06 May 2021

HOW TO START A DISPATH BUSINESS IN NIGERIA

HOW TO START A DISPATH BUSINESS IN NIGERIA

INTRODUCTION

The business environment is dynamic and not static hence it changes in response to changes in technology. A large percentage of the world’s population are internet users. In Nigeria, as at today, over 100millon people are internet users and over 40% of these have done one or two online transactions within the past one or two days. The increasing number of internet users has led to increase in e-commerce businesses as most internet users now prefer to do their shopping online since it is less stressful and cost effective. Every business with a view of perpetual existence must build a solid online presence as failure to do so will lead to a business declining and eventually folding up in the nearest future.

 

The rise in e-commerce brought about by changes in technology has created opportunities for growth and expansion in sectors related to e-commerce such as logistics sector. Companies like Konga, Jiji, Jumia, Pointek are some of the online stores with strong online presence. E-commerce relies heavily on logistics to be successful as the goods ordered by customers online would have to be delivered to them at their various locations.

 

Logistics business has over time, being called many names such as door-step delivery service, bike delivery service, transportation service, dispatch rider business, among others. Logistics business involves the procurement, distribution, inventory, maintenance, replacement of personnel materials and information to achieve organizational goals. It involves getting products and services from a supplier or manufacturer to a consumer. Logistics may also apply to warehousing, transportation, inventory, packaging, material handling, disposal and security within the business sector.

A very important aspect of logistics business is having a strong distribution network.  Most e-commerce companies offer bike logistics deliveries services, while other companies outsource the delivery to dispatch riders. Companies like Jumia, Konga, and mall4africa offer bike logistics delivery services.

In Nigeria today, because of the bad roads and high traffic rate, the fastest means of delivery is the bike delivery service. When customers need urgent and quick delivery of goods ordered the best option is the bike delivery service especially when the delivery is intra state or even nearby interstate.

 

WHY SHOULD ONE VENTURE INTO DISPATCH BUSINESS?

The world is gradually evolving and rapid changes are occurring daily. E-commerce is gradually becoming an important aspect of the business world. The internet usage of most Nigerians is greatly increasing and their engagement in online transactions is of high increase too. Hence, there is an increasing growth in e-commerce business in Nigeria and by extension, an opportunity for growth in dispatch business as the success of the e-commerce business is dependent on having a good distribution network. Therefore, the dispatch business is an economically viable business. However, one needs to get adequate knowledge of the requirements for setting-up and running a successful dispatch business in Nigeria before one invests in it.

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Venturing into a dispatch business is a good idea because there are huge profits in dispatch business. However, one needs to be well grounded in all aspects of the business and must deliver top notch service if one plans to survive in the industry.

HOW TO START A DISPATCH BUSINESS IN NIGERIA

To start a dispatch business in Nigeria, one needs to get an office space with a large parking area to park the vehicles/bikes. The business should be located at a very good location with easy access to customers. Adequate approval needs to be received from the State Government and permission to use the said location for dispatch business. In Lagos, the relevant authority to give permissions is the Lagos State Transport Ministry. The approval will come in the form of an “okay paper” issued by the Ministry.  To get this “okay paper”, a letter has to be written to the Lagos State Ministry of Transport requesting for an “okay paper”. The Vehicle Inspection Organization (VIO) would have to inspect your vehicles/bikes to see if they are in good conditions and of the right specifications for the dispatch business.

 

After securing an approval from the Lagos State Ministry of Transport and the VIO, a courier license needs to be gotten from NIPOST which is the regulatory body for courier services in Nigeria.

Most importantly, you need to register your business name with the corporate affairs commission (CAC) which is the regulatory body in charge of registering new and existing business in Nigeria. Registering of business name should be the first thing you do.

 

EQUIPMENTS FOR DISPATCH BUSINESS IN NIGERIA

  • Capital
  • Dispatch rider
  • Bus/Truck/Cargo bikes
  • Office space
  • Office computers and telephone
  • Accounting and other software
  • Stationery
  • Dispatch box

Capital

To start a dispatch business, one needs to have a reasonable amount of capital. A large sum is needed to purchase the delivery vans or cargo bikes. A good cargo bike can be purchased with at least ₦360,000 so depending on how large you want to operate your business, at least one bike should be purchased. Also money to be used in paying dispatch riders have to be put into consideration. A cargo bike is cheaper than a delivery van and more convenient for dispatch business especially where there is lots of traffic as a bike can easily maneuver its way through traffic. However, there are some deliveries that cannot be made with a bike because of their size, here, a delivery van must be used no matter the traffic. A delivery box would have to be purchased and attached to the bike. At present the deliver box can be purchased with at least ₦26,000. A comprehensive insurance should be run on all the cargo bikes and delivery vans to take care of cases of eventuality.

