Logistics business in Nigeria: Cost, Profit and how to be the Best

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Logistics business in NigeriaLogistics Business in Nigeria is one of the most lucrative businesses to venture into currently. This is as a result of the ongoing covid-19 pandemic.

Just like the saying goes:

Covid-19 has been a disaster to so many persons; both in health and finances.

And at the same time, many people have made millions (even their first millions) from this same pandemic. Not illegal but legal.

There are so many legal businesses that have taken advantage of this diving global economic situation and one of them happens to be the Logistics business.

Before the inception of covid, Logistics services has been one of the unpopular lucrative businesses in the Nigeria business sector.

The reason being that; “nobody ever predicted of the day or year when e-commerce will be more demanding than going to the physical market”.

According to statistics by International Trade Administration, The current spending via e-commerce in Nigeria is $12billion and it is expected to hit $75billion per annum in 2025,

So as it stands now, even after the pandemic, logistics services will still be one of the most lucrative businesses in Nigeria.

Because logistics service is the transportation mechanism between the e-commerce sellers and buyers.

Meaning, when you buy from an e-commerce shop like Jumia or Ali express, the seller on that platform gets the goods to you through an independent transportation system.

That independent transportation system is called logistics.

And because it is an independent logistics company it means it is open for anyone that desires to own a logistics company.

That is why I will not only be giving you reasons why you need to start this business but also how to be the best in this industry among your competitors.

That being said, let go straight up to what you need to start your logistics service in Nigeria and how to make it a success.

1. Business Name

Having a business name is as important as having business capital.

Giving your business a name is a way of showing to the public the credibility of your company.

Nobody wants to deal with a company without a name. They will rather engage with a fraudulent company with a name than a legit business without a name.

And when it comes to giving your Logistics company a name, let it be a name they(public) can easily relate to eg; Cargo to Nigeria, Fando Freight, Confidence Cargo, Airex Logistics etc.

But if you are finding it difficult to come up with a name that is relatable, you can also choose a name that is not difficult to remember like; Fortune Global, Loriku Logistics & Procurement, Bowagate Global Services, Chibyke Global etc.

The most important thing is to have a business name.

2. Business Plan

Starting a business such as this caliber without a business plan is like driving without direction and destination.

I know some persons will say you really don’t need a business plan if you know what you are doing.

Except you want to go collect loans.

But how can you know what you are doing when you don’t know where you are going.

A business plan goes beyond giving the loan officer a reason why you should get it.

It gives you the projection of the company and also prepares you for strategic times that might either take your business high or bring it down. In any of the two, it helps to keep you inform ahead of time.

It also helps you to maintain a good cash flow. Whereby preventing you from spending more than your monthly budget.

The advantages of having a business plan before starting a business are way more than you think.

And if you still haven’t been convinced enough about having one, then I advise you do proper research on; “why you should get a business plan”. As you can’t start this business without a business plan I assure you of that.

3. Capital

Capital is the core part of every business.

In fact, without capital, a well-written business plan is just a mere paper.

In starting this business, it is advised that you start with nothing less than N250,ooo niara.

With 250k you can be assured of covering both the registration fee and a bike.

With that you are good to go on a small scale.

4. Equipment

What is the essence of having a good business name, a business plan, and a reasonable startup capital and not having a single piece of equipment?

It means you must be checked mentally if you are ok.

Equipment is as important as the capital itself as nobody will order your services if you don’t have what it takes to deliver their orders.

List of equipment comprises of ;

  1. Cargo Bike or Van
  2. Mobile Phone
  3. Office Space ( which you can start from your apartment)
  4. Computers
  5. Dispatch Box
  6. Stationeries

1. Cargo Bike or Van

Logistics cargo bikeAs a starter, it is advised you start with a cargo bike first. As the money and demand keep coming in, a van will be needed.

When getting your bikes it is recommended you go enquire about the specific bike that is recommended in the state your business is.

The essence of enquiring about the specific bike model is as a result of the laws in the state (mostly states that have banned the use of bikes).

Please don’t overlook and think it is not necessary, because it does.

And if by any chance you violate the standard bike model for the state be assured that police will be the regular benefactor from your business.

And lastly, get your bike tracked because some riders could be funny.

2. Mobile Phone

Of course, a mobile phone is essential, not just for you but also for your riders.

How can people reach you when they want to place an order or how can you reach your riders when there is a need to, vice versa.

So the essence of a mobile phone is not something that can be substituted as it is very needed to run this business successfully.

And as a starter, you can also be using your mobile phone to track in the case where you can’t afford a computer.

A good Andriod or iOS phone will be a good edge to start with.

3. Office Space

If there is anything that can easily be substituted, is the office space.

If you know your capital isn’t enough, you can make your home your office space for the time being and as time goes (alongside an increase in money and customer base), you must get your office space.

But I recommend as a starter, if you can’t get a very cheap and secure office space, please use your home.

4. Computers

Like I said on the mobile phone; “if you can’t get a computer please get a Mobile phone (make sure it is a good mobile phone)”

The main purpose of having computers is to keep track of records which can be substituted with a book (in the case where you can’t afford a computer).

With computers, you find it easy to track your bikes in real-time because of its capacity to perform various functions without slowing down or closing other programs.

And of cos, you can also take orders when you either have a website that people can place orders on or when you register on other online platforms that connect you with potential customers.

That’s is why I said; “if by any chance you what to substitute a computer for a mobile phone, try as much as possible to get a good mobile phone that can serve the same purpose easily.

Lastly, please don’t waste your money getting a second-hand or third-hand computer as it will affect your business either from the overused software or dead batteries.

