How To Start A Water Business In Nigeria

The first step in conducting any meaningful market research is to decide what you need to find out.

However, take note that what you must find out must be centred around making your customers happy and saving the reasonable cost of getting your product out there.

Many entrepreneurs have lost their business capital, taking a stupid leap of faith into their business without adequate market research – that is Suicidal!

It would be helpful to keep in mind that bottled water is generally a commodity product. Except for a few luxury brands of water, bottled water is a commodity product that requires a high volume of sales for you to turn a profit.

Therefore, it is important that you consider the market size and delivery infrastructure that you will leverage if you are to cover a geographically wide area.

Keep in mind that it is best to situate your bottled water business close to heavily populated areas where access to the market will be much cheaper, instead of having to ship your products a long distance which will erode your profits.

Before you begin your business, you need to know the following at the very least:

1. Where your market is.
2. Who exactly are you selling to
3. What is the size of the market
4. Who are the competitors
5. How well are these competitors doing in the market
6. What is going to be your strategy to claim market share from them

Other factors to keep an eye on while carrying out your market research would be the pricing tactics of competitors. Are they positioning with a cost-competitive advantage? If that is the case, are you competing with them on cost or planning to enter the market as a luxury mineral water brand?

Carry out a complete bottle water production feasibility study so that there is a clear picture of what you are up against and how you are going against it. If writing a feasibility study is well over your head, do not hesitate to spend money to hire a business development professional to provide you with this service. Don’t stint on this – you are spending money on equipment and space. All that will be wasted if you do not get the feasibility part right.

Now that you have locked in all those learning on the business opportunity and the strategy, it is time for you to put it all down in a comprehensive business plan.

Sections you would typically have in a business plan of this nature would include an executive summary, market segmentation, marketing plan, management team, legal requirements and business location analysis.

This business plan will come in handy when you want to raise funds from investors to back your new business. But, even if your project is self-funded, your business plan will act as a roadmap of how the business will proceed, opportunities it would capitalize on, challenges it would face and how it would surmount them.

Without doing this critical step, you risk treating your capital like out-of-pocket cash, only to gasp when you run out of cash and half of what needs to be done is yet to be done.

This is a critical decision and not one to be made in a hurry. In selecting a site for your bottled water manufacturing project, bear in mind that access to your market will be a major factor in determining your profit levels.

And even when a site is accessible to the market, it may still be unsuitable for a bottled water production factory. Keep in mind that bottled water is a consumable product, hence you should take note of the hygienic conditions of the proposed site.

For example, NAFDAC food safety regulations prohibit the siting of a water packaging factory close to a cemetery, abattoir, wood mill, oil depot or sewage plant. Due to the high potential for contamination of your water source from such environments.

Also keep in mind that NAFDAC requires that a bottled water production facility has a cloakroom, packaging materials store, production bay, finished goods store and an administrative office. If you are not building a purpose-built facility, you have the option of renting a sizable facility and resizing it to fit the purpose.

After deciding on a location, the next thing to do is start the process of getting government approvals and necessary licenses for the factory. 

In Nigeria, that means getting in touch with NAFDAC and having them inspect your premises and give you their license. You may also need to visit the food safety department of the LGA, where the factory would be situated to get their appropriate permits. These are not optional requirements – your business would be sealed off, and you may face criminal charges if you proceed without this step.

Something else you need to do at this stage would be to get the business registered with the Corporate Affairs Commission. NAFDAC would require that you present evidence of this registration during the application process for a NAFDAC number. 

Additionally, you do not want to forget the taxman. Handle relevant registrations both at the Federal Inland Revenue Service (FIRS) office and at your State Inland Revenue Board office.

You have the option of either purchasing equipment outright or taking out a lease. Equipment needed for the takeoff of a water bottling factory would include power generators, bottle loaders, bottle filling and capping machine, water purification unit, conveyor belt, filling machine, storage tanks, and delivery trucks.

You will also need to install a borehole in the facility. Note that an existing borehole may not be suitable if you are converting an existing structure to a bottled water factory. This is because NAFDAC requires a minimum of between 100-150 feet, depending on the topography of the factory site.

The water source must also be a minimum of 30 feet away from your septic tanks for obvious reasons.

It costs ₦120,000 to ₦650,000 to drill a borehole in Nigeria.

Borehole drilling is the most efficient and common way to have a constant water supply. It can either be done through a manual drilling method or a heavy-duty drilling method. Meanwhile, the average price of the manual drilling method is from ₦120, 000 – ₦300,000, while heavy-duty drilling costs ₦250,000 – ₦650,000. The cost of materials, location, and also the number of contractors could affect the price of borehole drilling.

Click here for comprehensive material on all that you would need on drilling Boreholes.

Of course, you need a custom bottle for your water to at least make it a bit difficult for counterfeiters to fake your bottled water. A safeguard is to make sure that whichever bottle manufacturer you engage is a member of the International Bottled Water Association.

Ask those who are already in the bottled water business for recommendations. You could also browse online and do your due diligence on companies that come up.

Part of what you should consider while researching bottle suppliers should be the price, quality of their products, and the reliability of their supply.
You don’t want a supplier who will tell you stories when you are low on bottles. That could mess up your supply obligations.

Hire people who know their way around the machines you are installing. You have spent significant amounts on purchasing these machines; you don’t want to be left with an avoidable liability due to incompetent machine handling. If your employees would need the training to be able to handle the equipment, ensure that they get it efficiently.