Egg Supply Business: A Lucrative Small Business to Start Right Now

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Are you searching for a small business to start with minimal investment? Consider egg supply business. It is an evergreen and profitable business any one can do.  By evergreen, I mean this business never fades.

Interestingly, the business is scalable; so you can start small and grow it big with time.

So in this post, I’ll show you how to start this business.

What Egg Supply Business is About

The egg supply business is about sourcing and buying table eggs in bulk from poultry farmers and selling to retailers.  The retailers in turn sell to final consumers.  Thus, your market as an egg supply business owner include the corner shops around you, supermarkets of all sizes, restaurants and hotels, bakers and confectionary makers, etc.

You are more or less a wholesaler.

About the Egg Market

There are two segments of the  egg market , namely: table egg and hatching eggs.  Table eggs are what you see around you at corner shops and supermarket.  That is the egg you eat.   Hatching eggs,  on the other hand are are used to produce chicks for the poultry industry.

This business idea is about table egg and in Nigeria this sector constitute ghe major segment of the egg market.  The Nigerian table egg market is huge for obvious reasons.  The country is Africa’s largest in terms of population with about 212 million people and growing at approximately 3 percent per annum.  This huge population need good nuitrition which egg provides.

Thus the demand for eggs in Nigeria is driven by the growing population, increasing urbanization, and changing dietary habits of the population.  In addition, eggs are a good source of protein, and are used in a variety of dishes in Nigerian cuisine, including breakfast foods, stews, and snacks.

With an annual production of over 1.3 billion eggs, Nigeria is Africa’s biggest egg producer  and 20th largest in the world.  However, this production level hardly meet demand which is estimated at about 3.6 billion pieces of eggs annually; resulting to a supply gap of of about 2.33 billion eggs annually.

The importation of egg is prohibited in Nigeria.  Hence, to close this huge gap, the government has at various times attempted to provide policy incentives to encourage investment in commercial poultry farming.  However, the widening gap is increasingly incentivising the illegal economy through smuggling of bird eggs into Nigeria.

From the foregoing, you can easily see why egg supply and distribution is a business in Nigeria. Inspite of increasing cost of food, egg is almost a staple item in most homes, hence you will never lack patronage.

What You Need to Start Egg Supply Business

To start and run a successful egg supply business, you will need the following:

#1. Capital:

Of course, you need money to start any business.  Egg supply and distribution business is not an exception.  But how much do you really need?  It will depend on the scale you intend to operate.  The good thing is that there is always an opportunity to make money in this business irrespective of the scale you are operating.

For a small scale operation, an initial investment of N500,000 will easily get you strarted.  As at the time of writing this post, this level of investment will provide you with the essential things and a working capital to buy at least 50 crates of table egg to start with.

#2. Shop:

You will need a business premises: a place to store your eggs before supplying to your customers.  Also to keep empty crates before replinishing your stocks.  For a small starter, a corner shop will serve your purpose.  At the time of writing, a shop can be rented for between N60,000 and N120,000 in most commercial cities in Nigeria.

#3. Crates:

Crates are the primary physical asset or equipment you need to run your egg supply business.  They come in plastic and paper types.  The plastic crates are more common now because they are more durable than paper crates

#4. Source of supply:

Having a steady source of supply or a collection of sources of supply is the very first step to running a successful egg supply and distribution business.  Therefore, a critical part of your planing is to identify and establish relationship with a poultry farm where you will be buying table eggs in bulk.

To enable you deal with scarcity, have a relationship with two or three frams or more.  Also build your relationship in such a way that you have their confidence. This will enable you get supplies on credit.  Such gestures help you manage your cashflow and can also help you scale quickly.

#5. Delivery Vehicle:

In this business, mobility is very key.  So it is important that you invest in a vehicle to serve as your delivery van.  If you already have a vehicle, put it to use here.  If not, work towards having one if you are operating on a tight budget.

For instance, our estimate of N500,000 cannot set up if you are considering acquiring a deliverying vehicle from the onset.  For such budget start up, you wil have to make arrangement with a vehicle owner untill you are able to acquire your own vehicle.

#6. Record keeping.

Keeping proper records is very important in any  business that you do.  Many  businesses fail early due to lack of record keeping.  These days there are free online tools you can explore to keep your business records.