If indeed you say you need a computer, please get a good one, as some computers are more terrible than some terrible mobile phones.

5. Dispatch Box

Delivery Dispatch boxDispatch Box is what is normally seen at the back of bikes owned by other courier firms.

The Job of the dispatch box is to enable the rider to take bulk items from the office along with him while making deliveries.

Meaning, It prevents the scenario where the riders will have to pick an item from the office, go to deliver it, and still come back to pick another for another delivery.

This dispatch box help the logistics company and the riders to save both resources and time while carrying out their services to customers,

And finally, it is also advised you design the outer part of your dispatch box or boxes with your companies logo and contact for more publicity.

6. Stationery

This comprises items that make the logistics service run efficiently.

This includes; Biros, books, table, chairs, cartons/store boxes, rulers, etc.

Without these items, you might find it difficult to run your business efficiently.

5. Staff

If there is anything in this business that you must be sensitive to, it is at this point when you decide to recruit staff or staff.

It takes just one bad staff to bring a great company down.

But the amazing thing is; before that staff takes your business down, there must have been signs to show that, that particular staff is beginning to go rogue. Immediately you notice such attitude I advised you fire that particular staff immediately without wasting time.

If you delay you can be putting the existence of your business or company at risk.

The question now is; how can I get good staff for my Logistics organization?

When recruiting your staffs these are the things you must put into consideration:

  1. Put your emotion aside
  2. Only consider those with working experience (Even if is a month of working experience in any industry or business as a whole).
  3. You need at least 0ne guarantor (Mostly with logistics business that involved other peoples’ items)
  4. If it is a position that got to do with recording, give an eye test (through exam questions that focuses on the eyes)
  5. Confirm their addresses (very important)

After they’ve passed that test, these are what you must put in place to checkmate their activities.

  1. Make up your rules and regulations with a notice that the day they start breaking the rules it means they are saying they don’t desire to work in the establishment anymore.
  2. When you notice a thief among them, don’t hesitate to fire immediately.
  3. Anyone who lies unnecessary is likely a thief and should be fired.
  4. Always watch out for your staff as a good one today can become bad tomorrow.
  5. Never you re-employ anyone you fired because he stole or wasn’t honest.
  6. And always reward Good and honest workers (nothing is too small)

If you carefully follow the listed procedures above there is a 99% chance of having the best people around.

I know as a starter, you might not have enough funds to employ too many staff. So it is advisable that you be your first Dispatch rider or you employ a rider while you be the second rider.

Last and most important advice; “Never you mix work with pleasure”

6. Build a Brand

It is important that potential customers or customers in general, have a way of differentiating between your courier business from others.

Branding gives you a big edge over your competitors, by registering a permanent reason on their minds, as to why they must not give the closest competitor the orders but you that is far away. That is how powerful branding can be.

In having a good Business brand these are the things to put in place

  • Honesty
  • Exceptional customer care service
  • Fast delivery
  • Online presence (An App or Web page or both)

In addition; “As a starter, it is advised that you be specific on the category of item to deliver; either perishable or non-perishable.

But as time goes on you can create a sub-sector in the business that can support the opposite category you choose to add to the existing category.

7. Insurance

It is important you insure your logistic business in other to prevent loss from either damage on delivery or theft.

The insurance company is not a new word in the business sector in Nigeria, but it is mostly overlooked by most business starters.

And I must tell you; “if you really have the intention of having a logistic business where you can be at peace, even if, you hear some of the goods got burnt” then you must get your business covered in full, by a respectable insurance company”.

8. Management

No business survives outside management.

And for your business to even survive, it must be under good management.

I know as a starter you might think this doesn’t apply to you. In reality, it does.

Be it you have one staff or 10 staff, you must learn the management skills to bring the best out of them and that is why I have taken my time to write well-written articles that will assist you in becoming the best boss.

Cost and Profit of Starting a Logistics Business in Nigeria

Before I start breaking down the cost and profit of logistics services in Nigeria, you must understand that Nigeria is the highest internet user in Africa.

And almost half of the population that uses the internet has and still engages in e-commerce.

So roughly, about a 100million people buy or sell in e-commerce. What a potential market.

But the short in delivering company has made it possible for many people to venture into this business even till this day and still make it in a huge way.

The cost of starting a logistics company comprises of;

  1. Business Registration: N10,000 naira
  2. Motorcycle driver’s License ( normally called a drivers card): N55,250naira.
  3. Purchase a good bike 150,000 (secondhand cargo bike) or 350,000 (new cargo bike)
  4. Office space: you can use your home
  5. Stationeries cost will not be more than N10,000 naira

Total = N225,250 Naira (With secondhand Cargo bike)
Total = N425,250 Naira (with new Cargo bike)

Minimum Profit from monthly Deliveries

A typical Lagos delivery costs N500 naira and sometimes more if the distance is really far.

So using the minimum cost of N500 and 1,000 monthly deliveries as a start ( 35 deliveries daily)

N500 X 1,000 = N500,000 naira monthly revenue.

Note: The probability of doing more deliveries daily and monthly will always continue to go up as long as you keep building your brand.

But of course, there will recurrent expenses like; bike maintenance, riders’ salary, and miscellaneous expenses.

So roughly, you can always have a net profit of N300,000 naira monthly. Even some bank managers don’t earn such an amount.

Conclusion

Now you have understood how the logistics transportation business in Nigeria works and how to become the best.

If you have any contributions or questions leave them in the comment section below.

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One Comment

  1. Emeka March 10, 2021

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