By Ayoade Apelegan
Road transportation is the most common means of transportation in Nigeria. Road transportation could be through cars, mass transit buses, ‘okada’, and ‘keke napep’. Cars and buses are common in the cities and urban areas while okada and keke napep are most common in remote areas. Anyone who is considering venturing into road transport business will find this article useful.
Deciding on a niche to focus on is important when it comes to the transportation business. This is because there are different modes of transportation.
Types of transportation business available to choose from include but not limited to:
Tricycle transportation: in Nigeria, a tricycle is popularly referred to as ‘keke NAPEP. It has become a preferred mode of transportation in Nigeria, particularly in rural areas. However, some state governments have started restricting the activities of commercial tricycle operators.
Motorbike transportation: motorbike popularly called ‘okada’ has become a popular mode of transportation in Nigeria. However, in cities like Lagos and Benin, the use of motorbikes for commercial purposes has been banned.
Haulage: this is the business of transporting goods. The mode of transportation can either be by road or rail. Some of the goods that can be transported include but not limited to household items, food produce, livestock, petroleum products, building materials
Commercial bus/passenger transport services: this aspect of transportation business is done by rendering the service of conveying people from one location to a preferred destination for a fee. This is either done as an inter-state or intra-state transport business. Alternatively, you can also register yours with ride-hailing platforms such as Uber and Bolt.
Offering hire purchase services: in this type of transportation business, there is an agreement in which the owner of the vehicle allows another person (the hirer) to hire the vehicle from him for some time by paying in instalments. The hirer has the option to buy the vehicle at the end of the agreement.
Other types of transportation business available are aircraft transportation, train, boats, ship but for this purpose of this article, our focus will be on road transportation business.
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The business plan for your road transportation business will contain all the necessary information required to set up the business, the number of people the business intends to hire, the profit and loss analysis, cash flow analysis and the projected earnings from the road transport business.
Other ways in which the business plan will be useful include:
When starting a business, there are numerous funding options available to help finance your business.
These options include but not limited to:
Loans: Loan is a way of raising funds for business ventures. A loan can either be from friends and families and commercial banks. To access bank loans, one would have to write a bankable proposal.
When writing a bankable proposal take into account the following steps:
Familiarize yourself with the responsibilities of each financial organization
Prepare funding request based on their priorities
Get a copy of their template and use it to develop your proposal
Formally submit your proposal
Savings: This involves funding from personal savings.
Bank of Industry: Bank of Industry provides financial assistance for the establishment of large, medium and small projects as well as the expansion, diversification and modernization of existing enterprises.
Bank loans: Bank loans are one of the most common forms of finance for small and medium-sized enterprises. It can be capital/principal repayment or interest-only and can be structured to meet the business’s needs. Bank loans can be short term or long term depending on the purpose of the loan.
Angel Investors: Funds for starting a business can be raised through Angel Investors. Angel Investors are individuals that provide capital for a business in exchange for convertible debt or ownership equity.
Crowdfunding: This is the process of raising capital through the collective effort of a large number of people mainly through the internet.
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After getting the required funding for the business, the next step is to get the required vehicle needed for the transportation business based on the business plan for the business.
All vehicles on the road whether for private or commercial use is expected to have insurance. Although cannot be predicted, there have been cases where haulage vehicles got involved in hazardous accidents which led to the loss of goods and properties. The effects of accidents and loss of goods could be reduced with adequate insurance. Insurance protects your business against unforeseen circumstances and events that might occur during the course of running your business. Insurance for a transport company covers the following:
Goods in transit;
As a business owner, it is important that you get insurance an insurance cover for your business.
It’s always necessary to get one’s business registered with a related body. This is because most businesses are supervised by associations. Most times, there are fees to be paid before becoming a member of these associations.
In Nigeria, the bodies in charge of transport business include but not limited to:
Road Transport Employees Association of Nigeria (RTEAN)
Amalgamated Commercial Motorcycle Riders of Nigeria (ACOMORON)
Tricycle Owners and Operators Association of Nigeria (TOOAN)
In addition to getting the necessary license and permits, the legal documents needed include
A vehicle license
Ministry of Transport (MOT) certificate
After purchasing the vehicle and completing all the necessary registration, the next step is to hire competent hands to manage the business.
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