Steps to Starting Your Egg Supply Business

Now that you know the things you need to start and run your egg supply business successfuly; how do you go about starting one.  Here’s how:

#1. Do Your Research

A very important first step you must take in setting up your egg supply business is to conduct a market research.  The purpose of this study is to make sure that there is market for your business in the area you want to operate.

Critical questions you must find answers to are: who will buy from you? how many suppliers already exist in the area? where will you be buying from? what price will you sell?  How are you going to carry the eggs from the poultry farm to your customers, etc?

Providing honest answers to these and more questions will help you decide if this business will be feasible and viable in the location .

#2.  Prepare a Business Plan

The information you gathered in step one becomes very useful in the preparation of a business plan.  Many aspiring entreprenuers are often confronted with the question of whether or not it is necessary to write a business plan.

However, the benefits you get from writing one are many.

The thing is that many think a business plan should be long and complicated.  No. it doesn’t have to be.  It is all about putting together in  one piece of paper, all the elements that are important for you to set up and run your business.

Things like, how much you need to start. How you will raise that money. Where your buyers are.  How you will reach them. Where your suppliers are. What kind of arrangment will you be developing with them.  How much will you sell?  What are the possible challenges and how will you mitigate them when and if they occur.

A business plan is a roadmap that defines the strategic direction for your business.  If you will be raising external funding, getting a bank loan or investors’ support; writing a business becomes even more critical.  In this case, you may have to seek the help of experts to write the business plan for you; otherwise do it yourself in your own way.

#3. Register Your Business

True, you can do this egg supply business without registering a business name or incorporating a company.  However, I recommend you register your business, at least as a sole proprietor.  A lot of benefits comes with and you may never know when the opportunity will come calling and not having a registered business becomes a hindrance.  You will not want that to happen, would you?

Fortunately, the Corporate Affairs Commission (CAC), the body in charge company adminstration in Nigeria, now have a window that allows entrepreneurs register businesses by themselves.  In other words, you don’t have to use a lawyer or other professionals to register your business if you don’t want to.  All you need do is create an account on the CAC portal and follow through a simple process to register your business.

It will not cost you more than N12,000 to register your busness if you chose the self registration option.

#4.  Raise your start up capital

In the course of researching and preparing your business plan, you’ll easily know the exact amount of money you need to start your business.  As I have highlighted above, the sum of N500,000 can get you started in this business on a budget scale.  However, if you are adding a vehicle to the bucket, then yu will be requiring a much more higher amount.

Do your research, identify all possible costs to know the exact amount you will need to start your egg supply and distribution business.

#5. Secure a Shop

A shop will serve number of purposes.  It is your business premises.  It also serve as storage facility for the eggs.  Your shop has to be accessible to your customers, so pay attention to the location.  At this stage, you should also consider buying the necessary equipment you need.  For this business, egg crates are your primary equipment.

#6. Establish relationship with a poultry farm

You get your eggs from a poultry farm so it is important you look around and develop a relationship with a couple of farms.  Discuss details and agree on terms  before you start.  This will ensure you get steady supply of products.

You can also purchase from egg distributors but this doesnt have to be your primary source.  Another source of supply available to you is the open-air markets where eggs are sold at wholesale prices.  Discover one around you and explore it.

When sourcing eggs, it is important to ensure that the eggs are fresh and of good quality. You can verify the freshness of eggs by checking the expiration date or by performing a float test. A float test involves placing an egg in a bowl of water; if it sinks to the bottom, it is fresh, but if it floats to the top, it is likely spoiled.

It is also important to establish a good relationship with your suppliers and ensure that they are reliable and consistent in their supply. This will help to ensure a steady supply of eggs and maintain the quality of your product.

How Much Can You Make?

The profit potential for this business is very high.  But how much you make is a function of your scale of operations, the competition in your environment, how you are able to manage your costs amongst other factors.

Let’s do a little general calculation here for a guide:

From the information I gathered in the course of preparing this report, table eggs are sold at farm gates to bulk buyers at N1,300 per crate.  It is supplied to retailers and intermediate users at N2,000 per crate on the average.  This leaves you with a profit margin of N700 per crate.

Let’s assume you incur expenses of N300 per crate (i.e transportation, wages, rent, etc), including provision for breakages and spoilages;  you will be making N400 per crate in net profit. If you, conservatively, did a turnover of 1000 crates of eggs in a month, this gives you a profit of N400,000 net of all expenses.  The truth is that if you work hard enpugh and get your processes right, you can actually make this money in a week or two.