How to Start a POS Business with 100k Naira: A Comprehensive Guide
Starting a Point of Sale (POS) business in Nigeria with a budget of 100,000 Naira is a feasible and lucrative . This business allows you to provide essential financial services such as cash withdrawals, deposits, and bill payments to people in areas where traditional banking services are limited. With fintech companies like OPay, PalmPay, and Moniepoint, setting up a POS business has become more accessible. This guide will walk you through the steps to start your POS business successfully on a modest budget.
Understanding the POS Business
A POS business involves using a POS terminal to conduct financial transactions on behalf of customers. These transactions include withdrawals, deposits, money transfers, and bill payments. The business earns revenue through transaction fees and commissions from the partnering fintech companies.
Step-by-Step Guide to Starting Your POS Business.
Below is a guide on how you can finally get started
1. Market Research and Feasibility Study
Objective: Understand the demand, competition, and viability of your POS business in your chosen location, this is very important before starting any business
- Identify Target Market: Focus on areas with limited banking facilities, such as, markets, and densely populated neighborhoods, it is advisable to start your business in a very populated area or a place where other transaction are going on.
- Analyze Competitors and access demand: Observe existing POS operators, their customer service, and pricing, also check whether they are making sales or is the business not moving in that area at all.
2. Develop a Simple Business Plan
Objective: Outline your business strategy, financial projections, and operational plan.
- Executive Summary: Brief overview of your business idea and objectives.
- Services Offered: List the services you will provide (cash withdrawals, deposits, bill payments, etc.). some POS agents also issue cards to people (i.e. Opay, palmpay and monepoint atm card), some does not allow transfer from customer, you must come with cash or card for transaction
- Financial Plan: Basic budget allocation and revenue projections we will elaborate on this below
3. Choose a Suitable Location
Objective: Select a high-traffic area that is easily accessible to your target customers.
- Factors to Consider: Look for locations with significant foot traffic such as near markets, transport hubs, or residential areas with limited banking services.
4. Register Your Business
Objective: Legalize your business by registering with relevant authorities.
- Business Name Registration: Register your business name with the Corporate Affairs Commission (CAC).
- Local Permits: Obtain any necessary local government permits to operate your business.
with 100k budget, you may start the business without completing this part, however, we advise you to do the needful when you scale up
5. Partner with Fintech Companies
Objective: Establish partnerships with reliable fintech companies to access POS terminals and transaction networks.
- OPay: Known for its user-friendly platform and wide range of services. Initial charge per transaction is 0.6% and then 0.5% after upgrading to Preferred Merchant status
- PalmPay: Offers attractive commission rates and a robust network.
- Moniepoint: Renowned for its reliability and efficient customer support. Moniepoint charges a flat rate 0.5% of the transaction amount for withdrawals between N1 to N20,000, and They charge a flat rate of N100 for transactions above N20,000
Steps to Partner:
- Application: Apply online or visit their offices to express your interest.
- Documentation: Submit the required documents (business registration, ID, utility bills, etc.).
6. Purchase Equipment
Objective: Acquire the necessary equipment to run your POS business smoothly.
- POS Terminal: Typically, fintech companies provide the terminal for a small fee or on a rental basis.
- Furniture: A small table and chair for your setup.
- Signage: Basic signage to indicate your services.
7. Hire and Train Staff (If Necessary)
Objective: Employ reliable and well-trained staff to manage daily operations if you will not be operating the terminal yourself.
- Recruitment: Hire staff with good customer service skills and a basic understanding of financial transactions.
- Training: Provide basic training on using POS terminals, handling cash, and addressing customer queries.
- avoid POS scam: there are many pos scam from yahoo boys, inquire more about anything you dont know about the business from someone that knows better
8. Marketing and Promotion
Objective: Create awareness and attract customers to your POS business.
- Branding: Create simple yet effective branding with sign board, pay a carpenter to construct a sign post with the inscription POS AVAILABLE. this will be the main and most effecting advert option for you .
- Word of Mouth: Encourage satisfied customers to refer others.
9. Launch Your Business
Objective: Officially start your POS operations and begin serving customers.
- Soft Opening: on launching day or within the first few weeks of launching, you may not see many customers, this is normal in every business, keep showing up until your shop start getting noticed
Financial Management
Objective: Maintain accurate financial records and ensure profitability.
- Record Keeping: Keep detailed records of all transactions and expenses.
- Budgeting: Monitor your budget closely and adjust as needed.
- avoid credit deal: if you want your business to stand strong and last long, do not deal on credit
Scaling Your Business
Objective: Expand your POS business to increase revenue and market presence.
- Additional Locations: Consider opening new outlets in other high-traffic areas.
- New Services: Introduce additional services such as airtime sales or utility bill payments.
- Partnerships: Collaborate with more fintech companies to offer a wider range of services, if you started with opay, you can add other companies as you grow.
summary of How to Start a POS Business with 100k Naira
Example Budget Allocation
- Rent: 25,000 Naira, this price can rent a small space for just your table, umbrella and chair.
- Registration and Permits: 7,000 Naira, you may not really spend on this
- POS Terminal and Equipment: 35,000 Naira, Moniepoint mini Android Pos Terminal is N25, 000 plus N5, 000 for terminal Registration fee
- Marketing and Promotion: 7,000 Naira, a small POS AVAILABLE sign post is enoug
- Initial Working Capital: 26,000 Naira
Conclusion
Starting a POS business with 100,000 Naira is a practical and profitable venture if approached correctly. By following this comprehensive guide, you can establish a successful POS business with strong foundations and the potential for growth. The key to success lies in thorough planning, strategic partnerships, and excellent customer service. With dedication and smart execution, your POS business can thrive and become a valuable asset in the financial services industry