Sample Business Plan on Set up of a Petrol Station in Nigeria

Petrol Stations in Nigeria are very critical to the national economy. They are the main energy sources for powering automobiles, generating sets and other locomotive engines in the country. Due to their strategic role in ensuring that transportation services run smoothly, they also aid commerce and facilitate communication services. Without them, the Nigerian economy would collapse. Think back to the fuel scarcity period when economic activities are suddenly grounded because of long queues of vehicles around fueling stations everywhere.

In this sample business plan, I am assuming the filling station will only dispense petrol and sell other packaged products such as engine oil, grease etc and will also generate revenue from rent charged to tenants (tyre service centers, mechanic workshops etc). You can also start a petrol station without your own tanker, but that means you will have to rent one to supply your station. It is however better to own your tank because you can also make money from it by renting it out to other stations that may need it.

The petrol station business is relatively stable and sustainable long term business when located in the right place where adequate sales can be guaranteed. It is not suitable for people looking for quick returns on their investments within 5 years but for people looking at 10 or more years. It is capital intensive and

Market Overview of Petrol Stations in Nigeria

Petrol/Filling stations (or fueling stations) are part of the downstream subsector of the Nigerian Petroleum Industry providing; petrol, diesel, kerosene, engine oil, lubricants to name a few. But the main product sold is petrol for which local daily demand is over 40 million liters. Diesel is also sold but mainly in wholesale with distributors supplying homes, factories, churches, other private corporate establishments, shopping malls, schools, government offices and large transporters.

·        Diesel consumption in Nigeria as at 2016 was worth over 1 trillion naira but usually by commercial customers ·        Petrol which has the highest sale attracted over 3 trillion naira in sales ·        There are over 30,000 petrol stations in Nigeria ·        The largest regional markets for petroleum retailing are Lagos, Rivers, Kano and FCT

In addition to this, many petrol stations also retail cooking gas, household consumables and groceries. There are different categories of petrol stations in Nigeria depending on what they are retailing such as;

• Standalone fuel dispenser pump (usually found in semi-urban towns
• Mini fuel station (less than 6 dispenser fuel pumps) found in many towns
• Standard fuel station (6 to 20 pumps)
• Mega filling station (more than 20 pumps)

They are usually sited along busy roads, busy streets, close to very popular landmarks and in commercial settlements with high vehicular traffic.

The Nigerian petroleum downstream sector grew by 10.8% in 2016 despite the challenges in the industry among which are unstable products supply, uncertainty over price due removal of subsidy on nearly 90% average of imported products consumed locally.

Opportunities for Filling Station Business in Nigeria

From over 20 opportunities identified, these are just a few;

• Petrol, kerosene and diesel remain the most affordable, available and viable energy sources for a larger number of individuals, families and businesses in Nigeria
• Technology to develop alternative sources of energy is either too expensive or primitive at best
• Nigeria’s population is growing fast with ever rising need for people to move, work and do business putting pressure on petroleum suppliers
• Higher opportunity costs in the face of petrol scarcity implies that petroleum products are extremely important to the national economy hence there is a guaranteed market
• Urbanization is increasingly broadening the daily demand for various petrol products

Other Related Sample Business Plans

• Supermarket Business Plan
• Pharmacy Retail Store Sample Business Plan
• Hair and Beauty Salon
• The Furniture Making and Showroom Business Plan

Some Challenges of Running a Filling Station in Nigeria

Among 25 identified challenges owners of filling stations in Nigeria would likely face, the following is just a shortlist;

• Unstable Foreign exchange rates
• Low production levels from existing refineries
• Corruption among petroleum downstream regulators
• Inconsistent government policies
• Huge capital investments required for set up
• Difficulty in accessing finance for expansion
• Low profit margins
• High cost of maintenance
• Removal of fuel subsidy
• Industrial actions from trade unions

Many of these challenges have negative impact on sales, profit and growth opportunities for operators.

The Future of Petrol Stations in Nigeria

With the effect of fossil fuel consumption on global warming, pollution and the need to conserve resources, many organisations are working out plans to reduce or eradicate altogether fossil fuel based vehicles in favour or more efficient and environmentally friendly sources. Already there are cars that run on hydrogen fuel gotten from water, ethanol, solar powered cars and Volvo has already made plans to start mass producing cars that don’t use petrol or diesel from 2019. Globally, demand for environmentally friendly cars such as Tesla have been seeing steady growth year on year.

Add the fact that fossil fuels are finite and will one day dry up, the future of this market is uncertain beyond 50 years from 2017 which means that we may not have profitable filling stations by 2067 or they would have been replaced by more environmentally viable service stations. Then there is the rapid global population growth which will only lead to higher energy needs, again reducing the available crude oil reserves further.

There is also shale oil which has been touted as possible replacement for crude oil and it is in even more abundant supply, but the problem is the technology for exploiting it is too much for now.

What are the Startup Requirements for a Standard Petrol Station in Nigeria?

