The egg distribution business is one of the many ways to make money from the poultry business that most people are not paying attention to.
When I hear people talk about them starting a poultry business and they don’t have enough capital and equipment to make this happen, I point them toward the egg distribution business. It might be easy to start but it is also one of the aspects that is straightforward with little risk.
What Is Egg Distribution Business?
An egg distribution is buying eggs in bulk from farms at cheaper prices and selling them to customers with your profit added on it.
What do I mean? For example, if you buy 10 crates of eggs from Agricfy Farms for N18,000 (N1,800/crate) and you sell them for N20,000 getting a profit of N2,000 from the transaction, then you’ve distributed eggs from one point to another.
It is not as easy as I stated above but if you have customers that are regularly buying from you, you can make a decent amount from this business.
I will explain extensively how to calculate your profit in this business later in the article.
Advantages of Starting Egg Distribution Business
i. The egg distribution business is easy to start
ii. You don’t need so much money to start an egg supply business
iii. Guarantees daily/weekly income
iv. No skills or expertise is required to start this business
Disadvantages of Egg Distribution Business
The major disadvantage of starting an egg distribution business is you can get to lose your money if the eggs get spoilt
Challenges of Starting An Egg Distribution Business
I have been in this egg supply business for a long time to tell the story of the major challenges you could face in this business which you should be wary of.
i. Marketing: The first challenge you could face starting an egg distribution business is marketing. As a beginner, it is always difficult to convince customers to leave their suppliers to become yours.
It takes a lot to build trust, going from one person to another in a way to convince them. If you’re not strong, you will lose hope before you even start.
ii. Broken Eggs: Another challenge you could face when you eventually start this business is broken eggs. If eggs are not well handled when packaging, they tend to break thereby reducing the profit you are to make from that sales.
That is why it is advisable to use paper crates to transport your eggs from the farm before transferring them into plastic crates.
iii. Spoilt/Damaged Eggs: One of the major challenges of starting an egg supply business is getting bad eggs. There are times when farms have many eggs on the ground with little or no customers to buy them. When this happens, you need to be wary about the number of eggs you purchase.
If you buy so much, there is the possibility that the majority of it will be bad eggs. If this happens, you likely lose money and also lose customers.
iv. Credit Sales: This is another big challenge facing egg suppliers, credit sales. If you’re in business, there is no way you will not make credit sales but it mustn’t get too much. Credit kills a business faster than anything.
I’m not saying you should not sell on credit, but if you must sell don’t do more than 5% of your total sales. Have an established customer first before allowing credit sales and the grace period should not be more than 3-4 days (although it is usually not the case in real life).
How To Start An Egg Distribution Business
If you’ve been wondering how to start an egg distribution business with little knowledge of how it works, reading this article will give you heads-up on what you need to know before venturing into the business.
Research and Find a Target Audience
The first thing to know if you want to start an egg supply business is to research. In making money from this value chain of poultry farming, you don’t need that much money to get started which is why I didn’t put capital as the first thing you need to succeed.
You need to carry out research on your target audience before making a decision to go into the supply business. It is important to do so because your end users are more important than the eggs you want to buy.
Carry out some research on the location you want to be selling your eggs, your potential customer’s preferences, where they’re buying eggs presently, and what you can do to win their heart to purchase from you when you eventually start distributing.
This research stage is very critical to your success in the egg supply business.
Find A Farm
The second thing you need to do is to find a farm which you will be buying your eggs from. Just like the first point mentioned, seeking a farm that will offer you a good price so you can make enough profit is important.
You don’t want to be working for someone else. The goal of starting this business is for profit. When searching for a farm, put these three things into consideration:
i. Proximity: The first thing you need to consider when choosing a farm to purchase eggs from is proximity. Your potential supplier’s farm should not be too far from your location (market).
Although you don’t need a store/shop to start an egg distribution business, there may be situations where you will need to keep some eggs aside before distributing them to your customers.
If you’re in Nigeria, Ibadan, Oyo State is one of the biggest supply towns of eggs, followed by Ogun and Osun. This doesn’t mean there are no bigger farms in cities but if we’re talking about farms with large landscapes, then you need to go to these places mentioned.
ii. Customer Relationship: The second thing to consider when choosing a farm is the customer relationship. You want a farm that has a big customer base but you also need to consider the fact that companies with large customers tend to mess up sometimes. Having a farm that put you at heart when things are tough is one you should consider buying from.
iii. Price/Discount: Another thing to consider when choosing a farm to buy from is the prices they are willing to sell to you. The price you buy from farms will determine whether or not you’ll make a profit.
I always tell clients and mentees during my consultation/training session to always have a list of 3 farms they will be buying from. Doing this will not get you disappointed when there is scarcity.
Get A Means of Transportation
After making a list of the farms you will be buying eggs from, the next thing is a means of transporting your product to the customers. This is VERY important for success in this business because if you keep your customers waiting all the time because there was no way to get eggs to them, they will eventually leave.
You don’t necessarily need to own a vehicle of your own, you only need to have a stable cab person that will help you transport eggs from the farm to your destination (your store or customers).
I know you’re wondering why this is coming almost at the end of the list. WHY IS IT NOT NUMBER 1? Well, you’re right cos there is no business you want to start today that you will not need money.
