Starting Diesel Supply Business in Nigeria


Automated gas oil other wise known as Diesel  is serious business. It involves the purchase and supply of the product.
The product is supplied to companies that use the diesel to power generating set and other machinery. Companies that have a large fleet of buses and cars buy the Diesel  for their vehicles.
The business is profitable and falls under oil and gas industry. Countries with huge reserves of AGO like Nigeria have lots of small and large entrepreneurs in the diesel supply chain.
The business is capital intensive and requires lots of funding to buy the product. If you secure the right gig you make a ton of money. Are you interested in starting a diesel supply business here are some ideas.
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Why Diesel Supply is Lucrative
Some third world countries grapple with electrical power supply making them ideal candidates for diesel suppliers. Industries in such climes consume an insane amount of diesel daily.
They use several million liters of diesel  daily making the business venture very lucrative. Major consumers of the product are manufacturing companies, finance institutions and telecom's companies.
Diesel suppliers depend on demand and supply including sourcing the product.
How to Start a Diesel Supply Business
There are a few things you need to put in place before starting your supply business. You need proper registration, branding and equipment.
Carry out a feasibility study and write a comprehensive business plan. Other considerations are staff, office, networking and getting contracts.
Register your Company
It is very important to register your enterprise because you are going to deal with companies. Register your company as a limited liability company.
Your company is required to have a strong equity base to show financial capability. Diesel suppliers in many third world countries are not mobilized with cash and the clients pay only after the diesel is supplied. Some even pay fourteen days after the product is supplied.
To run your supply chain you need bank loans to buy the product. Diesel suppliers use contractual agreement and supply order from companies to source loans from banks.
Banks will only give the loans to diesel contractors that tender documents from known reputable companies. Your company also needs a business premises and address.
You are required to have a license to lift the product from the source. There is also the need to have insurance and tax identification number.
Your company should establish connections with associations and unions. The supply of diesel is highly regulated and controlled by the Federal government.
Haulage
You have two options purchase the truck or lease the truck. Owning your own truck is beneficial, saves costs and unnecessary overheads.
However, small entrepreneurs with low funds prefer leasing trucks to fill orders. The problem with this arrangement is theft of diesel, shortages and sharp practices by the drivers.
You can buy a new truck, used truck or refurbish an existing truck. Another method is buying and assembling your truck from scratch.
Sourcing the Diesel Product
The diesel supplier can source his products from major distributors. There are many huge oil companies such as Shell, Total, Mobil and Texaco. Other sources are importers of diesel and government controlled companies.
Some diesel suppliers use middlemen effectively reducing their profit margin and capital flight. Try importing the product from neighbor countries if they are cheaper.
You need to establish a good supply chain to profit in diesel supply. To do this finding a reliable source for your product is half the work.
Another challenge is finding reputable companies that need your product. It is difficult breaking into the market because such companies already have established suppliers.
To break into such companies you need lots of advertisement and insider information. Make sure the companies you deal with are reputable and pay on time.
 Many diesel supply companies have had their monies tied down for several moths after supply. This is bad because you need to service your loans and cover other expenses.
Branding
Branding has to do with your company’s image. Companies that need diesel are more likely to deal with recognizable brands.
Make sure your services are topnotch and dependable. Branding includes a good business name, prompt and efficient delivery system.
Marketing
The biggest challenge in diesel supply is getting good contracts. Others are adequate funding and networking with major suppliers.
You need lots of marketing to reach companies interested in doing business with you. Advertise in national newspapers and magazines related to diesel supply.
Join diesel supply associations for insider information and support. Build a website targeted to your demography and include a dedicated number and contact information.
Conclusion
Diesel supply business is capital intensive and tough. The supplier works on margins to make profit.
You need contractual agreements, network with major suppliers and funds. Approach many companies to secure contracts and drive your enterprise.








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