Transportation business in Nigeria can be very profitable, looking at the fact that every single day thousands of people travel around the country.
Not to talk of seasons like Christmas, Easter and the likes. Those seasons are often characterized with massive transportation of people from one part of the country to the other.
If you are looking forward to starting your own transportation business in Nigeria, then this tutorial will show you how.
This tutorial will not just show you how to start your own profitable transportation business in Nigeria, we will also be looking at some important tips and critical questions which include;
- Transportation business and its types.
- Why start transportation business in Nigeria?
- 3 different ways you can do transportation business in Nigeria.
- How profitable is transportation business in Nigeria?
- What do I need to start transportation business in Nigeria?
- How to start transportation business in Nigeria.
- How to make a lot of money from your transportation business.
Are you ready? Without further-ado let’s dive in.
Transportation business in Nigeria and its types
So you what to start transportation business in Nigeria? Nice idea!
But first, what then is transportation?
When in primary school they (my teachers) defined transportation to be “the movement of people from one place to another”that is not far from the truth. If you can still remember that primary-school definition then you have an idea of what transportation is.
But in addition to that definition, you should know that transportation isn’t just about the movement of people. But also goods, animals, crops, cloths, raw materials etc. can be transported too, but for the benefit of this tutorial we are going to focus more on the transportation that involves people.
Now, the process in which an entrepreneur makes his money by starting, organizing, providing, and rendering the services of transporting people from one place to the other is called the business of transportation or Transportation business [any how you call it.]
Let’s check out the types of transportation business we have in Nigeria.
Types of Transportation business in Nigeria
First let’s go a bit deeper into transportation by taking a look at the means of transportations we have in Nigeria and then followed by the types.
In Nigeria we have 3 major means of transportation which are; Land, Water and Air. Less than 10% of Nigerians travel by Water and Air so the vast majority of people travel by Land.
For that, this tutorial will be scoped around the business of transportation by land. The list below are the means of transportation on land and also the types of transportation business. So what are the types of transportation business in Nigeria? They are;
- Motorcycling (Okada, Achaba).
- Tri-cycling (Keke-napep or Keke).
- Town service (Taxi).
- Bus driving and,
- Haulage services.
Tri-cycle or keke-napep business, Taxi business, and Bus driving business are the most common types of transportation business in Nigeria. This is because Okada riding has met its end in many states in Nigeria and still fading away in more states (especially in big cities or state capitals). Also, not everyone can afford the vehicles needed to run Haulage services business even though it’s highly profitable.
Why start a Transportation Business in Nigeria?
That’s a good question because you might have had some bad experiences with the services of other transportation companies. Similarly you might have been misinformed about the business of transportation as of how un-profitable or risky it is.
The truth is this: no business on earth is completely profitable or unprofitable by default. In the same way no business is risk-free. Everything depends on you (the business owner) not the economy, customers or market.
It’s you who should make your business profitable and risk free. You may be asking me “But how do I make my business profitable and risk free?” To help you in that quest, read about how to start your own business in Nigeria. I am not going to divert to that since we are talking about transportation business in Nigeria. Read about starting your own profitable business in Nigeria here.
Back to our question of discussion: Why should I start transportation business in Nigeria?
Below I give you 4 reasons WHY you should start your own transportation business.
- Of every 1,000 people in Nigeria, only 31 own cars.
This is according to a statistics that was first carried out in about 7 years ago and again in the year 2014. It was discovered that only the average of 31 people have cars among every 1000 people. What does that tell you? Most people depend on public transportation services for their journey because they don’t have cars. The gap is really big and it’s a gap that needs to be filled. Do not be discouraged by the fact that there are other people already doing the business. Yes there are players of the game who have been there before you, but NO there is a place for you too if you know how to run your business. You can go in, compete well and make it big.
- It is highly lucrative.
Transportation business in Nigeria is highly lucrative though you can go into it and fail terribly [God forbid]. Failing makes you smarter though. Therefor it can be highly profitable or non-profitable.
