How To Start A Lucrative Generator Sales Business In Nigeria: The Complete Guide
All over the world, the need for power supply has grown tremendously, especially in industrial areas within the last decade. The growth has become so immense that the electricity grid provided by the state cannot sufficiently cater to the demands. As a result, many societies have had to resort to power generators to supplement available electricity.
As of 2019, the overall global market of power generators was worth US$22.3 billion. Going by current market behaviour and the increase in small and large businesses demanding backup generators, the market size is estimated to grow to US$29.3 billion by 2022 at 5.6% CAGR. Diesel-powered generators contribute the lion share to this market growth, and that is because it is the preferred option in urban and industrialised economies. At the moment, China holds the ace as far as generator sales are concerned. They are followed by India, South Korea and Bangladesh in the Asian region. European and North American countries also have some of the largest markets, especially for high-voltage gensets.
Given the huge population, growing economy and the poor electricity grid, Nigeria is a huge potential for power generators, especially portable generators of multiple applications from 0 to 75KV. In 2018, the generator market in Nigeria was worth over $400 million, and it has been protected to mount as high as $527.4 million by 2024 at a CAGR of 4.1%. There is at least one generator in every 3 Nigerian homes in towns and cities. It is used both at home and in small business centres, and this makes generator sales a highly lucrative business venture for any investor.
If you’re looking to start a generator sales business in Nigeria or any other part of Africa, you will find this step-by-step guide helpful.
What Is A Generator?
A generator is a mechanical device that operates on chemical energy to produce electricity supply. Generators come in different sizes and capacities, and they are suitable for different uses, both domestic and industrial. In Nigeria, generators are the main source of power supply and not just as backup sources. What this means is that almost home or institution is a potential client!
What Is A Generator Sales Business?
A generator sales business describes the process involved in procuring, stocking and selling generator sets to local consumers. Because generator does not drive repeated sales like edible products, many generator traders often add extra generator businesses such as selling generator parts, etc.
Business Opportunities In Generator Sales Business In Nigeria And Around The World
1). Importation Of Generator Sets:
Generator sales business in Nigeria operates mainly on importation. The gensets are imported from countries where they are produced. This creates an opportunity for mega importers of generators, and it is a lucrative business on its own.
2). Delivery And Distribution Services:
Large-scale retailers of generators depend on delivery personnel to deliver their products to buyers right in their homes or offices. This way, drivers and delivery boys are engaged and paid.
3). Sales Of Generator Spare Parts:
In most towns in Nigeria, retailers of generators add one or two other services to their trade. This includes selling generator spare parts and other accessories. The generator sales business also keeps generator repairers, technicians, mechanical engineers and operators in business.
Facts And Benefits Of Generators
- Most businesses in Nigeria and other growing economies of the world would found up without a generator set.
- Whereas large companies and offices use generators as backup options, they are the core of most small businesses.
- Generators operate on different types of energy sources ranging from diesel to biofuel.
- The most common generators are the portable home generators that use petrol as fuel.
- In Africa, where the electricity supply is low and erratic, generators are the mainstay.
- Generators come in handy both during extreme cold and hot weather conditions.
- China, the USA, Bangladesh and South Korea are some of the biggest markets for generators.
- In Nigeria, the demand for portable generators is motivated by the growing population, industrial business expansion, etc.
- Generator sales is common in most towns and cities in Nigeria.
- Generators against health challenges that would otherwise arise from adverse weather conditions.
- Generators are used for several domestic uses, including generating energy for water supply.
- Standby industrial generators can start automatically following a power cut, to provide you with uninterrupted power supply.
- The Faraday disc was the first electric generator ever produced.
- Portable generators are the most commonly used generators in Nigeria.
Types Of Generators
Based on energy used, generators may be classified into:
1). Gasoline Generators:
Gasoline generators are the most common generator types. They include the portable generators used for everyday business operations. Although gasoline, more commonly known as petrol in Nigeria, is more expensive than other common energy types, it is the go-to energy source for powering generators.
2). Diesel Generators:
Diesel generators are the most commonly-used generators after petrol generators. Diesel is the preferred option for high-voltage generators because it lasts longer than other fuel types.
3). Biofuel Generators:
Biofuel generators operate on fuel made from the combination of diesel and biological oils. Biofuel burns less than gasoline and diesel. However, it is less available in most regions because it is difficult to process.
How To Start A Lucrative Generator Sales Business In Nigeria: A Step-By-Step Guide
1). Draft A Comprehensive Business Plan:
It is always advisable to start your business venture with a detailed business plan which outlines all your goals, business ideas and decisions for the business. This will serve as a guide and checklist all along.
2). Secure A Shop Or Business Site:
This depends on the scale of your generator sales business. If you’re starting on a midrange level, a large shop will serve both as your shop and storehouse. On the other hand, if you plan to operate on a large scale, you will have to get a separate secure storehouse.
3). Contact Generator Importers:
After preparing a business site and warehouse in a favourable environment with business prospect, you are ready to stock up. Contact trusted importers and suppliers of generator sets with good quality and favourable warranty periods.
4). Employ Staff:
This is especially necessary for large-scale generator retailers with lots of generators and possibly a storehouse. Employ a couple of shop attendants and one or more security personnel to safeguard both the shop and the storehouse at night.
5). Create Awareness:
For things to ‘get moving’, you need to network with people, create awareness about your business, run ads on local radios, social media platforms, posters and flyers, etc.
Challenges Of Generator Sales Business In Nigeria
- Startup costs might be somewhat high, especially when you want to go large-scale.
- Delayed delivery of supplies from importers.
- High risks of stealing
- import duties and taxes
- High competition in the generator sales business, especially in urban areas
- Poor road network affects delivery speed
- Difficulty in accessing the international market for quality gensets.
- Insufficient loan structures for dealers in the generator business.
- Distrust between generator sales business owners and shop attendants.
- Instability of generator prices.
- Low support from the government
- Competition with the state electricity grid, solar power supply and other sources of electricity
To Sum It Up
The backbone of every industrial society is a working economy. However, the economy would be crippled if there is no power supply for it to operate on. Yet, given the ugly reality of the unavailability and insufficiency of the utility electricity grid, power generators become the ready options. The generator sales business in Nigeria can be a lucrative and profitable venture to start-up, due to its vast market demand and on your ability to build a wide network. If you’re looking for a lucrative business to venture into, the generator sales business in Nigeria is a great option to explore.
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