Sample Business Plan Baby Products Retail Store in Nigeria

Nigeria has a huge market for sale of baby products ranging from diapers, to baby clothing to baby shoes, baby toys and other products that can be associated with children under 18 months of age – those that can reasonably be breast fed or still growing little teeth. 

In all Nigerian homes I know, babies are the darlings of everyone. They can possibly do no wrong but they are the most destructive, restless, playful and distracting members of many households. They have needs and the loving parents know this very well.

Socially Nigerians tend to celebrate with their family member, friend, colleague, church member or neighbor who just put to bed. Guess how they choose to celebrate with them – by buying baby products as gifts presented to the parents as a way of showing their love for the new child. It is a very common

The Opportunity in Selling Baby Products in Nigeria
There are many opportunities in Nigeria to sell baby products in Nigeria. Let us start with the population of new born babies. In 2016 an estimated 5.2 million babies were born in Nigeria with over 2 million of them born to parents who reside in many Nigerian towns and cities. The main customers of baby products reside in the towns and cities of which an estimated 40% of Nigerians are resident in. The big towns and cities include state capitals, transit such as towns, trading towns and other densely populated commercial areas etc

Nigeria’s Population is growing very fast

Nigeria’s population is growing at an alarming 3.2% per annum which would make Nigeria the 3^rd largest country in the world - by population - by the year 2050 when our population would reach 400 million. This is because family planning is not widespread in Nigeria. Most homes have at least 4 children even among educated middleclass families. There is also the issue of early marriages. In Nigeria women get married as early as 21. Combine that with our high fertility rate of 5.7% - this means most Nigerian women between the ages of 19-39 will bare at least 5 children which is the 10^th highest in the world. Nigeria will keep producing millions of babies every year.

Huge Pool of Customers in Nigeria

There is a huge market pool of over 38 million customers to consider (parents with children less than 2 years). About 15.2 million of them reside in state capitals and cities such as; Lagos, Port Harcourt, Abuja, Benin, Jos, Kano, Ibadan, Ilorin to mention a few. This population keeps increasing year after year meaning that by next year we should be expecting a higher population of parents with children less than 2 years of age.

Products are affordable to the Nigerian Middle Class             

Thirdly baby products are relatively affordable for the middle class who are 23-30% of total population according to the World Bank. In Nigeria middle class families consist on average two parents and 4 children with gross household income of N120,000 and above. Most middle class families can afford to buy this range of products and they reside mostly in the urban centers. 

There are few Specialist Baby Product Shops

There are a lot of shops that sell baby product but very few of them are specialist stores. This means they can only stock their shops with the most common baby products i.e diapers and baby food but not on baby clothes. Most people buy their baby products from corner shops and Supermarkets in Nigeria. Secondly they are not likely to source quality baby wares and products at the best available price.

Family Planning is not widespread           

Nigeria is one of the least compliant countries in the world when it comes to the use of contraceptives and other family planning methods. Our cultural, religious and social practices encourage larger families compared to European and Asian households. 

Low Marketing Costs                                                             

Being a retail product that cuts across many social and economic divides, the cost of reaching potential customers is relatively low compared to many other products. There are marketing strategies that can achieve good results in a short time with a small budget that fits into this business. This offers a chance for investors to realize quicker sales if the marketing approach used is cost effective

High Profit Margins                                 

Baby products also carry a higher profit margin than many fast moving consumer products. Some baby products such as diapers can attract 10% or more in sales margin compared with other kinds of consumer items.

The Challenges
There are many things that could affect your business negatively or prevent you from achieving your business goals. In Nigeria I have identified at least 9 for baby product range of businesses but I will only explain 3 in this article;

Counterfeiting of Baby Products
One thing common in the Nigerian landscape is how soon a fast moving product is counterfeited or produced using substandard ingredients in order to make a quick buck. It cuts across drinks, to clothing to bags, shoes and a lot more and certainly baby products are not excluded. The unfortunate thing is that consumers often don’t know better. This can actually discourage some people from buying from your store. 

Strategic Shop locations are expensive                                                       
To have a strategic location to drive sales to your business is very hard to come by because the available spots are usually very expensive and can contribute to your already high operating cost

Stiff Competition
A lot of people already know about this business and there is no way they will sit back and allow others profit from it. Since there are many alternatives to the products you will be selling you will likely lose some potential customers so long as people can order for the same product from someone else. But this shouldn’t discourage you as aggressive marketing works well when there is stiff competition

How to Find Customers
There are at least 15 different ways I know you can find new customers for your business. There is word of mouth, targeted internet marketing, social media marketing, use of a strategic shop location, online shopping malls among other methods many of which are low budget and effective.

