Rice is the most consumed staple food in the world and in Nigeria it is a must eat in most families. Rice business is a very lucrative business to engage in. Many wholesale rice distributors are now making millions and smiling to the bank.
There are many reasons why you should go into this business, if you are looking for a new business to start.
Reasons To Go Into Rice Business.
- Rice is not a perishable food like vegetable, if water do not get to it and it is placed on wooden pallets, it will take at least 4 years for rice to get spoiled. Within this period, there is no way you cannot sell your stock of rice.
- Nigeria is Africa’s biggest economy.The population of Nigeria is 170million people and by the year 2020 it will be about 200million people. Statistic shows that about 22million bags of rice is consumed every month. So there is a big and growing market for rice in Nigeria.
- There is always a ready market in almost any locality. If you go into the business as a wholesaler, you will always find many retailers around you, who will patronize you regularly.
- Rice is an essential commodity, almost like salt and sugar. No wonder even billionaire businessman Aliko Dangote is investing $1billion in integrated farming. You can hardly go wrong with this business.
Things You Need to Start a Rice Distribution Business
These are the essential things you need to have in place in order to run a successful rice business.
- A Supplier-: This is where your work really starts. You need to go to the rural areas where there are local rice millers. Look for a miller with “near modern” equipment and excellent perboiling and drying techniques. Also look out for high level of hygiene. You need to buy from a source where you can get the rice in very large quantity and at the cheapest possible rate, so that you can still make profits after spending for the logistics involved in getting the rice from the supplier to the retailers.
- Warehouse-: Most times, you don’t get to sell of the whole bulk of supply you get at once to the retailers because there may be times when the market demand may be low, that is when you need a warehouse to store your rice until you are ready to ship out to retailers.
- Capital-: To become a wholesale distributor, you need to buy in very large quantities from the rice millers and sell in smaller bits to the retailers; so starting a rice distribution business requires much capital. The only exception is if you have a mutual understanding and agreement with the millers where they supply you the goods on credit sales, you sell to the retailers and pay them off as soon as you are done with the sales. You can source for a low-interest loan from Bank of Industry or Bank Of Agriculture. Click here for the procedure. But don’t go to commercial banks at this stage. Their interest rates will likely kill your business at this stage.
- Transportation-: As the distributor, you may have to be in charge of transporting the rice from the rice farm to your warehouse or delivery to customers when orders are placed. You may need to get an old truck to handle the distribution process or you can strike an agreement with a logistic company to take care of the transportation process. It may be cheaper for you to get an old but strong pickup or station wagon.
- Decide your rice variety -: Check out the most popular variety of rice in your localilty, and decide on the ones to invest in.
- Strategic Location:- Where you locate your rice business can be one of the most important factor that will lead to the quick success of your enterprise. Look for a good shop close to or opposite to a normal conventional market. If you are in a town, do your market survey properly and do not locate in an area where there are already too many wholesalers, unless the market in such places is still huge. However, it will be easier for you to go to a place with no or few wholesalers. This will force all the retailers around your locality to patronize you, so as to save on their transportation cost. Location is very vital.
- Packaging:- You may decide to package the rice with your own brand name. Branding is a long term plan that will pay off later when you start having competitors. The branding may involve packing the rice in personalized sacks. Also, packaging improves the look of your product, and increases its appeal to your customers.
- Marketing: Now you have everything set up, you will need to quickly penetrate the market by doing some marketing, especially to retailers around you. In any business, it is important that you go to market very fast. Business is never the same every where, so going to market quickly, still remains the best way to study your market. You may use certain incentives to lure your initial customers, such as giving out free 1kg samples, free delivery to their market stores, etc. Some may decide to give out credits at the initial stage, this will surely pull in customers quick, but I don’t advocate this, unless you are willing to lose some money, to get market share.
- Book Keeping: Finally, remember that it is very important for you to keep accurate records of your business from day one. This will give help you in managing your business, even if you employ sales boys 7 girl. It will also give you a great advantage when you want to expand your business and properly seek for finance from lending institutions. Remember that you can now get very sound business education from online business training schools like Millionaires Academy.