Foodstuff business is one of the most lucrative business in Nigeria and the reason is not farfetched, food is something we can’t do without, life can go on without phone or electricity but without food it is not possible.
Food does not obey human law of discrimination both the rich and poor will surely eat at least one square meal per day
.All this epistle is to assure you that you can’t make a loss if you venture into foodstuff business, though you need to follow some steps or guide that will quicken your success and prevent you from making mistakes that can cripple your foodstuff business.
In this article we will be doing just what I wrote above. We will be guiding you through the process of starting foodstuff business in Nigeria not only that we listed the challenges of foodstuff business and their solution, niches of foodstuff business, cost and profitability of foodstuff business in Nigeria.
This article was written after a lot of research online and offline, so you can bank on it.
Niches of foodstuff business in Nigeria
Foodstuff business is broad, there are different niches to choose from though it is possible to combine all the niches but for beginners it is not advisable, you can start from the least demanding niche and grow to other niches from there.
This niche is very lucrative but capital intensive, if you chose this niche, your job is to source for raw foodstuff directly from farmer and distribute it to wholesaler.
It is a herculean task, which will take you to north and deferent part of Nigeria. In this niche you sell to wholesaler in tons and you will need vehicle for sourcing and delivery.
Wholesaler niche look like distributor in the sense that they can also buy foodstuff directly from farmer but not every time.
If you chose this niche your job is to buy from distributor and sale to retailer, you might also need vehicle for sourcing foodstuff and delivery. Wholesaler sell in bags and can also go to many part of Nigeria to source for foodstuff.
Retailer buy from wholesaler usually in half or quarter bag and sell to final consumer in cups, congo, derica and other small measurement. it require less capital and it is the best niche for entrepreneur with small capital.
This niche is like retailer but instead of staying in one place to sell foodstuff, they make use of technology, such that people can order foodstuff online and it will be deliver to them.
If you are a student or recede around campus this is the best niche for you, with phone you can deliver foodstuff online and make your money.
Major raw foodstuff you can sell in Nigeria and where to find them
Guinean corn (North)
Cocoa yam (South)
Yam flour (South)
Dried pepper (North)
Palm oil (South)
Groundnut oil (North)
Equipment needed to start foodstuff business in Nigeria
Equipment needed depend on the scale of production and niches. Any way below are the equipment you will need to kicks tart your foodstuff business
Measuring equipment (Derica, Cups, Congo)
How to start foodstuff business in Nigeria
1) Feasibility study
Because your friend is making money from foodstuff business does not guarantee your own success.
You need to conduct a feasibility study that will let you know the profitability of your foodstuff business and how profitable it will be.
Go to where you want to start your business and interview potential customers and competitors. You should be able to answer the following question from your findings.
Can you win the completion?
Who are your target markets?
Does the location have good road network?
How easy to get equipment and raw material?
2)Choose your niche
Once you conduct a thorough feasibility study you should be able to know the type of niches that will fit in to your environment.
If you want to start as a distributor but the location is not good for it kindly go to another place.
3) Register your business
Nigerian are now taking business registration serious, you should too. Nobody will trust your business especially if you are starting a distribution or wholesale foodstuff business.
Also you will want to avoid future confrontation with the authority.
Read more: How to start Bakery business in Nigeria
4) Business plan
This is not compulsory if you are not ambitious or need loan. For those that want to start large scale, you should write business plan that will document how big you want your business to be and how you will get there.
If you are going to use it to obtain loan let your business plan be simple and concise for easy reading by bankers and investors.
5) Set up your store, space or container
Each niche of foodstuff business has deferent requirement considering where to store and sell it.
For distributor it is advisable to get a large store with good security, wholesale and retailer can get a shop or container.
With all been said make sure your store is in secure location to avoid theft.
This is the stage you stock your store with foodstuff. By now I expect you to have negotiated with supplier or farmer.
Store your foodstuff on pallet and let there be space between the foodstuff and the wall to avoid spoilage. Also be careful of what rat or pest killers you will use, remember you are selling food.
7) Selling your foodstuff
Price of foodstuff fluctuates a lot, to be at the safer side carry out an occasional price survey so as to be in par with your competitor.
You can use deferent medium to collect your money such as in cash, electronic transfer or POS whatever you use be warry of credit although this is unavoidable but let it be small, give credit only to loyal customer who have been patronizing you for long.
You can’t do it alone; you will need people to help you attend to customer while you focus on other thing.
There for you need to employ but let it be by referral, ask people you trust that you are looking for employee they will surely refer someone to you.
It is a known fact that employee which a reputable people refer will turn out good, to increase the process you can tips them with foodstuff or cash.
Foodstuff business requires little marketing that is while you must secure a good location that will move market.
All been said below are the marketing medium you can use to advertise your product but before that I want you to know that Foodstuff is a commodity product if you want to sell more than your competitor, you need to add a top notch services to your business; the way you packaged your product and your neatness will set you apart from competition, I will talk more about this in the next section.
Erect sign posts that will direct people to your business
Share flyers and business card
Share picture of foodstuff on your online (social media) wall
Word of mouth (good services)
What you need to do to succeed in raw foodstuff business in Nigeria
1) Know your target customer
Know what your customer want and stock it, this will prevent churn rate (people that get dissatisfy with your business) and spoilage. I believe if you do your feasibility study well this should not be a cause of concern.
Read more: How to become multi millionaire in Nigeria
2) Packaging and neatness
As I stated above, only way to beat competition is to deliver great service and one of the way of doing this is by packaging your goods.
Also let your store be neat, seeing rat moving around in a store can be annoying.
3) Don’t eat your capital
This is a common thing in Nigeria, don’t let it be for you, calculate your profit every closing business and record every food in your store, don’t postpone it; this will let you know how much you need to stock and if you are making any profit at all.
4) Sell when you have the chance
Some bad practice in foodstuff business is to hold down goods when there is news of price increment, if you do this you won’t be in business for long because those customers will notice you and surely give you a pay back during glut.
5) Be friendly with your customers
Do you want a loyal customer? Treat them well, everybody will like to buy from business that treats them like king and queen and not only that they will surely refer people to you.
Increase your profit in raw foodstuff business
Below are ways to increase your profit
Sell complementary product like beverages, cornflake, biscuit and sweets
Set up grinding machine, your customers will need to grind
Sell food waste to farm
Cost of starting a foodstuff business in Nigeria
This depends on the scale of production. For retailing and wholesale you will need between #50,000 to #2,000,000 while distributor will need between #500,000 to #4,000,000.
How lucrative is foodstuff business in Nigeria
Foodstuff business is a lucrative business, you can earn up to #400,000 on #1,000,000 capital depending on your location and source of product.
Challenges of foodstuff business in Nigeria
1) Price fluctuation
Foodstuff business is plague by price fluctuation, you can buy at higher price now and before you move away from the market, the price would have dropped and vice versa.
The only solution to this is to have many ears in the market regardless of your niche; usually those market people will know five days before the price go high or low.
Pest especially rats are serious problem in foodstuff business and the most painful part is that you can eradicate them with any-how chemical.
To solve it find their source and wipe them out with chemical not harmful to human.
If you have only one supplier, you in for trouble, you can’t rest on one person especially if you are living in Nigeria secure and buy from at least five suppliers such that when one disappoint, you will go to others
Foodstuff business is buying and selling business its modle is simple buy, sell, make profit and re ivest the profit, if you can do this you will soon expand to other places and make more money.