Nigeria is a country that has been known to have plenty of traffic, but the conversion rate on these websites is low. That’s why many people are turning to logistics businesses in order to make more money.
The first step to starting a logistic business in Nigeria is determining the type of logistics you want to do. The most popular types of logistic business in Nigeria are freight forwarding, courier services, and distribution.
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Freight and Forwarding
Freight forwarding is the process of transporting goods from one place to another.
Transport includes getting a truck and hire drivers, finding out how much it will cost per kilometer or per mile, and then going through customs in order to pick up your cargo at the destination point.
Freight forwarding services also include handling all logistics like visas for drivers, handling shipping documents like customs forms and bills of lading.
Courier services are the process of delivering goods from one place to another in order for them to be picked up by the recipient. Courier service providers will also pick up orders at a customer’s business or home address, pack them into (frequently) a cardboard box, and ship them to the recipient.
Courier services are often used for sending small parcels of goods within one country but can also be used internationally.
Courier services are also used for last-mile deliveries in the supply chain. Courier service providers will transport packages either by land, air, or sea and have different rates depending on how fast you want your parcel to arrive.
Distribution or Despatch Services
Distribution or dispatch services are the processes of delivering goods to local vendors, distributors, and retailers. Distribution service providers will take your products from your warehouse and transport them by land, air, or sea so that they arrive at their final destination in a timely manner.
Big logistics companies in Nigeria most times offer all three types of logistic services to clients.
Distribution service providers can also collect items from multiple suppliers for you.
How Viable and profitable is a logistic Business?
It all depends on your business model and how competitive you are in the industry. Shipping companies like FedEx, UPS, USPS, DHL deliver goods to their customers anywhere in the world while other distribution service providers work within a certain radius of delivery.
All logistics businesses require capital, but it’s always worth investing if you want to do what you love.
You can choose to build your own delivery fleet, buy into an already established trucking company, or work with a third-party logistics service provider that manages the shipping and distribution for you. If you’re looking to start a logistic business on your own then it is important that you do a detailed analysis of all the costs that are involved.
Examples of Logistics Business in Nigeria
Nigeria has a booming logistics industry. You can study any of these leading companies: Courier Plus Services Limited, Skynet, GIG Logistics, Creseada International Ltd., Ocenj Logistics AGS Movers Lagos, etc.
Equipment Needed For Logistics Business
The following equipment is important for a logistics business. You will need:
- A computer with access to the internet
- Business cards or other marketing material to distribute in order to grow your customer base
- An office space, which can be as small as your home if you do not have much money and want to start that way
- A phone to take calls from interested customers
- Vehicle (depending on the type of business)
- Scaling and Measuring equipments
- Cars, Buses, Trucks, Bikes
Skills Needed For Logistics Businesses
In addition, you may need some or all of the following skills: leadership, management, analytical thinking, accounting, and finance. These are a bit more specialized than those needed for a general business.
Leadership – you need to keep your company running smoothly and ensure that it is in compliance with all laws
Management – for managing a growing team, making sure everything is getting done on time, resolving conflicts when they arise, etcetera
Analytical Thinking – as the director of operations or logistics manager, you need to be able to plan, strategize, and make good decisions based on what you know
Accounting – so that your company can stay in the black financially
Finance – for making sure business goals are met with limited resources
Steps to Start Logistic Business in Nigeria
1) Work out your Business Scope
You can start out as an agent, transporter, or contractor. The first step to starting a logistics company is to choose your means of delivery: bikes, buses, or trucks?
Will you be involved with interstate and intrastate deliveries? Do you want to focus on particular industries within the sector like retail stores in computer village, Lagos?
Answering these questions before beginning will help estimate how much capital it’ll take for startup costs that include purchasing equipment such as bicycles and/or vehicles (buses).
It also helps define what kind of work one might do once they’ve established their business based on whether they’re supplying transportation services only inside California state lines vs. taking orders from customers outside the state too.
2) Determine your business model (startup or Franchise)
Setting up a startup doesn’t require the same kind of capital as opening a franchise does. It’s possible to purchase what you need and start your business with less money. To succeed, it’s necessary for startups to have an original idea or service that meets customer needs well enough so they can get established quickly.
A franchise is already established. The company’s name, trademarks, and products are owned by the franchisor. Franchisees pay a one-time start-up fee for their local operations (called an Initial Investment), plus monthly royalties on gross sales to the franchisor who supplies them with marketing support, training programs, and a business system.
Typically, between $200k and $500k is required for an initial investment in any type of startup or franchise. Franchisees pay a one-time start-up fee for their local operations (called an Initial Investment), plus monthly royalties on gross sales to the franchisor who supplies them with marketing support, training programs, and a business system.
3) Create a solid Business plan
A business plan is a written statement of the objectives, strategies, and tactics for operating a company. It usually includes forecasts of expected profitability in various scenarios (e.g., “if sales grow by 20%”) and explains how these profits will be used to achieve stated goals.
