Is the cold room business profitable in Nigeria?
A quick Google search on whether the cold room business is profitable in Nigeria reveals a number of things. It shows that not just you, but many people out there are interested in the cold room business, either as a main hustle or a side hustle. Most of all, it reveals that the cold room business has made millionaires.
So what exactly about the cold room business makes it a profitable venture?
Nigerians consume a lot of meat, fish, turkey, chicken etc, and we are not just saying this. Hardly a day goes by without the average Nigerian having one of these on their plate. Even the Fishery Committee for the West Central Gulf of Guinea, claims that Nigerians consume about 1.2 billion birds (mainly chicken and turkey) every year and consume about 3.32 million metric tonnes of fish annually.
The kicker is that most Nigerian homes buy these birds and fish frozen, and since the federal government banned the importation of frozen goods, all of them have to be frozen in our home country.
The people who had the foresight and thought to themselves, “why don’t I become the go-to place for people to freeze these birds and fish?” have become really successful. The great part is that they don’t just use their cold rooms for just birds and fish. They also refrigerate things like prawns, ice cream, ice blocks, and yoghurt, among others.
What exactly is a cold room?
The simplest way to think of a cold room is to think of it as a walk-in refrigerator. Depending on how large the cold room business is, it can either be a freezer with plenty of storage space or a walk-in storage facility with the temperature of a freezer.
Cold rooms are typically used for the storage and preservation of easily perishable goods like livestock, poultry, and seafood, among other things.
How much do you need to start a poultry business?
The amount of money you will need largely depends on a number of factors like the location of your cold room, and how large your facility is going to be. For someone who plans to be a wholesaler rather than a retailer, you will need a larger facility and need around 8 million Naira to get started.
This 8 million will help give you a competitive advantage as it means you can get a steady source of power supply and a good facility at a great location. You don’t want to be that person with a cold room business in the middle of nowhere.
If you are starting a smaller cold room business, you don’t need to invest as much, and might just need about 3-4 million Naira. Like we said originally, the cost depends on what kind of facility you want to run and the kind of equipment you want to have.
What will investing this money in your cold room business get you?
- Good equipment: The necessary equipment for a cold room setup is not cheap and with this you can get a good chest freezer, measuring scales, safety equipment, cutting table, cutting planks, cutlass, and knives.
- A good location: A competitive edge in the cold room business is having a place people can easily get to, such as a place near residential areas or the market depending on who you are serving and a place with motorable roads.
- Constant electricity supply: A fundamental part of the cold room business is good power supply, and proper investment into the business should be able to get you a good generator. This will power your freezer or cold room facility and ensure none of your goods get spoilt.
How much profit can realistically be made?
Like with a lot of businesses, there is no limit to the amount of money you can make with your cold room business, but making a lot of money is dependent on a number of factors. Factors like having a great business plan, having the right equipment, being in a great location, having a good source of power supply, finding your niche, having reliable suppliers, and storing fast-moving goods.
Read also: Cold room business in Nigeria
What are some challenges involved with the cold room business?
- Lack of access to loans: Except if you had a great source of income before starting your cold room business, getting access to the money needed to start can be difficult. Loan companies are not very willing to give out loans because they believe you might not be able to pay back, or you might not be able to create a profitable business.
- Electricity: It is a well-known fact that we live in a nation with an erratic power supply, and it costs a lot to run a generator nowadays, especially with the rising cost of petrol and diesel. If you don’t have adequate electricity, your goods can get spoilt, and you can’t exactly sell spoilt goods to people. So a lack of adequate power supply leads to a loss of profit.
- Cost of maintenance: The problem with building a cold room is that you can not just build a cold room and forget about it. The freezer, refrigerator, generator and other equipment you use must be regularly maintained and serviced depending on how big your business is. This can cost a lot sometimes.
- Tax and Levies: Doing business in Nigeria means you have to pay taxes and if that was the only thing you had to pay that would be great. You also have people in the market imposing levies, either for protection or just for the fact that your shop exists.
- Finding Reliable Suppliers/Importers: Except if you run a farm business on the side, you also need to find suppliers that will never let you down and ensure you never run low on stock. This can be hard, especially with the unpredictability of doing business in Nigeria, so to reduce the risk of disappointment you must have a minimum of 2 or 3 major suppliers/importers from which you get your product.
- Publicity & Marketing: Marketing and publicity are not problems that are unique to the cold room business, and although referrals/word of mouth can be a great way to find more customers. Referrals will always not be reliable, especially if you are not the only cold room business in the area. Publicity and marketing might have you budgeting more than you planned, and sometimes it might not always go the way you want.
How Can Ofin Global Help You Create A Profitable Cold Room Business?
Here at Ofin Global, we have helped hundreds of businesses design and install commercial cold storage rooms and blast freezers. Not just any kind, but cold rooms that fit the world standard. We also work in line with the client’s plan and budget and pride ourselves on our consistent completion of projects on time.
To find out more, kindly call +2348063150242 or send your questions to “info@ofinglobal.com.ng” and start your journey towards building a profitable cold room business.