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Dispatch Bike Rider

After acquiring the cargo bike/ dispatch vehicles, it is important to consider the dispatch riders to ride the bikes/vans. A good dispatch rider should possess the following attributes/qualities:

  • He must be a qualified rider with at least 3years experience.
  • He must possess required driving/riders license.
  • He must have adequate knowledge of the nook and crannies of the area to be covered.
  • He must be willing and ready to work.
  • He must possess good communication skills as well as good manners of approach to customers.
  • He must be an honest man since he will be handling cash and other valuable products.

Office Computers

For smooth running of a dispatch business, one needs to purchase some office computers and telephones. These would be used to interact with customers, get their orders and also to keep comprehensive records.

Accounting and Other Software

One would need to install some accounting software on the office computer to use in accounting for transactions and preparing accounts for the business.

THINGS TO PUT IN PLACE FOR A SUCCESSFUL DISPATCH BUSINESS

  • Decide on your Proposed Mode of Operation

The first thing to be done when one wants to venture into a dispatch business is to clearly define how you intend to run the dispatch business. You should decide on whether you want to use cargo bikes or delivery vans or both for your dispatch business and how many would be needed. Also you must decide on if your dispatch would be intra-state or inter-state. All these must have been concluded before you commence.

  • Draft a Business Plan

After concluding on you’re the mode of operation of your dispatch business, you need to draft a business plan. A business plan is a comprehensive document which states the goals and objectives of a business and how these goals and objectives would be achieved. A business plan guides you and shows how you intend to accomplish your goals.

Drafting a business plan shows that you have a clearly defined goal and have plans on how to achieve these goals. It causes others to see what your long-term goals her and buy into it through the strategies you mapped out to achieve those goals. A business with a business plan can easily assess funding from external parties, like government grants, loans etc.

A typical business plan would contain the following:

  1. An overview of your dispatch business
  2. Executive Summary
  3. General description of the company
  4. SWOT analysis
  5. Market Research
  6. Your Strategy
  7. The Team
  8. A marketing plan
  9. An operational plan
  10. Financial projection
  11. An appendix

 

  • Register your business with CAC

After drafting your business plan, it is important you register your business with the Corporate Affairs Commission (CAC). This will give your business a structure and credibility in the eyes of customer. You can either register your business as a business name or as a limited liability company. You should also get all necessary licences for dispatch business.

  • Acquire Funding and Capital
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As a registered business, it is easier to access funds and capital from external sources. You can approach a bank with your business plan and seek for loan.

  • Set up a website

Setting up a website makes your business more visible to customers. Your website stands as an intermediary between you and your customers as that is the platform on which you both would mostly interact. On your website, you advertise your business, your customers sees it and contacts you for an order. Your website should be easy to access by customers and should be updated regularly.

  • Get an Office Space

The dispatch business is both online and offline business. Most transactions would be done online but some customers would prefer to come over to your office so you need to get an office space and keep the office well branded with your business name and your logo. Also the office space should be spacious enough to accommodate your cargo bikes and/or delivery vans.

 

  • Hire Staff

You will need to hire some riders/drivers for your cargo bikes/vans. The drivers should be carefully selected and trained with the company’s ideals and culture as they are the face of the brand. They should be polite when making delivery to customers and should be calm when driving.

Other employees too need to be employed to attend to customers when they call, and also man the business website.

  • Market your Dispatch Business

Marketing is an important part of business survival. A business that does not engage in marketing cannot operate into the foreseeable future. Marketing involve carrying out activities that makes your business more visible to your target audience. You can market your business through word of mouth, referral, social media advertising, Google advert etc.

CONCLUSION

The dispatch business is a profitable business but one can easily run into loss if one does not take care to put in place the needed items and take necessary steps. Also there is high demand for dispatch services by companies these days one just needs to grab these opportunities and maximize its use. Since technology keeps changing and internet users keep increasing the need for dispatch services will always exist.

By Taiwo Olowu, ACA

To learn more how we can help you achieve your vision on starting a business like this, please reach us now on 08023200801, email enquiry@mocaccountants.com or send us a detailed request by completing our enquiry form

     

     

     

     

     

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