Cement business is a very lucrative and easy one to start in Nigeria. Due to the increase in population and the rise in the real estate industry, the demand for cement in Nigeria has been on an uptrend in recent years.
With this, sellers have been making a lot of money, as there’s always demand for the goods all across the country. Regardless of your capital, you can start a cement business in Nigeria whether on a small scale or a large scale.
However, one major thing that stops people from starting this business is not knowing what the business entails and how to run it. Well, if you are one of them this post is for you, as we’ve covered everything you need to know to start a successful cement business in Nigeria.
From the opportunities to the cost of starting and profits to expect, you’ll learn everything about the cement business in Nigeria.
If you’re ready to discover all of them, let’s go then!
Starting a Cement Business in Nigeria
Cement business involves selling cement to contractors and sometimes to retailers. This business is very popular in Nigeria as it can be started with small money. And if you have a lot more, you can also start this business on a large scale.
Cement moves fast in Nigeria especially in new construction sites as there’s been a rapid increase in the real estate industry in Nigeria in recent years. There’s a lot of money to be made from this business as the price of cement fluctuates all year round.
The business is very easy to start and can be started anyway regardless of your gender in Nigeria, although there are lots of ways you can prove the business and be successful.
Opportunities in Cement Business
The cement business can be approached in many ways, but two opportunities are the most popular in Nigeria. These include:
Cement Distribution Business
Cement distribution business involves the purchase of cement from the manufacturer and reselling to retailers and sometimes final consumers. Approaching the cement business as a distributor in Nigeria requires a lot of money.
This is because you are not just buying a bag of cement, instead, you’ll be dealing with a full trailer load which costs millions. Not only that but you also need to invest in a warehouse where your goods are meant to be stored. You’ll also employ workers who will help you carry out the day-to-day activity of the business.
While that may seem a little bit of work, it is not as hard as you may think. Becoming a cement distributor in Nigeria could make you a lot of money as you will be dealing with a multi-million naira business. Therefore your profit margin will be massive.
Cement Retailing Business
Approaching the business as a retailer is another way to start the cement business in Nigeria. This involves buying cement in small quantities from distributors, then selling to final consumers.
Not much of a capital is required to start a cement retailing business in Nigeria. All you need to get started is just a shop or possibly a means of transportation by which the goods will be delivered to buyers.
Is Cement Business Profitable?
Yes, the cement business is very profitable in Nigeria. Although your profitability depends on how you approach the business.
It’s obvious that as a distributor you will make more money than being a retailer. What also drives the profits of this business sales. The more sales you make the more money you will realize, which also means more profits for you.
As a distributor, your profits are calculated based on trucks sold. Per full load truck of cement, you can make hundreds of thousands of Naira. While as a retailer, your profit is calculated based on the bags sold. Per bag, you could make up to N1000 in some parts of the country.
One more thing about the profitability of this business is that it varies depending on location. For example, the price of a bag of cement in Lagos may be different from the price in Abuja and port-Harcourt which means the profit will also be different.
What is the Cost of Starting a Cement Business in Nigeria
Just like every other business, you need money to start. However, the capital required to start a cement business in Nigeria depends on your mode of operation.
To start a cement distribution business in Nigeria, you would need millions of naira to start, and most of the money will account for the cost of goods and setting up a warehouse. On the other hand, you would need anything from N300,000 and above to start a cement retailing business in Nigeria.
Although, depending on how big or small you want to start, whether as a distributor, or retailer, you may need more or even less. This is because factors such as location also determine the startup capital needed for a cement business in Nigeria.
How to Start a Cement Business in Nigeria
1. Decide on the Type of Cement Business to Start
The first step in starting a cement business in Nigeria is deciding on the type of cement business you want to start. As listed above, there are two popular types – becoming a retailer and becoming a distributor.
Here, your decision should be based mainly on the capital you have to start, and also your location. If you have enough money to start as a distributor and can manage a big business, it will be great to start that way. However, with little startup capital, settling for the retailing of cement would be better.