Business plans are often classified according to their focus: strategic business plans address the company’s vision and its opportunity, operational business plans focus on the execution of day-to-day activities for achieving desired strategic goals (e.g., marketing strategies), financial business plans deal with budgeting and financing needs;
A well-written plan is persuasive to potential investors, lenders, employees, and customers because it demonstrates a complete understanding of the company’s context and direction.
A plan is a management tool that helps to identify, develop and evaluate potential opportunities that can generate value for the firm and its stakeholders.
Business plans typically include five types of information: (executive summary, external environment review, internal analysis, operating strategies) and tactics for operations (marketing, finance, and human resources).
4) Register Your Business with CAC
How do you feel when customers trust your business? The Corporate Affairs Commission (CAC) is the approved body for business registration in Nigeria.
When a Nigerian starts their own company, they need to register with CAC before starting operations; this can be done by either registering as a limited liability company or an individual proprietorship which costs less than the former but has drawbacks such as not being able to raise capital through issuing stocks and shares.
You can register either as a limited liability company or under your own business name.
The latter option is more affordable and flexible, while the former offers greater legal protection for investors who have an interest in seeing that their investment succeeds.
5) Open a Corporate Account
Now that you have registered your business with the Corporate Affairs commission you can proceed to your banker to open an account in the name of your business.
This is straightforward with banks such as Access Bank and Zenith Bank which offer this service for free if the company has less than N500,000 in the capital; larger sums will incur fees of up to four percent on deposits.
The business can also get an International Money Transfer License which will allow it to receive and remit funds overseas.
6) Get Start up Capital
To get the business running, you need to get start up capital from yourself or a bank.
You will need to get start-up seed money by yourself so that you can confidently invest in your own company and be more involved with its running.
This is because I don’t believe banks are very interested in investing their money into smaller companies which hasn’t demonstrated much.
You can also use the money from your savings account or borrow it from a bank but make sure you plan to repay in time and don’t overburden yourself with too much debt which will leave you struggling for long-term sustainability.
Once you have your capital, acquire all the necessary equipment. Make sure you are conversant with State laws, especially in states such as Lagos with heavy traffic, try investing in bikes for an affordable commuting option.
However, the government has made it more difficult to use bicycles as transportation by enforcing new rules on their usage and distribution while also levying fines against those who do not abide by them.
7) Get Insurance
You can get insurance for your delivery vehicles, the contents of your store, and even cover against damage to property.
A good way to find out what you need is by researching through local providers in Nigeria or asking other established businesses if they have a policy that suits these needs.
You may also be able to take advantage of discounts on buying insurance through trade associations.
8) Get a Legal Advisor
You need a lawyer to help you with all of the legal aspects that go into starting a business.
You will want to figure out what your property rights are, how to register and get licenses, how to make sure everything is in compliance with local laws and regulations, etc.
They can also be very helpful when it comes time for tax season or any other time you need to deal with a lawyer.
9) Do Competitive Research
Figure out who your competitors are and what they do. Find out how much you could potentially make if the business is successful, or find out what market share you’ll have to compete with for a specific product in an area of interest.
Then compare it all to see which option would be most promising and profitable for both short-term and long-term goals.
10) Get an office
You can’t run a business out of your living room. You will need to get an office space, register with the city and get all necessary permits or licenses, make sure you have power in the building, etc.
You can lease a property or buy one. When leasing makes sure you lease for a longer period of time to avoid changing locations every few years.
Next is to create your logo, website, Banners, Business Cards, letterheads, office seals, stamps, custom uniform wears, truck branding, car branding, office branding, and more.
You can engage the service of a brand management company, or do it yourself.
12) Get Employees for your logistic business
You will need people to help you, including an accountant or a financial controller.
First, hire the best talent from your country (if not available) and then outside Nigeria if necessary.
Your employees are your assets, so make sure they are good enough for what you want to achieve.
Training them is also important in achieving high-performance levels of each of them.
13) Map out a Strong Marketing Strategy
Your logistic business will not grow if it is just sitting alone.
You need a strong marketing strategy to make people know about your company and the services you offer.
Marketing includes Advertising, Marketing Communications Strategy Planning, Media Relations, and Publicity Strategies, Brand Development Strategic Approach, Product Positioning Strategically-oriented Business Analysis in the Market.
You need to create your marketing strategy before you start in order for it not to be too late when the time comes
There are three areas where a good market analysis will help: business environment, competitors, and customers.
Practicably, you need a strong marketing team that already has a number of clients on their list. These types of marketers are not hard to get with good remuneration and benefits.
14) Brace Up for Bumpy Ride
In a situation where the company is going through hard times, it’s very important to brace up for a possibly bumpy ride by having enough manpower and capital at hand. This will ensure that the business doesn’t get into an even more difficult situation when things start getting tough in the market.
The Nigeria Logistics industry is at the cusp of a booming phase. A lot of opportunities are available for those who want to start up their own logistics business in Nigeria, as well as those looking to invest in existing companies.
This article highlights some points you should consider before getting started on your journey towards success and profitability. With these tips under your belt, what will be standing between you and starting the successful logistic company of your dreams?
Nothing! Get going today with all this information by using it wisely!
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