- How much will it cost me to set up?
- How much will it cost me to run the business and how do I manage these costs.?
- How much will I make as commission?
- How much will I keep as profit?
- When do I break even?
1. How much will it cost me to set up?
Before you ask yourself this question, you need to understand your environment; the potential number of customers, the level of awareness and the disposable income. An agent in Molete in Ibadan will only put himself under undue pressure by building his shop out like one he saw in FESTAC in Lagos. The potential numbers are more, awareness higher and disposable income larger in the latter than the former.
Also, as a cautionary note, ensure you have a secondary source of income. This is so you can fund the day to day expenses of the business for the months prior to the break-even month.
To start, you will need the following
- A shop. Take the next few lines as gospel.
- Rent a shop ONLY because it is rightly located. This will mean it is in a densely residential area. A mix of 70 residential/30 commercial is just fine.
- Be VERY wary of rent. In big cities like Lagos 100K to 150K p.a is good enough, while in areas such as Ibadan, Ado, Ogbomosho, Kubwa, 40 to 80K p.a is just right. Let the “resident” customer density guide your assessment of rent, and not the “passing” customers i.e a major highway junction will not be as lucrative as a minor “agboo-ile” junction.
- The shop SHOULD be sizable. A 10ft by 12ft will be too small. Try to go for a 12ft by 15ft or larger. The bigger, the better as your customers will be comfortable while they wait their turns.
- If you decide to use an existing business’ shop, ensure the items on sale are not “handy”. I once had an agent who sold shoes and wanted to combine the business of sports betting. He lost 13 shoes (note not pairs i.e different legs) in his first week.
- 2 Laptop (or desktop) Computers: Desktops are preferable in relatively insecure environments, but tend to require a bigger generator to power. [ 2 Used laptops will go for between 50K and 70K]
- A 10ft x 6ft x 1ft counter made of wood (preferably of board): Having this helps separate your cashiers (attendants) from your punters (customers). [10K to 20K]
- Chairs (for cashiers) and benches (for customers). [10,500 to 15,000]
- Should you be interested in customizing your shop, you can paint it in the colour of the brand you are selling.
- A generator. Please I urge you not to use I-better-pass-my-neighbor. This generator is notorious for burning adapters. A decent 2.2Kva generator will serve well. [28K to 35K]
- Internet Modem. I recommend you go with any of the LTE providers, as faster speed equals faster money making. The likes of Spectranet, Smile and Swift will serve well in areas where they have coverage. If you do not fall within these areas, use the 3.5G GSM providers. In order of preference, I recommend Glo, Etisalat, Airtel and MTN…and if those don’t exist, you’ll have to struggle with CDMA 1x from O’net or Visafone or GPRS from the GSM providers. If you use laptops, get a modem that supports Wi-Fi for easy connectivity. [18K to 40K]
You most likely will be given the following items by the company:
- Thermal receipt printers. New POS-58 or POS-80 units come with a roll of paper.
- A Banner, to advertise your business to passers-by
- An account on their platform.
Of course, you get the last 3 items after you must have paid the signup fee [ 50K to 500K]. I’ve been informed some (new) companies will give you these items for free.
Conservatively, you will require between 250, 000 to 400, 000 to setup, depending on your location.
To summarize this section, I strongly suggest that you prepare to setup at least 2 shops in order to benefit from economies of scale.