Capital Needed to Start Low-Cost Intercity Transport in Nigeria

Opportunity Snapshot

Investment Opportunity

The concept is to provide low cost intercity road transport services for the low income earners. Funding is needed to purchase equipment, equip terminals with 37% ROI.

The idea is to launch a low cost intercity road transport company that would over all over the national territory of Nigeria. The concept and business model is inspired by that of reputable low cost airline companies like south west airlines in the United States. We aim at providing services which are 10 to 30percent cheaper than that of other intercity transport companies but yet providing humane, safe and comfortable intercity travelling conditions for our passengers.

Our services are designed to cater basically for the travel needs of the low income earners and rising middle class in Nigeria who constitute over 85percent of the population in a sector which is characterised by bad services, inhumane travelling conditions, high service unreliability, old and poorly maintained vehicles, insecurity amongst other problems. We are coming in to provide world class service excellence at highly competitive prices for low income earners as we believe that every human being irrespective of social class needs respect, care and attention.

We are going to generate revenue through the direct physical exchange of prescribed fares in return to be transported from one point to another on our

-Being able to safely and comfortably transport over 200000 people daily between different destinations in Nigeria.
-Being able to generate turnover revenues of more than USD1billion by year four with profits exceeding USD200millionf for Nigeria alone.
-Being able to consistently and continuously deliver on our brand promise of providing safety, genuine quality, safe and comfortable services at lowest market fares which satisfies and exceeds every of our client's expectations in the long run, while being competitive enough to be a continental reference for premium low cost intercity transport provision despite the advent of new and innovative transport concepts in the sector.
-Being able to connect every city in Nigeria after 4 years.
-Being able to build, inspire, motivate and train our people, keeping a positive work spirit which will enable us achieve our goals in terms of size and finances.
-Being able to create a positive impact in the society where we operate and inspire people to live up to their potentials through our corporate and social responsibility

The business plan is ready and all we need is the seed capital to launch the project after all preliminary details have been taken care of to launch the project successfully, we would need the sum of $1,926,500 but a minimum of $1.5million and investor will receive 37% return on his investment after 2 years.

Competitive Advantage

We have several direct competitors in Nigeria like ABC, Chisco Transport ltd, the Young Shall Grow, Greener line transport company providing scheduled intercity road transport services and intercity airline companies like Aerocontractors and Dana air offering air services at cheap fares.

Intercity transport companies have generally failed to consistently provide reliable experiences and a majority of their fleet are made up of old buses which can be blamed for the numerous breakdowns and accidents. Apart from these, passengers have to deal with inhumane travelling conditions ranging from dirty terminals and buses, high fares and low value services, bad customer service due to rude, poorly paid and untrained personnel in addition to the confrontation with park guys, no respect of time, long journeys due to multiple stopovers on very uncomfortable seats, a situation which can be blamed on poor organisation and lack of long term managerial planning on the part of bus owners who are only interested in money and less about their passengers and staff.

The airline companies though they are cheap are unreliable, have a general feeling of insecurity due to aged and poorly maintained planes and are rather expensive compared with an intercity bus fare.

-Our advantage is we seek to provide excellent customer services, utmost operational reliability, humane and innovative transport conditions by valuing rigorous staff training, invest in latest equipment and facilities maintenance and leaving no place for inefficiency, indifference, laziness and bureaucracy.
• Again, our fares are 10 to 30% cheaper than competitor's given that low income earners are very sensitive and will go for lower prices especially if it goes with quality.
• Neat buses and terminals with comfortable seating facilities provided at our terminals to accommodate our large passenger numbers.
• Air conditioned buses suited according to environmental conditions.
• Comfortably designed interior bus settings with ambient colours, seats designed with softer and more comfortable seat materials providing wider seats and legroom space enhancing greater comfort for our passengers.
• On-board entertainment systems with DVD screens showcasing various programs during the trip in order to entertain our passengers.
• The most caring and service focused cabin crews to take care of our clients during every trip and provide exceptional customer services even for the most difficult clients.
• Mineral water will be provided aboard every trip for free with chocolate or fruit juices for every kid depending on availability.
• Strict adherence to departures schedule.
• The availability of Wi-Fi internet aboard our buses which will enable our guest connect on social media like Whatsapp, Twitter.
• Our staff will receive decent salaries (our lowest salary is 27000 naira for the cleaning staff) so they perform better.

