How To Become A Dangote Cement Distributor

This post focuses on Dangote Cement; being the biggest cement producer in West Africa. Cement distribution business is a business anyone can easily start and make lots of money. If you’re looking to become a cement distributor for producers like Dangote, Lafarge Wapco, BUA, Ibeto, CCNN, and many others, this article will attempt to explain the procedures involved. Here’s a step by step guide on how to become a cement distributor.

Profitability of Dangote Cement distribution business

Using Dangote cement as a case study, one can actually expect to gain a lot from cement distribution in Nigeria. Assuming you’re just starting out, consider this analysis. You can buy a minimum amount of 600 bags of cement. With a cost price of N1,450. If you sell say N1,550 per bag you can make an excess of N60,000 per trip. If you do up to 5 trips everyday that’s 5×N60,000= N300,000 everyday. This is more than good enough if you ask me. However, since you are just starting out you could actually sell at the factory price which is N1,450 or at N1,500 so that you can easily meet up with sales targets. In this case, you should be expecting some payments from Dangote every month as a reward for meeting targets. Note that the figures in the analysis is assume and the actual price may differ. The amount is very large actually. This is what so many cement distributors do, they simply sell at the factory price forfeiting their profits so that they can meet up with targets and get compensated heavily by the company. If your target is N50 per bag after you have met your monthly target and receive the target reward, and you’re able to sell up to 100 trailer loads per month, then your monthly profit will be N4,500,000

Things you need to put in place before starting up your distribution business

Before you can fully start up your cement distribution business there are a number of things you will need to put in place first. These are:

Have a business plan:

Firstly prepare a business plan for your intended business. Your business plan will serve as a guide for your business, tour management strategies and so on. Make sure that it fully describes your business and how you intend to make profits from your product offerings. Write it in such a way that any distributor reading it is convinced beyond any doubt that your business is going to have a high returns on investment. Analyse in detail all your strengths and weaknesses to your advantage. Normally, preparing a business plan is something you should probably outsource to professionals trained in business consultancy.

Consider your competitors

That is a fact you should begin to adapt to as an entrepreneur. Does your intended business have competitors? Absolutely. Find out who they are, where they are, their strengths, their weaknesses. In what ways does their existence threaten your business? What are they doing differently? How big are they? How can you be better? Your answers to these questions will form the basis of an effective competitor analysis and will thus help you in coming up with strategic competitive advantages over your competitors. Without which you may not survive. Your competitors directly and indirectly affect your business’s profitability, so it’s important that you take the competitor’s analysis seriously.

 

Warehousing

A very important asset required for any distribution business is of course a sturdy warehouse. The same goes for your cement distribution business. Yes it’s actually possible to run supplies directly from the company to retailers without even hitting your base some days. It can be like that at times but not always. Either ways you have to make provisions for a good warehouse where you’ll be storing your goods at times. It can sometimes take time to supply products so they need to be warehoused. Aside from that, you should always have a stocked warehouse just in case, you never know who may show up or even what business opportunities may come up. It is for these reasons that you should factor in a warehouse that can hold up to 600 – 2000 bags of cement into your start up capital.

Sort for a dependable transportation system

An important factor that will determine the success of your business is having an effective transportation system in place. By this I mean arranging for vehicles that will be used in conveying your business from the factory to your warehouse or to your customers. Usually, a big truck that can carry up to 600 bags is acceptable. This way you can easily track and control your supplies and other logistics. For now you should probably start up with one truck until your business gets bigger. However if you don’t have enough money as at yet to purchase a vehicle, then simply start by renting trucks. You can keep this up until your business achieves enough turnover, and then you can buy at least one truck to run your business. Remember to hire qualified and experienced drivers so that you don’t run any unnecessary losses.

Undergo training from other big cement distributors:

There is a number of established cement distributors you can reach out to for better insight and information. These people will be more than willing to help in most cases, all you need to do is ask questions.

Normally established business owners are always open to guiding young and industrious people launch their business. You would be surprised at the kind of quality information and tips you receive from such persons. They will let you in on things you will never find online and even some business ‘secrets’. As long as you’re serious and very passionate about getting into the business and you go as far as to submit yourself to them, in most cases they will help you. So take your chances.

Get CAC registration

You must first register your business with the CAC to become a corporate and legal entity. This will show the manufacturers that you are a business entity ready to do business with them. It is actually to your own advantage to have your company registered because people have more faith in corporate bodies than not. So just visit the official Corporate Affairs Commission (CAC) website by clicking here to start up the process.

Open a corporate bank account

Once you’ve successfully incorporated your business, the next most important thing to do is opening a corporate account with any commercial bank of your choice using your company name. Next, follow these processes:

  • Get clearance from EFCC ‘s special control unit against money laundering ( SCUMIL). This clearance is to ensure that you did not register your business in order to involve in money laundering and other forms of financial fraud
  • Get a Tax Identification Number (TIN) for your business from the Federal Inland Revenue office nearest to you. This document shows that you are willing to observe Nigerian tax laws, that you will pay your tax when due and will not avoid or evade tax.
  • Use these documents together with your CAC certificate, passport photograph, identification card(international passport, driver’s licence etc) to open a corporate account for your business.

You will then proceed to fund the account with the capital you want to start your distribution business. Then get a reference letter from the bank. A bank reference letter is a letter from your bank which states that you have been their customer for a specific period of time and confirms that there is a banking relationship between you and them. You can find out about requirement for opening corporate account in Nigeria by clicking here

Registering with Dangote

Before you start your cement distribution business with Dangote, you need to apply for registration with them using the following documents;

  • A copy of certificate from CAC
  • A scanned copy of the bank’s reference letter
  • A detailed application letter to become a credible distributor
  • Your passport
  • With a minimum purchase of one trailer load (i.e 600 bags of cement)
  • Send your applications to this address