HOW TO START A PROVISION BUSINESS IN GHANA

According to Goong.com a provision store is a retail outlet or shop that sells a variety of food items and other goods essential for daily living. Provisions in Ghana consist of toiletries, food items. household items, stationary etc. Operating a provisions business is such a lucrative venture since they are daily needs. Ghana has a growing population as such demand for such goods are high. For the purpose of this article, I would like to focus on retail of provisions. Before you venture in this kind of business however there are certain things you need to consider such as location, clients, suppliers etc. Even though retail of provisions is such a lucrative venture particularly within a community the profit margin is very low.

As an experience credit risk personnel who has appraised lot of provision businesses, I can tell you that the gross margin for wholesale of provisions is mostly between 4-8% and retail is usually between 10-16% as such the growth of your business depends mostly on your level of sales. Location for this kind of trade is key. Competition is quite common in this kind of business however if it’s located within a community or a school which is densely populated then it doesn’t really matter.

Its however necessary to conduct market research to identify your potential customers, competitors and business environments with regards to pricing. You can have varieties of stocks thus from personal care, food items, stationary etc or focus on particular items depending on your environment you operate. For instance if you site your business around a school then it’s prudent to concentrate on drinks and stationary .

You have to identify your sales strategy in order to grow your business. Pricing is important due to the competitive nature of this business. In as much as you are in to make profit, as a new business is best if you keep a competitive price to attract clients. Secondly good customer service helps to retain clients. It’s important to listen to customers’ needs and also adapt to the industry trends. It’s important to identify your clientele base for instance if you sell in a location where residents usually stay awake in the night then you have to ensure you open late into the night likewise if you sell around a school you have to open early since parents would purchase drinks etc for their kids in the mornings.

One of the ways of attracting clients is the layout of your shop. Regardless of whether it’s a container, stall or an actual store t’s important you use shelves and other displays rugs to showcase your items.

For you to make maximum profit you have to purchase from the right suppliers and as a new comer in this business you have to research how to get cheap supplies. Even though I recommend Accra central thus if you are in Greater Accra, you could also get goods at good rate from delivery vans of major distributors who sometimes offer suppliers credit. Due to the nature of this business it’s important to avoid credit sales as a retailer since profits is low and there are constant hikes in prices which can affect your working capital.

Record keeping is important in this business as this helps to calculate the profits and also identify fast moving items which can inform your decisions during purchases. It also helps in stock rotation since most of the products have expiry dates.

In addition to the usual items, you can also be commercially dynamic by identifying the needs of the people in your vicinity and selling them as well for example fruit juice (since people are now conscious with their health), under wears, wigs, bread and egg etc.

As a start-up retail provisions business, I recommend you use your personal savings to commence or ask for assistance from family and friends. Borrowing from an institution or money lender to start is not the best since sales may be low at the beginning which can affect your repayment capacity. Provisions business is a profitable venture however for it to thrive you must identify all risk associated in your business area and provide measures to mitigate them. Secondly since the products are daily needs you have to be punctual hence you will lose your customers to your competitors. It’s also important to be directly involved in sales and purchases to avoid pilfering. All the best in your new venture.