How to Start a Commercial Tricycle Business

Tricycle business is one aspect of commercial transportation. The business thrives because of the huge population of Nigeria, bad roads and dirt tracks.
The need for cheap and fast transportation had led to an explosion of such vehicles on our roads. Another factor for the popularity is low cost of acquiring the vehicle and government initiatives.
The business is very lucrative and profitable for operators. The beginnings of tricycle business in Nigeria could be traced to the Keke Napep initiative. This was a poverty alleviation scheme aimed at the poor masses.
The scheme was fashioned to empower the unemployed population by providing subsidized vehicles to participants. Although the vehicles were not cheap the business developed into tricycle business today.
 Tricycle

How to Start a Tricycle Business in Nigeria
The first step to starting the business is to buy a commercial tricycle. The average cost of a new one is about $1200(N400, 000). The next step is to register the vehicle.
Join an Association
To operate tricycle business in Nigeria you need to join an association. There are no free operators because the union would hound such an individual.
Pay your operators fee and union fee at a designated park. You don’t necessarily need to incorporate a business name unless you have many tricycles.
Long Lease
Another way to acquire a tricycle is to lease the vehicle. Some people operate hire purchase agreements and collect a total sum of N650, 000. This is incurred during a specified period from 10 to 12 months.
The operator pays the owner through installment payments and owns the vehicle once complete. Make sure you carefully go through the terms and agreement before appending your signature.
Rent the Vehicle
Some investors prefer purchasing the vehicles and renting to operators. The downside to this arrangement is the poor handling of the vehicle by the operator.
This is because the vehicle is owned by the investor and the operator is the commercial driver. He remits a weekly or daily take to the owner of the vehicle.
Funding
Funding could be sourced from thrift societies or micro finance banks. You could try target savings or borrow from friends and family. The working capital for tricycle business is periodical maintenance and fuel.
Earnings
It is possible to make N5000 daily doing this business. This comes to N150, 000 monthly. Cost consideration should include fuel, association fees, loading and local government taxes.


 More on Starting a Keke Tricycle Business
A three wheeled vehicles is referred to as a tricycle. The terminology also covers man powered bicycles or recreational vehicles. The different wheel configurations include the tadpole with two wheels in front one at back or delta with one wheel in front and two at back.
The different types are the recumbent, recumbent delta. Others are recumbent hand trike, recumbent tadpole, and recumbent tandem. Commercial tricycles are the rickshaw, spidertrike.
The popular KeKe is a motorized rickshaw type of vehicle. It can conveniently accommodate four passengers and a driver. The commercial vehicle introduced in 2002 by the then former Nigerian president Olusegun Obasanjo has become very popular.
This is because the rickshaw is ideal for narrow roads and short distance travel. Popular in most urban areas the transport business is highly lucrative. The inventor only needs to purchase or lease one, pay association fees and levies.
How to Start Keke Napep Business
Funding
The amount you need is low and achievable. Try target savings or borrow from friends and family. You can try a thrift and credit society or micro finance bank. Other fund sources are trade banks, partnership, and core investor.
  • target save
  • borrow from friends and family
  • approach a thrift and credit society
  • get small loan from a micro finance bank
  • try a trade banks
  • look for a partner
  • find a core investor
Buy the Tricycle
The main mode of transportation is the tricycle. There are many auto dealers that sell imported commercial tricycles.
The average cost is about $1250 USD or N400, 000 naira. It is not advisable to buy a used one because they may have serious mechanical issues. However a used one should go for about N250, 000 to N300, 000
Other Ways to Start the Business
Apart from buy a new or used one there are other ways to enter the industry. You could operate a hire purchase agreement with a tricycle owner. The structure of hire purchase involves paying the owner a stipulated amount monthly.
The payback period could be ten months to a year. The total payback before the vehicle is officially handed to the driver is about N650, 000. Once this is achieved the driver automatically owns the vehicle. The driver usually pays a weekly sum of 15,000 for 10 months.
How to Join the Industry
  • Purchase a tricycle and ride yourself
  • Leverage on hire purchase agreement
  • Become a tricycle driver and remit funds daily to owner
Register the Business
It is mandatory to register with a tricycle association in your locality. Keke rider’s association registration fees are about N5, 000. The operators also pay a daily sum between N400 to N1000 as levies.
The association handles issues such as arrest of members or harassment from local government authorities. You also need a current driving license, insurance and state tax identification number. To operate commercially register the rickshaw as a commercial vehicle.
  • register with a tricycle association
  • current driving license
  • insurance
  • state tax identification number
  • the vehicle needs a commercial license
Earning Potential
It is possible to earn N1.5M a year if you operate the vehicle yourself. This figure is estimate on a take home of N5, 000 per day. This equates to N150, 000 a month.
The cost of fueling is low because N1, 000 naira will run the vehicle the entire day. While a brand new Keke has a quicker turnover period than a used one.
If you drive the vehicle yourself you can brake even in 5 months. However if you intent using hire purchase it takes 10 months to earn a profit of N250,000 and lose ownership of the vehicle.
Find Transport Routes
You need to find good routes for your business. Ideal locations are densely populated areas with lots of human traffic. Roads within a local government area are good routes. The general characteristic of a driver is endurance, good driving skill and interpersonal skill.
How to Flip Cars for Profit
How to Scrap Vehicles for Profit

How to Start Cattle Haulage Business

0 comments:

Post a Comment

Note: Only a member of this blog may post a comment.