Tipper Business Plan in Nigeria – Starting a Trucking Business
Tippers are used for an assortment of haulage in Nigeria just as anywhere in the world. They are used to transport sand, laterite, stones, granite, asphalt, and other items used for construction which must be conveyed from one location to another. For instance, sand and stones from the dredging sites and quarry sites respectively to the construction sites. Sometimes, they have to be moved over relatively long distances depending on the proximity of the resource to be used to the location of use. Could it be conceivable that construction works generally could have been executed without the use of tippers for conveyance of items?
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Let’s delve into the business of starting the tipper business. The following guidelines should furnish you with ideas that will keep this dream alive.
Also Read: Haulage Business Plan in Nigeria
Feasibility studies; Just as any business, it is important to understand the business in such a way that you can be confident of being in the business for a long time and not the crash-in-crash-out kid on the block. This study will ensure that you know all the necessary complexities of the tipper business. It will help you to understand the market and the dos and don’ts. It will also teach you things you need to do to ensure that your invested efforts and capital yield maximum profit. You wouldn’t want to be starting a business where you have invested between 5-7 million naira and can’t get a headway after a while. So the trailer head will cost about that and can even go for as much as N12,000.00 usually dependent on the size, make and year of production. Also add the cost of vehicle registration and particulars with the National Union of Road Transport Workers (NURTW) in Nigeria. There is also a tipper association in most towns and so it is best to register with them. They usually protect their members when there is a crisis with other road users as well as with the police. Remember that it is also important to insure your vehicle. Your initial cost would depend on the cost of trailer head, tipping trailer, registration, insurance, vehicle particulars including plate number.
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Options of Running Tipper Business
There are about three methods of going about this business in Nigeria. The approaches are explained as follows:
- Operating as an Independent Transporter
As an independent transporter, the owner of the truck can decide to operate the truck by himself or hire a driver to convey items and products to whoever needs such services. Most people hire drivers for convenience especially as most people cannot drive big trucks.
Here, the amount per trip is negotiated and the number of trips is calculated for daily payment. There is usually a standard price for haulage but if the distance is much then one should not be afraid to factor in fuel to the hauling cost charged. It is calculated that if there are no serious mechanical problems, a tipper owner operating under this system can make up to Four Hundred Thousand Naira (N400,000.00) per month as net profit depending on the type and size of tipper (tipping trailer).
- Operating the Tipper Business as a Contractor or Subcontractor
It is common to find people using operating like this. Here, the tipper owner will look for a big multinational company or a construction company which will use the tipper. Sometimes such multinationals make adverts and when such people come, they will inspect the truck/trucks depending on the number you are able to provide. The company may decide to manage the vehicle as well as the process of hiring and paying the driver; or it may ask the owner to provide a driver with the tipper and work under the direction of such company. Most of this is decided in the contract document which the owner of the tipper will be required to sign. It will also contain the amount of money to be remitted at the end of the month or duration of the contract. I have experienced that sometimes some companies may require such tippers for upwards of 6 months to a year, (usually dependent on the duration of the contract) with the option of renewal, so they might pay for hire at regular intervals like quarterly or every three months. This pay can be can range from anywhere between Three Hundred and Fifty Thousand Naira (N350,000.00) to Six Hundred and Fifty Thousand Naira (N650,000.00) depending on the type of tipper.
On the other hand, the company may decide to pay a fixed amount for each trip made on a particular distance, if that is to the liking of the owner. This will imply logging of daily operations including distance covered otherwise known as mileage. Sometimes this isn’t always advantageous to the tipper owner as a result of dishonesty. The company might log that the vehicle didn’t function on certain days and in reality, the vehicle did function. If a tipper owner would use this method, it will be necessary to find a way to monitor the use of his trailer. A tracker may be used and sometimes, one can station a trusted hand with the company so as to be able to validate the logs. This will definitely reduce profits but at least you will be in business.
The owner would have to register the vehicle with the client company and also may be obligated to service or maintain it regularly depending on the stipulation in the contract.
- Leasing the Tipper to a Company
Here, the owner leases the tipper fully to a company, especially a construction firm, to be used over a specific period of time. Subject to the work at hand, some firms could hire a tipper for six months, one year or even more. Other times, there may be an addendum for extension or renewal.
