25 Tips to Set-up Small-scale food production Business in Nigeria

Small-scale food production: Food production business is a safety business; not only in Nigeria but all around the world.

The food industry has always been a safe choice when considering how to start your own business.

Everyone loves and needs food; and studies have already established the fact that people are less likely to regret spending money when they shell it out on food.

Such facts lead to the truth that food business, even small scale ones; is still a good investment.

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Small-scale food production:https://www.icrisat.org

Small-scale food production

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1. Small-scale food production

Starting a small business is without a doubt a large undertaking.

But it is fortunately something that can be attained by anybody with a good idea.

A strong work ethic, and a good set of resources.

Starting a business involves thinking of a business concept, writing a business plan.

Understanding the financial side, and finally marketing and launching.

2. Choose an idea.

It might be a product you’ve always wanted to make, or a service you feel people need.

It might even be something people don’t know they need yet, because it hasn’t been invented!

  • It can be helpful to have people who are bright and creative join you for a casual brainstorming session.
  • Start with a simple question like: “What shall we do?” The idea is not to create a business plan, just to generate potential ideas. Many of the ideas will be duds, and there will be quite a few ordinary ones, but a few may emerge that have real potential.

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3. Consider your talents, experience, and knowledge when selecting a concept.

If you have a particular skill set or talent, consider how these resources can be applied to meeting some sort of market demand.

Combining skill and knowledge with a market demand increases your odds of having a successful business idea.

  • For example, you may have worked with electronics as an employee for many years.
  • You may have noticed a demand in your community for a particular form of electrical work.
  • And combining your experience with the market demand can allow you to attract customers.

4. Define your goals.

Do you want financial independence, eventually selling your business to the highest bidder?

Do you want something small and sustainable, that you love doing and from which you want to derive a steady income?

These are the things that are good to know very early on.

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5. Create a working name.

You could even do this before you have an idea for the business, and if the name is good.

You may find it helps you define your business idea.

As your plan grows, and things begin to take shape.

The perfect name may come to you, but don’t let that hinder you in the early phases.

Create a name that you can use while you plan and don’t hesitate to change it later.

  • Always check to see if the name is being used by somebody else before selecting it.
  • Try to create a name that is simple and memorable.

6. Define your team.

Will you do this alone, or will you bring in one or two trusted friends to join you?

This brings a lot of synergy to the table, as people bounce ideas off each other.

Two people together can often create something that is greater than the sum of the two separate parts.

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7. Choose your partners wisely.

When choosing the person or people you’re going to build the business with, be careful.

Even if someone is your best friend, it doesn’t mean that you will partner well in a business operation.

Small-scale food production

8. Create a business plan.

A business plan helps to define what you think you need to launch your business, large or small.

It summarizes the sense of your business in a single document.

It also creates a map for investors, bankers, and other interested parties to use.

When determining how they can best help you and to help them decide whether or not your business is viable.

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9. Write your business description.

Describe your business more specifically, and how it fits into the market in general.

If you are a corporation, LLC, or sole proprietorship, state that, and why you chose to go that route.

Describe your product, its big features, and why people will want it.

Small-scale food production

10. Answer the following questions:

  • Who are potential customers? Once you understand who they are and what they want, come up with a marketing strategy.
  • What price are they willing to pay for your product or service? Why would they pay for your product or service over your competitor’s?
  • Who are your competitors? Do a competitive analysis to identify key competitors. Find out who is doing something similar to what you are planning, and how have they been successful. Just as important is to find the failures, and what made their venture fall apart.

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11. Write an operational plan.

This will describe how you will produce or deliver your product or service and all costs.

  • How will you create your product? Is it a service that you are offering, or if it’s more complex— software, a physical product like a toy or a toaster — how will it get built? Define the process, from sourcing raw materials to assembly to completion, packaging, warehousing, and shipping. Will you need additional people? Will there be unions involved? All of these things must be taken into account.
  • Who will lead, and who will follow? Define your organization, from the receptionist up to the CEO, and what part each plays in both function and financials. Knowing your organizational structure will better help you plan your operating costs, and fine-tune how much capital you will need to function effectively.
  • Getting feedback. Friends and family make great resources for asking questions and getting feedback––don’t hesitate to use them as your sounding board.
  • Needing to increase the size of your premises. This happens more often than expected. Once the stock starts piling up, you may find it ends up in your living room, bedroom and the garden shed. Think rental of storage premises if needed.