Startup Requirements for Baby Products Retail Store in Nigeria

• 2 years’ Shop Rent – 1,200,000
• Inventory – 3,000,000
• Adverts and Marketing – 600,000
• Working Capital – 600,000
• 3 months salaries – 300,000
• Contingency – 600,000
• Total – 6,300,000

NB: required staff; 2 sales girls and 1 marketing executive

1^st Year Financial Summary

• Gross sales = 18,000,000
• Gross Profit = 5,400,000
• Net profit before tax = 3,240,000
• Taxation = 972,000
• Net Profit after Tax = 2,268,000
• Return on Investment = 36%
• Breakeven period = 9^th or 10^th month if sales target is met
• Payback period = 3^rd year

Assumption used in this projection is daily sales of N60,000, gross profit margin of 30% and 300 business days in a year.

Do you wish to setup a baby/children’s store in Nigeria and need a professionally written business plan for it? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com to get one prepared professionally for you.

What will be Africa’s Biggest Untapped Business Opportunity from 2017 to 2030?

In this article I’m going to be referencing facts and data from the World Bank, Africa Development Bank, National Bureau of Statistics, McKinsey global, KPMG and USA today in analyzing Africa’s biggest untapped business opportunity. I won’t be using citations - so you don’t feel you are reading an academic essay. 
 

This topic asks a question and I personally didn't have an answer till I read McKinsey Global services market report on this earlier this year. The highly respected marketing research company particularly mentioned an industry as Africa’s biggest business opportunity by 2025 – but I emphasized untapped. 

KPMG also reports that this business opportunity will thrive as more Africans start earning above $1,000 per annum - which is the minimum amount required to be classified as middle class in Africa by ADB and World Bank criteria.

I call it untapped because as of 2014 only 8% of Nigerians patronize them. Nigeria being Africa’s largest market (by population) is still lagging behind South Africa and Egypt by sales volume in this industry. Unlike other business opportunities in Africa, this one isn’t seasonal, short term or adversely affected by harsh economic conditions except by inflation and declining purchasing power. The irony though is that even so the industry still grows even with inflation and declining purchasing power.

• Africa’s Biggest Business Opportunity would be worth over $400 billion in sales per annum by 2020
• Over 420 million customers would patronize the industry by 2025
• Less than 40% of the entire market would be captured by 2025
• The growth of this industry would also involve massive economic growth (over 5% per annum) for many African countries.
• Internet technology would be a major driver of sales for this industry
• Increasing annual purchasing power from customers is projected for this industry
• The industry is expected to create many new age millionaires (less than 40 years of age) in Africa by 2030

What industry am I talking about? Let me tease you a bit. It is an industry that grows on average at 7% per annum in most African countries. It sells everyday items, is associated with the middleclass, it rarely experiences negative growth in Africa even during recessions except during civil wars and severe famine. 

I am talking here about the formal retail industry which comprises registered, taxable and regulated supermarkets, grocery stores, boutiques and clothing shops, food markets, online retail shops and any business involved in selling consumer items directly to consumers at retail prices. I am not referring to kiosks and informal petty trading although they also fall under retail albeit the informal sector. 

There has been a massive growth in population of most African cities due to rural-urban mass drift as young school leavers in rural communities migrate to towns and cities in search better economic opportunities. 

Many African cities especially national and regional/state capitals are growing at an alarming 3-5% per annum from rural-urban migration which puts pressure on domestic food security and increases local demand for consumer items and consumables.

Add the cosmopolitan lifestyle of most city dwellers and you begin to see why going to the supermarket or grocery store is more convenient that storing food supplies in barns or why maintaining a home garden isn’t feasible for them.

People can’t produce their own food items, design their own clothes, make their own makeup kits etc but they have needs for these things and the population of these people keeps rising every year in many big towns and cities in Africa. Currently less than 300 million Africans live in towns and cities but the story will change in another 8 years when their population will reach 420 million with at least 156 million of them being middleclass as against the current 60 million plus middleclass city dwellers. Nigeria in particular would have over 40 million middleclass urban residents by 2025.

Factors that will ensure the rapid growth of the retail industry in Africa

• Rural-Urban drift [Urbanization]
• Online Social Media influence on Millennials
• Westernization of the growing youth population
• Rapid growth in middl eclass population
• Large number of white and blue collar jobs in African towns and cities
• Improved enactment and enforcement of urban and town planning laws [Urbanization]
• Rising influx of foreign investors
• Increasing government spending on infrastructural projects
• Africa’s extractive and consumer based economy isn’t likely to transform into a more productive one even by 2050 giving room for the retail boom to thrive

What does this mean for Investors and Retail Entrepreneurs?

