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What is Logistics Business?
Credits: Ejianreh Emmanuel
Logistics Business also known as Delivery, Courier, Freight, Transportation business, is one of the evolving business in Nigeria today.
The New Oxford American Dictionary defines Logistics as the detailed coordination of a complex operation involving many people, facilities or supplies. However, the Oxford English Dictionary defines Logistics as the branch of military science relating to procuring, maintaining and transporting material, personnel and facilities.A Logistics Business is therefore a business which specializes in movement of goods from one point to another.
Why you need to start up a logistics business?
With the outbreak of COVID-19, there has been lots of restriction in movements. Also, more people tend to purchase their commodities online. As more entrepreneurs are investing in e-commerce, there is also need for logistics companies that will help deliver their products to their customers nationwide.
8 steps needed to start logistics business in Nigeria
The steps I have listed in this article will guide you in starting your logistics business in Nigeria as soon as possible.
- Develop a business plan – a business plan is a document setting out a business future objectives and strategies for achieving them. In creating the business plan for your logistics business, you will have to include the following
Company name
Mission/vision statement
Business strategy
SWOT analysis
Business location
Manpower/employees
Financial plan
Competition
also read 7 Reasons Why Small Businesses Struggle in Nigeria
- Choose your method of operation- there are different levels of operation in the logistics business, and as a result there is need for decisions to be made on the following;
means of transportation i.e., bus or bike
transport route i.e., inter-state or intra- state
target industry
are you beginning as an agent, or contractor?
If you have no experience in the sector, it is advised you get attached with a logistics company to enable you learn and understand the flow of the business. Along the line you would also establish networks with companies that may represent future clients.
Funding- just like any other business, funds is required to purchase equipment’s needed as well as sort salaries of staffs. A capital of about #300,000 to #500,000 is required to kick start depending on your level of operations. In the absence of readily available fund, you can sell the business idea to potential investors with your well written business plan convincing them of the business profitability.
Acquire the necessary facilities and equipment’s – with funds available, you can proceed to purchase the following:
Vehicles/bikes- depending on your capital and location. For instance, if the traffic congestion is high in your target area, bikes would be preferable at the beginning stage for easy navigation but in an area with less traffic congestion, vehicles are advised. Make sure your vehicles/bikes have the necessary documents to avoid been delayed by traffic officers which could be a big waste of time.
Office space- a spacious office with parking space to accommodate your vehicles/bikes. In the office there should be a store where customers goods can be properly kept. The office should be located within areas in which your business relationships and connections are centered.
- Register your Logistic Company- people tend to deal more with businesses that are registered. Once registered, customers can trust you and see your business as a legit one.
The approved body that carries out registration of business in Nigeria is the Corporate Affairs Commission (CAC). Choose a good business for the company and also find out the necessary licenses and permits to be obtained to ensure the smooth running of the business.
also read 20 Entrepreneur Skills In Nigeria that you need to learn
- Create a website- a website would make your company known to people within Nigeria and all over the world. The website would enable customers book orders, track their goods from the point of purchase till it gets eventually delivered to them. It should be user friendly and easy to navigate. Also, there should be sections for customers review and most importantly the company’s location, email, phone contact.
- Employ staff- a logistics business can not be run successfully by one person; therefore, you will need the services of other people.
Some of the persons you will need to hire at the early stages include the following;
Driver – as a beginner, you can start as your own driver/rider to get acquainted with the system of the business. Then as the business progresses, you will need to employ more drivers.
The drivers/riders must be properly trained on how to relate with customers because whatever they do will either grow or kill the business
Customer care representative – he/she takes orders and keeps in touch with the customers. Such a person must be polite, non-vulgar, good listener, etc.
Store manager – he/she is to ensure that customers goods are properly arranged and kept before delivery in the store.
also read How to Register Your Business/Company Name with CAC
- Advertise your business – there is need for both online and offline advertising.
Adverts can be done via the following ways;
Newspaper publication
Radio/Television
Printing of handbills
Business card
Google adverts
Social media (facebook, twitter, Instagram etc.)
Common Challenges in Logistics Business
The commonest problems faced in logistics business includes the following
- Traffic – persistent traffic can slow down the delivery rate of good to customers
- Vulnerability of goods – some goods might get damaged on transit due to the nature of the road or in ugly cases of accidents
Communication breach – in some cases, customers do not give exact destination of their deliveries or might not be readily available to pick their goods.
How much do i need to start a Profitable Logistics Business In Nigeria?
With as low as a million naira you can be at the peek of grounding your own Logistics business in Nigeria, The reality is, it’ll be almost impossible to scale fast with just a ride and a logistics service offering. Progress will be slower as you wouldn’t be able to take enough customer requests to meet the profit you would have loved to.
I’d advise that with one bike, you work within your capability. Take only requests you can successfully manage so as not to disappoint prospects. You want to avoid heavy-duty tasks so as not to wear out that machine fast.
However, if you realistically want to run this business efficiently and to see good returns, you want to invest in more bikes. Adding two more to your existing one is a good place to start. This way, you have riders who can be in several different places at a time, take several orders and make several deliveries at a time thus covering a wider space and bringing in more cash. You can often ‘rent’ these bikes or go in for a loan. Nonetheless, if you’d like to start at a point considered ‘a lot safer’, get really creative with using your one bike to run errands, take one customer request at a time, take more ‘personalized’ orders (eg contracting with just one business or company to run errands for them) this could put more cash in the business. Then, save a lot of what you make to expand by adding one more bike. Continue like this gradually, and you would have scaled. And remember, the bike-riding logistics sector is gradually becoming competitive especially in major cities like Lagos and Abuja; you want to determine what unique angle you will be coming from with yours to be able to stand out.
With one bike, it’ll take real patience, commitment and a real understanding of your market to finally run a profitable business, but, it can be done. Otherwise, raise more business capital to add more wheels to your fleet so you kick off with a bang.
Notable Logistics Companies in Nigeria
Listed below are some of the already established logistics companies in
Nigeria:
- Redoxcorp Shipping and Logistics Limited.
Medical road, Suit 3B 3-9, Olu Koleosho street, Awolowo road, Ikeja Lagos. - Olive Logistics and Haulage Services Limited
Ikeja. Lagos - AB Logistics Ikeja. Lagos
- Courier Plus Services Limited Ikeja. Lagos
- Aaroco Global Logistics Apapa. Lagos
- IGIT Shipping and Logistics Company Limited Lekki. Lagos
- Fast – Trac Logistics International Limited Ikeja. Lagos
CONCLUSION
The Logistics business is a VERY Lucrative Business, and it requires lots of hard work, patience and commitment, just like the adage that says “nothing good comes easy”.
These 8 steps I have put together will set you on the way to starting your logistics business. Feel free to drop your comments after reading.
