Business plan for starting kerosene business

With the increase in the number of persons using kerosene in Nigeria, it makes economic sense to venture into the sales and supply of kerosene commonly known as paraffin. It is useful in the home and also in industrial settings, where it can be used as a mixture for driving production of chemical agents. The number of users in the urban areas far supersedes that of the rural area, based on the fact that more rural dwellers make use of modern equipment in their kitchen. An individual who wants to go into the business will definitely want to focus on supplying the product to urban dwellers.

The fact is that kerosene business will always be profitable whether in the urban or rural area, because those who use gas for cooking equally patronize kerosene marketers in case of emergencies and this gives the business the needed leverage. Though the number of users have dropped significantly over the last few years, there are still enough opportunities available for serious entrepreneurs who wish to profit from the sales of this volatile product. Below is a step by step guide on how anyone can setup this business and start making profit from the business:

Get enough information about the product

Knowledge is very crucial when starting any business. In this case, it is important to get as much knowledge as you can about kerosene. You have to know the current prices, where it can be bought at a cheap rate, safety measures concerning the product, how the product can be preserved, how other kerosene dealers have been faring and how they make profit, capital that may be needed to start the business, how to make the business more attractive and attract more clients. These and other information you need to get, before contemplating on starting. You can also carry out a comparative analysis based on black market current price to verify your profit margin. By the way, the current price of kerosene fluctuates between N150-N200 per liter.

Note: You may not need to have a business name or get a license before commencing the business as long as you won’t be selling beyond 10,000 liters. It is assume that you are starting a small 1scale kerosene business.

Raising your capital

Raising the capital for any business is always the most crucial part in the process of setting up such business. In the case of kerosene business, this must be done after you have gotten a secure price for your product. This could be a rented store or an empty room or store room where children cannot get access to the product.

Storage facility

Apart from finding a space to sell your product, you need containers to hold your product. Commonly used containers are the 50 liters containers, the 20 liters containers and the 10 liters containers. Kerosene is normally put on display in these containers.

Note: in large scale kerosene business, you can prepare a tank to hold your product and attach a dispensing pump to the tank from where kerosene is then sold to buyers.

Get a sales boy or girl

Due to the huge demand of the product, it may be practically impossible for you to do it alone; hence you may have to hire the services of either a sales boy or girl to assist you in the sales of the product. The sales boy or girl must have a sound knowledge of the business and also be able to do a decent book keeping job side by side with monitoring daily sales records and inventory of supplies sold and volume remaining.

Display area/space

If you do not wish to sell your product at home, you must acquire/rent a space in a location close to or in a residential area. This way, your patronage will be high and more expansive. You must ensure that the product is not within the reach of children and if possible, prohibit the presence of children via a well displayed sign post within the vicinity of the business.

 

Purchasing of kerosene

There are two ways you can do this. The first is that you go to a fuel station close to you with large containers especially 50 liters containers. Using bigger containers will be more difficult due to transport and logistics. You can then transport your product to your facility using a pick up van or normal Toyota open booth car. Beside this, you can arrange with the fuel station to bring the product to your storage location, especially when you are dealing in large quantities of about 500 liters upwards. The product is pumped into your storage tank and you then sell from it on a daily basis. Customers buy mostly in small gallons of 5 liters or less.

Safety in Kerosene business

You must be informed that kerosene is a highly flammable substance; hence care must be taken to ensure that no form of fire comes close to your storage location. Where possible, ensure you have a fire extinguisher around your storage location, together with source of water supply in case of fire emergency.

Kerosene business can be started with as low as N5, 000 and as high as a Million Naira depending on your capital. The higher the capital, the more the profit margin as the business has a huge potential based on its usefulness in the society. Most kerosene marketers usually make more profit during the period of scarcity as they hoard the product waiting for price hike before bringing the product out to enable them maximize the profit.

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