• There is a fast shifting trend observed among retail shoppers and consumers in Africa. Many of them now have access to mobile and internet banking, they have rising tastes for modern gadgets and products
• There is a rapidly growing population of millennials who are gaining purchasing power to buy and pay for goods and services. Most of these people would be looking online to purchase their preferred items
• Financial institutions in Africa are increasing their funding of consumer spending with tailor made services to their customers
• Africans are now going cashless which makes shopping; easier, safer, faster and cheaper
• More people will be able to spend cash on the go whether at the airports, schools, hotels, restaurants, at car parks etc

Conclusion for African Entrepreneurs and Investors

Investors and retail entrepreneurs should be looking to setup formal retail marts at strategic places in cities in Africa. Shoprite, Park ‘N’ Shop, Ebeano, SPAR and NEXT are not sufficient to meet these growing demand. More players should join and serve this market

Looking to write bankable business plans in Nigeria? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com

Professionally Written Business Plan versus Self-written Business Plan

If you read my previous article on various business plan options available to Nigerian entrepreneurs, you’ll understand why I’m writing this piece. I made a promise that I will expatiate on this topic with a review on why you should choose either a professionally written business plan or self-written business plan and I even went further to discourage my readers from ever patronizing any business plan writer who specializes in selling ready-made/already written business plans.

Today we are here to find out what makes professionally written business plans and self-written business plans the best two options for people seeking funding for their startups or expansion of their existing businesses here in Nigeria. If you didn’t read that article you can follow this link best business plan options in Nigeria to find out more about the article.

Kindly note that in this article I am assuming that anyone who wants to write his/her own business plan has exceptional research and writing skills and can present a standard business plan at least to a reasonable extent for it to be called a bankable business plan.

What makes professionally written and self-written business plans the best options?

These two options from my experience are the best for Nigerian entrepreneurs and I will give you 7 reasons why they stand taller than the other available options;  

1. They are both current with market/economic realities

The market situations in all economies change slightly over 5 to 10 years and drastically over 10 to 20 year periods such that certain trends, marketing approaches, market situations and buying factors which were relevant in the past suddenly start losing their relevance and influence on how the market will respond to a new product, market opportunity or strategy. Other business plan options don’t do much especially in researching the current and emerging market situation and economy to arrive at their assumptions.  

2. They contain the most accurate assumptions and forecasts.     Compared to all the other business plan options, these two options tend present more accurate assumptions and forecasts. This is very invaluable when preparing sales forecasts, financial projections and personnel planning. 

3. They tend to contain more thorough analysis.                                Professionally written business plans and self-written business plans also have a meeting point in that they tend to be more thorough with analysis. Usually there are visits and revisits of ideas already penned down as the research begins to unearth new ideas, findings and data 

4. Most precise research available.                                                These two business plan options also tend to ask the most pensive research questions that will give the writer a solid direction and flow when carrying out market research especially in determining market size, consumer behaviours, competitive analysis and cost effective marketing strategies.  

5. Offer plenty of room for corrections and improvements. 
Due to the dynamic and open approach in clarifying facts, there are many opportunities to change, improve and even alter aspects of the business plan that don’t seem to measure up with realities on ground. Other business plan options are less flexible. 

6.  Achieve greater funding results. 
From my experience, the business plans which achieve the best results in terms of receiving bank loans, attracting investors or achieve very concrete financial and marketing results are those written in person by either the entrepreneur or a professional business plan writer.  

7. They are both tailored to your specific business need. 

Unlike other business plan options which don’t consider your specific business needs, a custom made or self-written business plan looks at your specific business needs – the opportunity, your company setup requirements, corporate goals, growth strategies and personnel plan. The other business plan options fail to be customized satisfactorily in this way.

What to expect from Professionally Written Business Plans.

A Professionally written business plan usually involves the hired professional business plan writer asking you background questions about your business to serve as an initial guide in preparing your business plan. The procedure is for him/her to use this information in preparing you a business plan which is suited to your very business needs and with excellent research skills present it a very persuasive way to command respect and action from the intended target. The deadline for submitting a professionally written business plan varies but should be anything from 5 to 20 working days.

What to Self-written Business Plans  

The self-written business plan on the other hand is a straight forward thing since you already know your business, have industry information/data and experience in organizing resources to achieve results for your business, the only real challenge may be in terms of lacking analytical tools, finding the right business plan format to work with, access to market research findings and opinion of other consultants when criticism and review is needed to present a final document. But an excellent research work can cover all lapses so that in 20-40% of the time self-written business plan is just as good as a professionally written business plan – it all boils down to the research skills of the entrepreneur.

Professional or self-written Business Plans: Which Option?

I honestly cannot answer this question for anyone because if as an entrepreneur you are really good at research and have excellent writing skills the only thing stopping you is your busy schedule. If you have the time to write it my advice is go ahead with it.  If you lack the research or business writing skills then it’s better to outsource your business plan writing to a professional – with proven track records.

You can hire such a business plan writer to prepare your custom made, bankable business plans by simply calling: 0803 206 4106 or email: paulonwueme@gmail.com