Small-scale food production

12. Write the marketing plan.

Your operational plan describes how you will produce your product.

And your marketing plan describes how you will sell your product.

When you create your marketing plan, try to answer the question of how you will make your product known to potential customers.

  • You will want to include the type of marketing you will use.
  • For example, will you use radio ads, social media, promotions, billboards, attend networking events, or all of the above?
  • You will also want to define your marketing message.
  • In other words, what will you say to convince customers to choose your product?
  • Here, you want to focus on your Unique Selling Point (also known as USP).
  • This is the unique advantage your product has to solve your customers problem.
  • For example, you may be lower cost, faster, or higher quality than your peers.

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13. Come up with a pricing model.

Start by checking out your competitors.

Know how much are they selling a similar product for.

Can you add something to it (add value) to make yours different and hence make it a more enticing price?

14. Cover the financials.

The financial statements translate your marketing and operational plans into numbers — profits and cash flow.

They identify how much money you will need and how much you might make.

Since this is the most dynamic part of your plan, and perhaps the most important for long-term stability.

You should update this monthly for the first year, quarterly for the second year, and then annually after that.

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15. Cover your startup costs.

How are you going to finance your business initially? The bank, venture capitalists, angel investors, Small Business Administration (SBA), your own savings: these are all viable options.

When you start a business, be realistic.

You will probably not roll out of the gate making 100 percent of whatever you project.

So you need to have enough ready reserve to fund things until you are really up and running.

One of the surest roads to failure is under-capitalization.

  • What price do you intend to sell your product or service for?
  • How much will it cost you to produce? Work out a rough estimate for net profit—factoring in fixed costs like rent, energy, employees, etc.

Small-scale food production

16. Come up with an executive summary.

The first part of a business plan is the executive summary.

Once you’ve developed the other parts, describe the overall business concept, how it will be monetized.

How much funding you will need, where it stands currently.

Including its legal standing, people involved and a brief history.

And anything else that makes your business look like a winning proposition.

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17. Build your product or develop your service.

Once you have the business all planned, financed, and have your basic level of staffing, get going.

Whether that’s sitting down with the engineers and getting the software coded and tested.

Or getting materials sourced and shipped to your fabrication room (aka “garage”).

Or purchasing in bulk and marking up the price.

The building process is the time during which you prepare for market.

During this time, you may discover things such as:

  • Needing to tweak the ideas. Perhaps the product needs to be a different color, texture or size. Maybe your services need to be broader, narrower or more detailed. This is the time to attend to anything that crops up during your testing and development phases. You’ll know innately when something needs tweaking to make it better or to make it less like a competitor’s stale offerings.

18. Secure start-up costs.

Most businesses require capital to start.

Money is typically required to purchase supplies and equipment.

As well as keep the business operational for the period before your business becomes profitable.

The first place to look for financing is yourself.

  • Do you have investments or savings? If so, consider using a portion to fund your business. You should never invest all your savings into a business due to the risk of failure. In addition, you should never invest money put aside for emergency savings (experts recommend having three to six months of income put aside for this purpose), or money you will need over the next few years for various obligations.
  • Consider a home equity loan. If you have a home, looking to get a home equity loan can be a wise idea, since these loans are typically easily approved (since your home acts as collateral), and interest rates are typically lower.
  • If you have a 401(k) plan through your employer, consider borrowing against the plan. Plans typically allow you to borrow against 50% of your account balance up to a maximum of $50,000.
  • Consider saving ahead as another option. If you have a job, save a portion of your monthly income over time to cover your start-up costs.
  • Visit a bank to inquire about small business loans or lines of credit. When doing this, always visit many providers to ensure you are getting the best rate.

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Small-scale food production

19. Manage your running costs.

Keep a close eye on your running costs and keep them in line with your projections.

Whenever you see something spent wastefully—like electricity, phone plans, stationery.

Packaging—look around and estimate how much you really need.

And minimize or remove the cost in every way possible.

Think frugally when you start up.

Including renting items instead of purchasing them.

And using pre-paid plans for services your business needs instead of locking yourself into long-term contracts.

20. Have more than the minimum.

You may determine it will take $50,000 to start your business, and that’s fine.