In future, we intend to become market leaders in innovative services while adapting to changing customer needs and satisfy them excellently and remaining true to our brand promise of consistently providing safety, genuine quality and excellent travel conditions for our guest.

Rationale for the deal

Nigeria is Africa’s most populated country boasting of a population of over 175million people. It is equally the country with the largest rising middle class ( above 15million people according to Standard Bank Economist Simon Freemantle), amidst a booming economy of trade, industrialization, rising entrepreneurs who necessitate a reliable, comfortable and safe means of intercity urban transport as they move from one city to another coupled with the booming trade and industrial activities between major cities in Nigeria, which has made the country number one investment destination in Africa due to its huge population and rapidly expanding middle class.

Despite these huge population, rising middle class and rapidly developing industrial activities, the intercity transport both by air and road is a nightmare and characterized by bad services, high rates of insecurity, high fares and low value services, time problems, inhumane travelling conditions, with innovation being almost inexistent. To make matters worse, the bus equipments used are old with the average age of an intercity bus in Nigeria being 16.5 years with improper maintenance, little or no training offered drivers and personnel accounting for the high rates of intercity road accidents and poor levels of credibility, perception and customer satisfaction within the country.

In these atmosphere, creating and developing an intercity road transport brand which people can consistently trust and providing them with world class customer services is therefore a necessity in order. These is the ideal for these project.

We would make money through the direct payment of prescribed fares by a client in exchange of being transported(both him or cargo) from one city to another by us. Our business concept is similar to that of a low cost transport airline company though with premium services. By charging very low fares and providing excellent services, we would be able to attract a greater number of travellers to use our services, which in turn will mean that we will have many more buses travelling between different destinations daily than our competitors and though profit margins may be slimmer compared to competitors, the many trips operated daily than competitors will enable us make more money than them. for instance if a competitor has five buses travelling between Lagos to Abuja daily and makes say $10 per trip as profit totalling 50 dollar per day. We should be able to make 25 trips daily with $5 as profit per trip, we would be able to make $125 on the route. We intend to grow to be able to transport not less than 200,000 people daily after four years which will enable us achieve our growth and financial objectives.
• For now, there is no competitor capitalizing on this idea.
• I am a junior aviation strategy consultant. I equally have over two years’ experience carrying out market perception studies in these sector, travelling between different regions and understanding people's needs which has given me an insight into the problems faced by the sector and how they can better be solved.

Use of financing

The requested financing is needed in order to;
- Carry out all Administrative procedure to establish a corporate identity for the company and legalise its operations= $30000.
- To purchase and customise our buses (ten 45-seater buses) in order to meet our desired comfort levels and road conditions, export them, pay for import tariffs upon their arrival In Nigeria=$106,000 x 10 = $1,060,000f.
- Lease space for two terminals(two years)= $120000 x 2= $240000.
- Build and equip two temporal bus terminals in Lagos and Abuja= $200000 x 2=$400,000.
- Cost involved in recruiting and training our personnel so they operate up to expected standards= $70000.
-Cost involved in designing and creating crew costumes = $36500.
-Carry out extensive terrain mechanical test with buses and at thesame time carry out practical training sessions for both Drivers and cabin attendants= $10000.
-Settle all preliminary launching arrangements like adverts and pre-launching brand communication prior to launching = $40000.
-Miscellanous = $ 40000.
TOTAL= $1,926,500.

Two round of funding, $1,060,000 and $866,500 with a difference of 6 week.

Opportunity for the investor

For debt investor, seed capital needed is $1,926,500f and investor will receive money back after two years with 37 percent return on investment.

For equity investor, investor will receive back his investment after two years still with no returns on investment and in return will get a 50percent share of the company for the first five years

Both silent and hands-on investors are welcomed.

The investment capital will be returned plus returns on investment in one instalment by the end of the second year.

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