Profitable because the gap is large and so does the need becomes high too. Secondly it’s profitable because every business can be made profitable by its owner, so this depends on how smart you are in business, your experience and how much you have read good business books about business.
- You will make a lot of money if you learn the rules.
Since the transportation business can be profitable, that means there is more money to be made in it, more than you think. What am I trying to say? With the business of transportation you will make a lot of money (by the rules) follow the rules or create one. Every business has its rules, take your time to study and learn them because they will aid you. If you learn how to run without panting and fly without perching then you can become a millionaire transportation business owner.
- Some car owners enter public transport too.
Are you surprised? Well that’s the truth, even some people who own cars still follow the public transportation buses at times. That’s due to a vast array of reasons.
2 days ago I was in an entrepreneurship seminar and among the resource persons was one other man who came from Abuja. Somehow during the time of his talk on the stage he told us that he came using public transport not with his own car. He said he preferred public transportation for this particular journey because it will save him money. According to him it will cost him about #30,000 to fuel his car from Abuja to and fro, and it’s just him that will be in the car all the way, but for public transport he will spend just #10,000 at most for to-and-fro. Which one is better? The answer is obvious. So for reasons like this and many more, a lot of car owners often find themselves preferring the public and commercial transportation at times.
3 different ways you can do transportation business in Nigeria
- Tri-cycle or Vehicle hiring services.
This is a kind of transport-related business which involves you giving out your Tri-cycle(s), Taxi(s) or Buses to people for hire, and daily (in most cases). Though it will cost you more capital to start this type of business but there is a lot of money to be made too. This option still works in many parts of Nigeria because not everyone can afford to buy a new Tri-cycle or Taxi and so this becomes the best option for such people.
- Higher purchase services.
Higher purchase is a business where you (a business owner) buy a Taxi or any other land-transport means and then give it out to a driver for a return of higher price than you bought it for in a specified period of time.
For example, you could buy a Tri-cycle (Keke) at #400,000 and give it to a driver for a higher purchase rate of #600,000 in 6 months (could be more or less). After paying you the #600,000 then he (the driver) becomes the owner of the Tri-cycle. You go ahead to buy another one and the process repeats itself on and on. Before you know it your money will grow from a higher purchase of one keke at a time to 5, 10, 15 and more. The same can be done for Taxi, Buses or whatever. Again the price varies from place to place; it depends on how fast the market is.
- Transportation services.
This is the most popular business model in the world of transportation. It is the process where you transport people from one place to another for profit. This could be you doing it yourself or getting other people (qualified drivers) to do that for you.
How profitable is transportation business in Nigeria?
To answer your question, I will have to ask you too “how much is the need for transportation in Nigeria?” the answer is that “The need is high” if your answer is otherwise then am sorry, you may be wrong. Every single week, millions of people travel in Nigeria for a lot of reasons ranging from business, school, conferences, visitations etc. what does that tell you? The need for transportation is high and will always be high. As at the year 2015, only about 5 million vehicles were registered (legally recognized) in 3 years according to a statistics by the FRSC. You may think 5 million vehicles are much, but take a minute to compare that number to our population in Nigeria which is about 180 Million (2015)…… can you now see?
So what am I really saying here?
High need for transportation gives you a greater chance for more profit. In a busy city like Lagos, you could acquire a taxi and get the profit that could buy two other taxis in one year.
Having seen how profitable this business could be, now what do you need to start a transportation business in Nigeria? Let’s check that out!
What do I need to start a transportation business in Nigeria?
You will need the following to start transportation business in Nigeria.
- Vehicle (Keke, Taxi or Bus)
You will need #300,000 to #600,000 for obtain a brand new keke-napep in most parts of Nigeria. The prices depend on quality and location.
- Particulars and Driving License.
- Register your business (with the corporate affair and/or other related legal bodies)
- Identify with unions or associations like National Union of Road Transport Workers (N.U.R.T.W).