I believe before you decide to start an egg supply business, you have to set aside some cash that you want to invest with. The amount to start this kind of business depends on how big or small you want to go.
Another thing you need to put into place when starting an egg distribution business is storage. Whether you’re starting small or big, you need a physical display room.
When you get your eggs from the farm, you need to put the in a place before you start distributing them to your customers.
The eggs that come from the farms are not always sorted, so before you give them to your customers, you will need to sort the bigger eggs from the smaller eggs because they carry different price tags.
When considering a storage room for your eggs, make sure it:
- is easily accessible. You don’t your store to be located in a dead-end area where it will be difficult for your customers to locate and buy. When I talk of accessibility, the road that leads to your storage space should be graded even if not 100% perfect should be motorable for small types of vehicles.
- has enough ventilation: Another factor to consider when choosing your storage space is ventilation. Eggs get spoilt easily so you need to store them where there is enough air and free from water.
When starting an egg supply business, you need to be very careful in your dealings because it is a very delicate business.
Another thing you need to start an egg supply business is a worker(s). If you have another job and you want to make this a part-time thing, you will need a worker that will represent you and keep track of things.
Depending on how big you’re willing to go, you will probably need from 2 persons upward.
Even if this is a full-time job, you need a support system so you don’t wear out easily. As I’ve mentioned earlier, this business looks easy yet it can be draining especially if you’ve started having customers patronizing you often.
Eggs can be very tempting so you need someone/people that are trustworthy to an extent to take charge of the business for you.
NOTE: There is no how your workers won’t short-change you, make sure you keep track of the workers so it does not affect your business down to the point of closing the business.
Are you surprised about this being a requirement for starting an egg distribution business? Don’t be surprised. I am an advocate of good record-keeping in any agricultural business you wish to venture into.
Anyone that wants to start this business should be disciplined enough to keep track of the purchases and sales of eggs.
I wrote an article on the importance of record-keeping on the farm, you should read it so you know how it can lead to success in this business.
How much Does It Cost To Start An Egg Distribution Business?
Majorly of the money you will spend starting an egg business is capital expenses.
Capital expenses are money spent once at the beginning of starting any business.
Some of the equipment you will buy when starting an egg supply business are:
i. Crate: The first material you need to start an egg distribution business is a crate. You will need to buy this in large quantities. When buying crates to start your business, make sure you buy different colors, and customize them so they can be easily identified.
There are two different types of crates, paper crates, and plastic crates.
Which is the best? From personal experience, I prefer the plastic crate to the paper crate. Why? Paper crates get damaged quickly once they come in contact with water.
When supplying your customers eggs, make sure you collect back your crate if you don’t want to keep spending your profit on crates.
When supplying your customers eggs, make sure you collect back your crate if you don’t want to keep spending your profit on crates.
Best Advice: Buy both paper crates and plastic crates, they have their different use.
ii. Storage Space: The amount that will be spent on storage space depends on the area and the size of the space. This is if you’re going to rent a space.
If you own your space which is rarely possible, then good, you have to keep the money and spend it on other things.
Remember if you rent a space in a high brown area, you spend more compared to if it is in a low-budget area. All this depends on your research.
iii. Vehicle: The third piece of equipment you will spend money on if you’re acquiring is a vehicle. It doesn’t have to be a four-wheeled vehicle, it could be a tricycle (depending on where your suppliers are).
If you don’t have money to spend on buying a vehicle now, you know you have to find a reliable person that will help you transport eggs every time. I have said this earlier in the article.
iv. Bucket: Another thing you should get ready for is a bucket. You want to have this as a backup whenever you want to buy your eggs from the farm. There are times when you will get to the farm and what you eventually buy will be more than what you budgeted for and you don’t have enough crates to carry them. The bucket you take along will substitute for the crates you didn’t take with you to the farm.
Profit Making Ratio in Egg Distribution Business
The profit you make in an egg distribution business lies in the amount you buy and the amount you sell. Even though you have to put some expenses you incur into consideration.
Your cost of transporting the eggs should be deducted from the sales figure before arriving at your profit.
For example, if you buy a crate of eggs for N 1,800, use N 100 to transport it to your final destination and sell the egg for N 2,100. If you are to calculate your profit, it will
N 2,100 – N 1,800 – N 100 = N200. In actual reality, N200 is not your profit because you will still need to factor in waiting time and maybe staff’s wages/salary.
One thing is sure, you should be making at least N130 on a crate of eggs. If you buy 100 crates of eggs, be rest assured you’ll be making 13,000. This is just a rough estimate of what you could make. It could be higher or lower depending on time.
Just like every other business, there are peak seasons and there are off seasons for the egg business. Make sure you study your location (country) to understand the best time eggs sell so that you know the number of eggs you will be buying at each season.
DISCLAIMER: Your location will influence your profit, so the calculation may not apply to you.
Yes, it is easy to make daily income from the egg distribution business but you have to get it right first.
There are challenges you’re going to face that will make you want to give up but it is just a phase if you know how to manage a crisis.
So, if you are looking for a business that is less risky, and has an income value with little or no experience at all, I will say go for an egg supply business and you’re on your way to making fortunes out of it.