Under the leasing arrangement, the client company may take care of fuelling expenses and monthly maintenance, except for major repairs. The owner may be paid monthly, quarterly, semi-annually or annually usually dependent on his inclination and what is suitable for the client company.
A tipper owner who lets out a tipper to a company, can take home an average of between Four Hundred Thousand (N400,000.00) and Seven Hundred Thousand (N700,000.00) monthly.
This is the dream deal as there is no stress of managing the truck, no drivers’ troubles and no fuelling cost. Your money just keeps dropping at the end of the month.
Fleet managers could also take the truck for you and pay all income into your account. You on the other hand are liable for the driver and maintenance and you pay the managers 20% (negotiable and could be a little more or less) of your monthly income while they manage your truck.
That said, there are uncertainties in this business because you have to rely on mechanics and drivers who may not be honest and that is most often the case. Also, because of the bad roads and getting good diesel as it is difficult to get diesel that isn’t mixed sometimes with even water.
The state of roads in Nigeria is pretty bad and majority will think twice before exploring the haulage business. You easily find tippers in creeks, rivers, ditches, some just fall in an attempt to navigate a pothole. This is no reason to be overly pessimistic, people still do well in this business. I was in Ilesa one day and I witnessed how tinny roads affect trailer drivers as the road was so thin, two trucks couldn’t pass the same area at the same time.
The issue of dishonest drivers is another case which I might review in another article. Most drivers have the tendency to cheat by all means. Be very careful. Illicit activities truck drivers engage include selling of diesels or fuel, inflating the volume of diesel for a journey, selling of truck tires, calling of truck owners during official journey about a fault in the truck with the intention of financial gain, conniving with mechanics (who are another Achilles heel) to fabricate non-existing faults and the mechanics themselves who just begin replacing the good parts of your tipper with worn-out ones. Never forget this rule of thumb, “No Tipper, No Tipper Business”. Secure the integrity of your truck by any means necessary. I always advise truck owners to always ensure, that their truck is parked at the tipper shed or in their own private garage every night so far as the truck isn’t on a long distant trip.
Never trust a driver too much. He will disappoint one day.
Never trust a mechanic too much. He will disappoint one day.
As much as possible, do not use the same mechanic for a long time. Don’t even allow himself and the driver become friends. Once you notice they are friends, please, find another mechanic. They are very likely to connive to make money off you by leeching your tipper one piece at a time. Some drivers even go to the length of collecting money for truck parts that are not damaged just to extort money from the owners of the trucks (this is possible when they voyage on a long journey but even if they are on short voyages please keep your eyes opened). Don’t release money to them for any reason apart from their salary and probably fuel. It is possible to even arrange with a filling station that they should sell fuel to your driver based on deposits that you make from time to time. It pays you, and it pays them. You are able to be certain that you are not cheated. This doesn’t mean you shouldn’t be nice to your drivers. In fact Never Owe them, actually, hand them tips from time to time. You don’t want to give them a reason to become notorious. Do not release money to your driver for a service or truck item unless you verify yourself.
If they have issues with the police or other law enforcement agents like LASMA, please verify and go there to resolve the matter yourself.
Write down the serial numbers of all your tyres and add a trade mark of your company to your tyres as drivers have been known to liaise with the tyre fixer “vulcanizer” to replace the new tyres with old ones, they do that systematically and not at the same time. Remember to note when you purchased your tires as tires should last up to a year and should even last more during the raining season as the temperature is more conducive for them.
Also note that drivers can use your truck for 2 or 3 trips outside the official arrangement, they will pocket all the money and yet do 1 trip for the owner and still get their salaries. It is important to track your vehicles if possible electronically and if that can’t be done, pay attention to the mileage. Time their delivery time. A friend of mine will normally remotely switch off the tipper once he suspects that his driver has overstayed. If they know you can do this, they are less likely to become dubious on that end – but drivers are funny people.
They also drive very carelessly because they do not own the tipper, hence some owners have resorted to putting provisos like “if you don’t like how I am driving please call 080XXXXXXX”. Usually, they drive roughest when they are about their business without the knowledge of the owner because they are trying to save time.
All these have been highlighted so you can cover as much base as possible to prevent losses that could be avoided in the tipper business.
Ensure that you have a tipper with a good engine to begin with.
The tipper business is good business…go make some money.
To write a feasibility study on haulage business in Nigeria, call us at 07033378184 or via email: firstname.lastname@example.org. We will be glad to help.
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