- Professional driver.
You could need more things, but of course that will depend on the situation or your need.
How to start transportation business
When all that is needed of you to start the transportation business is in place, then it’s time to start the business. It’s time to go out there and make things happen.
So now the question is “how do I start transportation business?”
The best way to start transportation business or any other business is to start it small. I am not saying it is impossible to start big, but that’s not a wise option in most cases. Starting big can be dangerous so do not be tempted to start with 5 or 10 cars (if you have the means).
The smaller you start, the smaller your risk. The bigger you start the bigger your risk. When you start big you lose more money easily. When you lose a lot of money just at the beginning of your business then you will learn your lessons the hard way, which I believe it’s not an option you will like.
The smaller you start the more experience you gain, the wiser you will become in business. So I say again, start small.
Start with a motorcycle (if you are in a state where it’s allowed) or a Tri-cycle (keke-napep). Then a Car or Taxi, and then bus and more buses later. Like that, and there you go.
Start small, think big and grow big with time.
Find a professional driver.
Without experience you too can jump into it and start a commercial driving business. But what if you have other business ventures? Can you divide yourself? Of course not… What if you don’t want to run your transportation business yourself?
The best thing to do is to hire a professional and experienced driver. Most professional drivers nowadays have the technical know-how to some common vehicle problems. That alone is an additional advantage.
This is not to say that you cannot do it yourself, but would you still be the one to drive your 10 or 15 buses by the time you expand your business? The answer is obvious!
So how do you pay the driver?
A popular way to pay a driver in most parts of Nigeria for driving your Keke-napep, Taxi or Bus is by negotiating a particular return in weekly basis. The weekly return am talking about is an amount of money that the driver brings to you periodically.
For example you could agree to be receiving a weekly return of #10,000 from your driver. A hard working driver could raise that amount in 4 days of work and use the remaining 3 days to work on raising his profits.
Determining the fee for return will depend on some factors. These factors may include;
- Location: The weekly returns vary from city to city or state to state. This depends on how busy the location is. #10,000 could be ok for a weekly return of a Taxi driver at some states while at other states, #10,000 is just the return for Okada or Keke-napep, it could even be more than that.
- Type of vehicle.
- Size of vehicle etc.
They best way to find out how to determine this fee is to ask around your area and know how much money the drivers at that location pay for a weekly return. Associations like the National Association of Road Transport Workers (N.U.R.T.W) can help you with that if you ask them.
How to make a lot of money from your transportation business
How to make a lot of money?
Expand your business, simple!
Make it grow, make it fly that’s how to make a lot of money. In how to start the business I earlier advised you to start small, do you remember? Ok now let me tell you another thing, it’s more dangerous to remain small.
I don’t mean to scare you; I just need to tell you the truth. Business is a battle, just like life itself. When your business does not grow, then it becomes a prey to bigger businesses or those who are serious about growing. Remember that the mission of your competitors is to kick you out of business by making the competition unbearable for you. So you must fight in order to win! There can never be a win without a fight, and to fight better you need to grow stronger.
If you must make a lot of money in your business, then you must invest your profit back into your business. After starting with just on keke-napep, use the profit to acquire another one, make it two and when there are two of them, it’s easier to purchase another one again, then more of it and so on and so forth. From Keke-napep you move to taxis, from taxis you move to buses and before you know it you will be running a multi-million naira transportation company in Nigeria.
Make your business grow and you will make a lot of money.
I will close by urging you to go out and start doing something, a journey of a thousand miles begins with a step, so they say.
The journey to being an owner of a multi-billion naira transportation business starts with a step, reading this tutorial was one step, taking action will be another great step.
Tomorrow will be the wrong time to do what you can do today, therefore go out and make things happen today. Make that decision now!
You could start with your private car, it doesn’t matter. Who cares?
Just do something this day, because nature itself respects people who take action.
See you at the top.