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November 4, 2017

What you need to know to setup a cooking gas business in 2017

how to set up cooking gas business

When was the last time you took your gas cylinder to be refilled at your favourite gas vendor? Or maybe you even called him to come and do the refilling right in your house. You may or may not be aware of the excellent business opportunities present in cooking gas business. It’s a low entry business with reasonable capital requirements and can be completely customized according to the available resources and the requirements of your clients.

Reasons why you should start cooking gas business:

  • It has low entry barrier. With as litttle as N200,000, you can sucessfully begin selling your products to consumers in your neighbourhood.
  • It’s completely flexible and can be scaled to fit into your local customers requirements as well as your finances.
  • Anybody can start a cooking gas sale and delivery business irrespective of educational background.
  • You can widen the scope of your business by offering value added services such as home or office delivery, and sales of accessories such as cylinders and burner.

Basic requirements to start cooking gas business:

To start cooking gas business you will need the following tools and equipment;

CAC registration
Gas cylinders (12.5kg)
Long hose Good location
Cylinder Regulator
Industrial weighing scale

CAC business name registration:

You are probably going to come up with a fancy name for your business right from the planning stage. Now is the right time to start the application process of registering your business name. Hum wait, so you think you’re the only one thinking of calling your business “Unfinishable Gas”? It should be noted that this is not an absolute requirement. But since the process of registration has been made so easy now, there really is no excuse for you not to do it.

Market analysis and survey:

This is a very crucial stage that will determine whether a business will survive or drown especially in its infancy. Don’t undersetimate this step for any reason because sometimes appearance can be deceptive. Without an indepth analysis of your potential market and your competitio, you just increased your chances for not succeeding. So, go in search of a supplier company with their station closely located to where you can access them easily.

You don’t want to spend too much of your resources just conveying your gas products to your shop. That will put serious stress on your profit margin.
Once you find one, ask them about the price and compare with the prices of other suppliers. Select the most competitive pricing with reference to your own location.

Next, get a note book and move from target friends and homes in your neighbourhood to ask them about their gas consumption behaviour as well as the price they get their gas. Find out how they get their delivery. How best they prefer to have their gas delivered. Your aim is to put down sufficient data that will enable you plan for your own unique selling point. You have to offer your potential customers a deal they can hardly refuse (while still keeping an open eye on your own profits. The keyword is TURNOVER)

Your final port of call is your competiton. If it’s possible you can go on a personal fact-finding mission to vendors in your vicinity to gather some information about how tthey operate. In case that’s not going to be feasible, you can send someone trustworthy to go on that mission for, you.

Location and marketing:

Your cooking gas business should be in a good location, easily accessible to customers. Marketing for this business is mainly through word of mouth. Visit homes, families and friends in your vicinity to tell them about your service. Offer to give sell at cheaper price than the competition if you can. You can also type and print small flyers and share.

As you grow in the business you will have some customer’s phone numbers. Send them goodwill messages during celebration periods. Now, your competition is in real trouble.

Gas Cylinders:

The size of cylinders you’re going to be refilling will to a large extent depend on your primary location. For instance, if you service a majorly student area, its more likely that you’ll be filliing more of the smaller sizes (2.5kg – 5kg), compared when you service a residential area where most homes have large cylinders.

There are some businesses where the level of success depends on your ability to sell yourself as well as sell your product. You must be able to make your clients/customers like and trust you as a person as well as your product. Cooking gas sales is one such example. Integrity is very crucial as it will enable your customers see exactly what they are getting from the money they’re paying. You must make sure you don’t shortchange your customers even when they are not there, make sure to deliver the weight paid for.

A 12.5kg cylinder costs between ₦8,000-₦17,000 depending on the quality (foreign or local) and whether it’s new or fairly used.

Proximity to gas supply plant:

Unless you’ve got some serious cash to spare, you are going ton  need to procuure your products (gas) from a wholesaler. Cooking gas plants are like wholesalers in cooking gas business. So, you purchase from them at wholsale rates and sell to your own customers. It is important to have your store close to a cooking gas plant. This is to save money on transportation. The economic consequence of this is that it enables you to offer a better competitive pricing to customers.

Consider home deliveries:

In this jet age where everybody seems to be busy (sometimes doing nothing), there’s a high likelihood that procastination might be a big problem for some of your target customers. They are just too busy to take their cylinders to the gas vendor. Obviously it makes sense to take advantage fo that right?. Of course you can and should take advantage of that and one way to stand out in this business is to do home deliveries. These days, cooking gas suppliers are doing home deliveries at no extra cost. Which means that if you’re not doing it, then somebody else is, and they’re doing  it to entice your potential customers. This also serves to create a cordial bond between you and your clients.

You can transport your products using a bicycle (where it is permitted), tricycle, or even branded vehhicles. Even If you don’t currently have a means of transportation, you can always liase with commercial transporters to help you fulfill your orders.

Safety and other best practices:

The biggest fear many people have towards both cooking gas business as well as its domestic use is due to the fact that it is higly flammable. Safety measures should be employed to reduce the possibility of fire explosions. I remember we had a hard time convincing my mum that gas was cleaner , faster, and cheaper than her kerosen stove. You must be quick to detect and stop any gas leakage. Where you refill gas should be as far as possible from any fire source. Smoking, bush burning, waste burning should be avoided in the vicinity. Get a fire extinguisher and make sure it’s kept in a location where it is readily accessible.

How profitable is cooking gas business:

The level of profit you make will depend on your volume of sales and turnover. On the average, the profit on every 12.5kg gas cylinder is ₦500. This means that it is possible to make at least ₦20,000 every month by selling 10 cylinders every other week.

Sales of accessories and scaling up:

If you have extra capital at start-up, you may include the sales of accesories related with cooking gas sales. Some of these items include empty cylinders, gas burners/cookers, hoses, regulators etc.

Every new business has its peculiar challenges. Starting a cooking gas business is no different. With perserverance

however, a die hard spirit of integrity, as well being innovative in your approach to your customer, You shouldn’t have too many problems. You can offer services that include creating awareness on safety measures, as well as make provision for door-to-door delivery.

So, there you have it. We love comments and feedbacks. Please kindly drop your feedbacks or maybe you want to share your own experience concerning how to setup and run a successful cooking gas sales and distribution business.

 

If you’re interested in learning how to start a successful snail farm, check out this nice, easy to follow guide by me here.

Don’t forget to share with your loved ones, and you can also follow ouur social media handles. Have a very productive day!

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