2. Do Your Research
Knowing the type of cement business you want to start, the next thing is to carry out some research. Before starting, you’ll need to know how the business works in your area, find out about your target audience, know the best marketing strategies, and also get to understand the day-to-day activities of the business.
In doing this, you’ll need to find and create a business rapport with someone already in the business, and let them guide you. If you’re starting as a distributor, you’ll need to research the requirements to work with top cement companies like Dangote, Elephant, Lafarge, and so on.
3. Come up With a Business Plan
Based on the type you want to start and your market research result, the next thing to do is to draft a detailed business plan. Here, you’ll need to outline your objectives, and goals both short-term and long-term.
In your plan, you’ll need to go into detail on how you’ll run the business. If you’re good at drafting a business plan, there’s still lots more to be covered. If not, you can hire professionals to draft a detailed business plan for you.
4. Get a Store
Now to the practical part of the business. Whether you want to start a cement retailing or distribution business, you need a store where your goods will be kept for sale.
As a retailer, you can rent a shop or get a container kiosk to start with. Here, it is ideal you secure a shop at a good location where your targeted audience can quickly locate you. As a retailer, bricklayers would usually be your customers, so it would be a great idea to sit your shop near a construction site, or a newly developing area.
Some distributors don’t have a store. They operate as “From Company to Retailers”. That is when they get a full truckload of cement, they’ll distribute it little by little to retailers. However, in some cases, especially as a newbie with not many customers yet, you’ll need to rent or build a warehouse for the goods.
5. Register Your Business
Although not necessary for retailers, if you want to start a cement distribution business in Nigeria, you’ll need to register your business, as that is one of the most important requirements by cement manufacturers like Dangote, and the like.
To work with cement manufacturing companies, your business must be registered with at least the Corporate Affairs Commission (CAC). Also, you’ll need a corporate bank account, as well as some other legal documents to become a cement distributor in Nigeria.
While doing your market research, you should find out about all the requirements to work with cement manufacturers in Nigeria.
6. Source Suppliers
As a retailer, finding a supplier is easy as there are lots of cement distributors across every state in Nigeria. All you just need to do is find the best one in your area to work with.
However, if you want to start a cement distribution business in Nigeria, it is very difficult to gain a direct distributorship license in many cement manufacturing companies. This is because you’ll need to provide some documents, and also be able to meet a specific turnover rate, which as a complete beginner, may be difficult.
The most advisable way to go about working with cement companies as a distributor in Nigeria is to become a sub-distributor. This simply means working as a distributor under someone or a business that already has a distributorship license, and from there, you can walk your way up.
Both as a retailer and distributor, it is ideal you go with the popular cement brand in your area while sourcing suppliers. Although Dangote cement is popular across the country, other brands are preferable in some places.
7. Get Started and Get Working
Once able to find a means of getting goods to your store, the next thing is to get started. This simply means starting to sell.
To make sales you’ll need to market your cement business. There are lots of ways to do this including:
Whether you’re a retailer or distributor, branding is a good way of marketing your business. Here, you’ll need to print some promotional materials like banners, posters, flyers, etc.
I mean something like “Buy Your Cement Here” or a billboard saying “Cement Depot”. You can place them outside your shop, or on walls to create awareness.
Word of Mouth
Word of mouth advertisements is another great way to market a cement business. This involves telling people such as friends, family, neighbours, and the like, and also encouraging them to tell their friends and family too about your business.
As a distributor, using word of mouth as a means of advertising your business, you’ll need to have a marketing team that will go out there and source retailers to advertise your business to. While as a retailer, you can reach out to contractors and block industries, or make friends with local bricklayers and tip them whenever they refer someone to buy from you.
The cement business in Nigeria is one of the fastest-moving businesses in Nigeria that makes a lot of money, as the profit margin is amazing. If you’re looking to venture into it, I believe this post on how to start a cement business in Nigeria, will guide you on the path to success!