You get your $50,000, buy your desks and printers and raw materials, and then then the second month arrives.

And you’re still in production, and the rent is due, and your employees want to be paid.

And all the bills hit at once. When this happens, your only likely recourse will be to pack it in.

If you can, try to have the reserves for a year of no income.

21. Pinch those pennies.

Plan to keep purchases of office equipment and overheads to a minimum when starting up.

You do not need amazing office premises, the latest in office chairs and pricey artwork on the walls.

A broom cupboard in the best address can be sufficient if you can artfully steer clients to the local coffee shop for meetings every time (meet them in the foyer).

Many a business start-up has failed by purchasing the expensive gizmos instead of focusing on the business itself.

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Small-scale food production

22. Decide how to accept payment.

You will need to do something to get payment from your clients or customers.

You can get something like a Square, which is great for small businesses since it requires the minimum amount of paperwork and the fees are minimal.

However, if you feel uncomfortable with technology, you can inquire about a more traditional merchant account.

  • A merchant account is a contract under which an acquiring bank extends a line of credit to a merchant, who wishes to accept payment card transactions of a particular card association brand. Previously, without such a contract, one could not accept payments by any of the major credit card brands. However, the Square has changed that, so don’t feel locked in or limited to this option. Do your research.
  • The Square is a card swiping device which connects with a smartphone or tablet and turns that device into a sort of cash register. You may have encountered this device in the businesses you frequent, as they are becoming common at coffee shops, restaurants, street food stands and other businesses (look for a postage-stamp sized plastic square plugged into a tablet or phone).
  • Note that PayPal, Intuit, and Amazon all offer similar solutions. Make sure to look into all options before making a selection.
  • If you are online business, services like PayPal offer an excellent way to receive payment and make transfers.

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23. Secure space.

Whether it’s an office, or a warehouse, if you need more space than your garage or your spare bedroom, now’s the time to get that.

  • If you don’t generally need an office beyond your home, but may occasionally need meeting space, there are often places that can address those needs. A quick Google search on “business meeting rentals [your city/state]” will deliver plenty of rental options in your area.
  • Be sure to contact your local municipality about zoning laws. Some types of small businesses cannot be ran out of a home, and it is important to ensure your business is operating within its proper zone.

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Small-scale food production

24. Launch your product or your service.

When the product is all built, packaged, coded, online, and ready to sell.

Or when your services are fully worked out and ready to go.

Hold a special event to launch your business.

Send out a press release, announce it to the world.

Tweet it, Facebook it, let the word resound to all corners of your market—you have a new business!

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25. More tips

  • Most direct selling companies have low start up capital compared to a traditional brick and mortar business. You can also break even rather quickly compared to the traditional business.

  • You can also consider trading on eBay or Overstock.

  • It is ok to start small with one or two products and then add more and more great ideas as you go!

  • Don’t be afraid to experiment with prices.

    You should determine the minimum price for your product or service to break even, but experiment with low-price or premium-price variations.

  • Always believe in yourself even when financial money is down hill.

  • Take risks. Nothing is get without any risk. So, whenever there are chances of risk, do not fear.

  • Always provide value and service to those who may be your customers, even if they are not currently. When they do need your product, you want them to think of you first.

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    • With the advent of the internet, online businesses are probably the easiest way to start and very much less expensive in terms of start-up cost than a bricks-and-mortar counterpart.

    • Keep learning, and be adaptable to change. Find buddies, mentors, local business-related organizations, Internet forums, and wikis to discuss the daily details of running a small business. It’s much easier for everyone to perform their core businesses well and prosper when they don’t waste time and energy “reinventing the wheel” on housekeeping.

    • Be confident and have a good mind about everything you do. Also, be prepared for all the unsuccessful times that may occur.

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    Small-scale food production

    Conclusion

    • Beware of people who ask for money before giving you business. Trade leads to prosperity through mutual gain, so a business should be willing to pay you to work for it. (A franchise store or home-sales business may have legitimate start-up costs, but they should reflect a reasonable cost of getting you started in the business so the managers would make money through your success, rather than just by getting you in.)

    • Beware of business propositions that seem to offer “something for nothing.” They probably involve taking something from somebody—usually you. There are innumerable variations, some more polished than others. Examples include pyramid schemes and advance-fee fraud


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