It is good news that more Nigerians are beginning to use cooking gas for various domestic cooking purposes. That will help decrease the problems of deforestation and help conserve our natural forests and prevent potential disasters that is inherent with desert encroachment such as erosion.
Apart from the environmental benefits, the increase number of people especially in urban areas who are using cooking gas has created good business opportunity for smart entrepreneurs who can now trade on cooking gas and cooking gas equipments to make good profits.
Cooking gas business is very profitable and you don’t have to break the bank before you can start. With N300,000, you will get your business setup and ready to go with almost everything necessary in place. And this is a big business that anyone who is into it can be proud of.
How exactly can one start cooking gas business in Nigeria? Before we go into the details, let us first take a look into the profit potential in this business as well as the risks involved.
How Profitable is Cooking Gas Business in Nigeria
Let’s take the 12.5kg cylinder as a case study, the average profit you make from 12.5kg cylinder of cooking gas is N500. You buy for unit cost of N2,500 or less and sell for N3,000 or higher. If you sell ten cylinders in a day at the average profit margin of N500, you will be making N5,000 daily. In a month, you will be making N5,000×30 = N150,000.
This is relatively the lowest profit you can make in cooking gas business if you are in respectable position where you get good patronage. Most people make much more than what I calculated here. So, it’s not in any way by exaggeration.
For a business you started with N300,000, N150,000 profit is a super profit by all standard. Imagine if you invest more resources and take it higher, your profit will be much more mouth watering. Gas companies, both the suppliers and retailers are making good money in the business. You can become one of them today if you act now!
The Potential Risks in Cooking Gas Business
Every business has it’s peculiar setback and the biggest risk in cooking gas business is fire explosion which is very common due to the high inflammable nature of liquified natural gas. That isn’t much problem though since it can easily be mitigated or even avoided.
To be able to curtail this, you need to be alert at all times to detect when there is leakage in those cylinders as leakages is one of the major cause of fire and explosion. You also need to buy good fire extinguisher that can be very handy in time of minor fire outbreak.
Another risk in the business is government regulation. Should government decide to increase the price of LPG today, some consumers may find it difficult to take and have to go back to using kerosene or firewood. If that happens, you loose some customers and your sales will drop.
However, government is always trying to reduce the price of cooking gas in other to encourage the usage and discourage deforestation.
Now that you are aware of the risks in the business and you think it is what you can handle, how do you get to start this business and what are the things you need to have or put in place? Let’s proceed to answer these questions –
What You Need To Start Cooking Gas Business
Startup Capital – According experts (people who are already in the business) you can start conveniently with N300,000 and be able to buy more than 20 cylinders, get you a shop, and buy the initial products. The cost of shop in this regard depends on the location. If you decide to locate your business in a highbrow area, you will spend much more money to get a shop but the cost will be well worth it.
Get Training – You must get attached to any experienced retailers or even depots for about six months to learn the important rudiments. You need to learn how to refill the cylinder, how to transfer, how to change valve. And everything necessary that you must know about the business. You equally need to know where and how to buy cylinders.
If you decides to learn in a smart way, you can learn from any of those retailers you see by the roadsides and if you are smart enough, you can get all the knowledge you need there. In anyway, it may take you as much as six months to complete your apprenticeship.
Rent a Shop – After your training is completed and you now have the required knowledge, the next step is to go get a shop. The class of people that use cylinder gas cooker are more in the urban area. almost every part of Lagos is good for the business but some places are better than the others.
Marketing – When your business is up and running. You need to employ every marketing strategy you can muster to increase your profitability and stay afloat.
Firstly you need less than 500k to start. The profit margin per sale of 12.5kg cylinder is about N600 which means you have to be in an area where the threshold, that is population can afford you to do good volume sales per day/week. A delivery vehicle from the point of purchase plant to your intended location will be an added advantage and of great value to the biz. Another way you can increase sales is a reduction of your sale price instead of making N600 you will make N400. That will increase your turnover fast.
Marketing on a door to door basis and home delivery is also not a bad strategy to employ. But remember that new businesses always come with challenges and patience is the key. Like the bible says Paul planted, Apollos watered but only God gives increase. Pray for favour.
With all things setup according to plan, you are in good business. A business that is capable of giving you all the money you want. I have a friend who is doing this gas business and he is doing very well. You too can do even better. Wish you success!