WHY IT IS DIFFICULT TO MAKE PROFIT ON YOUR TRUCK(S)
When truck owners complain of not making money with their trucks, i knew instantly that the statement is “very true” right from inception. The fact that truck owners don’t make money from the haulage business is not totally at the door steps of drivers and mechanics (even though they make up over 50% of the problem) but also a fundamental problem that bothers on the nature of trucks and the lack of a proper (real-time) business plan from the owner’s part. You may as well see this article as the concluding part of “Why People Go Bankrupt Doing Truck Business in Nigeria (Owner’s Part)”, this is the Series 4.
Nature of Trucks
Do you notice that majority of the imported trucks coming into Nigeria either from the United States, Canada or Europe are all Used Trucks? If you look at the date each trucks were manufactured some are dated as far back as the year 1988 (that’s 30 years ago). The most recent ones are probably in the year 2000’s. The problem with these “millennium trucks” (i.e the one’s manufactured in the year 2000’s) is that most truck mechanics in Nigeria do not have the technical know-how because they come with a sophistication (i.e modern technology like brain-box, nozzles or rotors) and partly due to lack of original mechanical and electronic parts. The sad story is that most “millennium trucks” hardly survive our environment because of the poor nature of our diesel (fuel), so truck owners have no choice but to import the ones manufactured in the early 1990’s or early 1980’s trucks that’s over 25 years or more.
To my point, any truck that is manufactured over 25 years ago and imported into Nigeria has spent over 90% of it’s life span abroad. The efficiency of the physical and mechanical parts of the vehicle has reduced drastically. The fact that they seem okay is based on the original parts they are replaced with over the years and the nature of good tarred road they ply. Once the trucks land in Nigeria it is a different ball game.
As a truck owner if this is the nature of your truck, please erase that pseudo-expectation of you making the “return on investment” in the shortest possible time because it is IMPOSSIBLE! However, what you can make is just a peanut (considering you want to stay in business) and this can be made in the first 2 years of importing the trucks. To make that “little profit” you need to get some figures right, and you need to use the carrot and stick approach on both the drivers and mechanic (read). However if you are not interested in staying in business you can spend-as-you-earn.
Lack of proper (real-time) business plan
I deliberately used the term “real-time” business plan. The reasons are that, the price of diesel, tyres, vehicle parts etc fluctuates in the Nigerian market on a weekly basis. The state of our roads also fluctuates and varies for every season. Therefore, a business plan that was written over a year ago cannot be applied for a truck business you want to start-up this year because things might have changed. Pricing is still a factor that is left in the hand of players within the industry.
Talking of pricing, the cost of haulaging a goods also vary from time to time and from company to company, so it is important that if you intend to go into the industry, make sure you do a business plan for the year you intend to start.
Lack of a proper business plan is a key determinant for the demise of the business on arrival. In the business plan you must know the “pay-back period”of your investment and the period of profit, this will give you a clear idea whether to go for it or to just forget it.
In my next article, i will be writing on the “cost structure” for your truck business and the amount you can bill per mile (which depends on tonnage of the goods). Stay turned and cheers!