• Petroleum Stock – 4,800,000
• 6 Fuel Dispenser Pumps (plus cost of installation) - 6,600,000
• 1 Generating Set – 12,000,000
• 1 NO of 33,000 liter Fuel Tanker – 35,000,000
• Other stock (Lubricants, engine oil etc) – 300,000
• Building Construction Cost – 80,000,000
• Others – 6,700,000
• Total – 130,400,000

Basic Financial Summary and Projections

Based on average daily sales of 21,000 liters of petrol @ 145 naira per liter for 360 days in a year and sale of other products plus rent income from tenants and (other indices not indicated), first year sales projection for a standard filling station could look like this;

• Total Fuel Sales – N1,096,000,000
• Other revenue – N38,641,000
• Total Revenue – N1,134,841,000
• Cost of sales – N1,089,447,360
• Gross Profit – 45,393,640
• Operating Expenses – 34,045,230
• Net Profit before Tax - 11,348,410
• Taxation – 3,404,523
• Net Profit after Tax – 7,943,887 

Are looking to setup a Petrol or Filling Station in Nigeria and require a professionally written Business Plan? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com to have one prepared for you

Business Plan Competitions in Nigeria: Are they always worth the stress?

Many Nigerian entrepreneurs and business owners looking to raise either startup capital additional capital to fund their growth may have had cause to participate at a business plan competition in the past. Are business plan competitions really worth the trouble of submitting and participating fully in? We shall find out at the end of this article whether or not they are worth the stress.

What are Business Plan Competitions?

Let us begin first by asking what are business plan competitions? They are competitions designed usually by governments, international development agencies or consortium of investors to identify, mentor, and fund small and medium scale businesses which are viable and have great potentials for growth, employment creation and wealth creation. Usually they are part of a larger project by governments and major international organisations to achieve sustainable development goals or enable various countries achieve major economic and developmental aims. Therefore a business plan competition is both an economic and social development project.

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Why Should Business Plan Competitions Matter to Entrepreneurs

There are a few reasons why you should participate in Business Plan Competitions. The main reason is that you could attract funding for your business if you win at the competition - that is not including the prize money by the way. Some business plan competitions like the Abuja Business Plan Competition offers prize money for the best 10 entries in addition to access for funding from high net worth individuals who may be interested in investing in SMEs with huge growth potentials.

Another benefit is the chance to network and meet potential business partners and customers. Like a trade fair which is principally a networking and marketing event, you could say a business plan competition also offers entrepreneurs new business opportunities that they may not have heard of but for the business plan competition.

Entrepreneurs can also be mentored through trainings, courses, conferences, case studies, lectures, affiliations with established business schools and institutions to mention a few entrepreneurs can actually be empowered with new skills, knowledge, information and strategies that could take their businesses to the next level.

Why Business Plan Competitions may be a waste of time

The other end of the divide presents the failure of the human factor in most noble projects. On one hand, business plan competitions are designed for entrepreneurs but they may not function that way. The organisers usually have interests and goals to achieve which may not correspond with the expectations and interests of the applicants at the competitions. Some entrepreneurs understand their businesses thoroughly but the competition organisers may hire ‘experts’ to review their applications and many of these so called ‘experts’ are questionably qualified to assess the viability and potentials or otherwise of emerging new businesses.

Most startup businesses which attracted huge funding for their businesses never applied to a business plan competition, because there are other alternatives which show greater promise. So someone like Mark Zukerburg who didn’t get the funding he required for facebook from a business plan competition may be right to ask “why bother then?”

Stiff competition and limited funding also reduce the chances of serious entrepreneurs with bankable business plans and viable businesses as well who may have to struggle to convince a panel of judges that they and not others should be considered.

There is also the issue of the integrity and competence of the competitions’ managers. YOUWIN for instance has faced allegations of favoritism, nepotism, lack of due diligence and lack of due process in the award of grants. Many grant winners have folded up their businesses due to inexperience, poor management, an unviable business model or other risks that were not factored in when these businesses were being assessed for viability and suitability for grant.

Business Plan Competitions in Nigeria: past, present and the Future

There will always be business plan competitions available to Nigeians whether they are perennial – once every 3 years – like the Abuja Business Plan Competition or annual like the YOUWIN, African Young Entrepreneurs Empowerment Nigeria, Tony Elumelu Entrepreneurship Programme or one off like the Pat Utomi @ 60 Business Plan competition, they have come to stay albeit for an uncertain period. Some other global and regional international business plan competitions hold in various parts of the world and Nigerian entrepreneurs can seize advantage to be part of it.

My Take on Business Plan Competitions

If you are new, young, inexperienced but have a business you believe so much in, then go ahead and participate in a business plan competition. This is because even if you don’t get funded, there are other benefits you can gain from them. If on the other hand you have lots of experience, you have an existing SME with strong growth and profit potentials and you have made concrete progress in growing your business with the little resources you have, then look for alternative sources as they are usually more promising, that is not to say business plan competitions are only for novices, but serious investors with interests in SME ventures are often nowhere near business plan competitions and they are not likely to fund startups run by inexperienced entrepreneurs.

Are you looking to submit a bankable business plan to an investor, bank or business plan competition and need very sound and reliable write up? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com