Point of sale (POS) systems are revolutionizing the way businesses operate in Nigeria.
POS allows business owners to accept debit/credit card payments and manage daily operations.
With the growth in cashless payments and plastic money, POS presents massive opportunities even with 100,000 Naira capital.
A POS system comprises of hardware like receipt printers, barcode scanners, cash drawers and software to record transactions.
It eliminates manual invoicing and provides real-time inventory updates. POS enables secure card payments without Internet using GPRS technology.
POS enhances customer experience by reducing long queues and waiting times. Customers can pay conveniently using cards instead of cash. POS provides business owners with sales insights and inventory control not possible with manual methods.
Setting up a POS business in Nigeria requires moderate startup capital but has immense potential.
You need to obtain the required permits and hardware to build credibility with customers. Effective marketing and choosing the right location are key success factors.
Overall, a POS business can provide stable long-term income with N100,000 initial capital.
Startup costs – Breakdown of costs needed to start a POS business in Nigeria
Starting a POS business in Nigeria with a capital of N100,000 is very much possible if costs are properly managed. Here is a breakdown of the key startup expenses involved:
Registration and Licensing Fees
You need to legally register your POS business with the Corporate Affairs Commission (CAC). Business name registration costs around N10,000-N15,000.
You should also apply for a business license from your state government which may cost N5,000 or more.
Don’t skip these steps as you need them to open a business bank account.
POS Terminal and Printer
A POS terminal like Verifone VX520 and a receipt/ticket printer will be your main hardware.
You can get a used reliable POS terminal for N35,000-N40,000.
A thermal printer will cost N15,000-N20,000 for an entry-level model. Shop around to get the best deals on hardware.
Internet and Software
You will need a basic POS software like Cap POS which costs around N20,000 for a single user license.
Unless you get a POS system with inbuilt GPRS, you may need Internet/WiFi which could cost you N5,000 monthly.
Other Accessories
Other items like cash drawer, barcode scanner, WiFi router, paper rolls etc can cost you another N10,000-15,000.
So factor in these additional purchases as well.
Shop Rental
If you want to open a physical POS outlet, shop rental will likely be your biggest cost.
In a small town you can find a small space for N15,000-N20,000 per month. In bigger cities expect to pay N50,000 or more as rent.
Consider your location carefully.
Contingency Funds
Keep at least N10,000-N15,000 as a contingency budget for miscellaneous expenses during startup. Things rarely go as per plan so it is good to have extra cash for handling issues.
In summary, here are the cost estimates:
- Registration and licensing: N15,000
- POS terminal and printer: N55,000
- Software and Internet: N25,000
- Other accessories: N15,000
- Rental for space: N15,000 – N50,000
- Contingency funds: N15,000
Total Cost: N130,000 – N175,000
So with discipline, you can start a POS business with N100,000 capital by cutting costs in non-essential areas.
The key is to not splurge and focus only on must-have items.
Hardware and software requirements
To start a POS business in Nigeria, there are some essential hardware and software requirements you need to have in place:
POS Terminal
The POS terminal is the heart of your business operations. Following are some popular options:
- Verifone VX 520 – A reliable countertop POS machine supporting debit/credit card payments. Costs around N35,000.
- InnJoo P88 – An Android based POS terminal with 7-inch touchscreen. Price is N25,000.
- HP iBox BT – A compact POS machine good for small businesses. Sells for around N28,000.
Note: Buy from reputable suppliers and ensure the POS terminal supports GPRS connectivity. This allows processing card payments without Internet.
Receipt/Ticket Printer
A POS printer is required to provide transaction receipts to customers. Some good options are:
- Epson TM-T20II – Thermal printer with fast 200mm/second speed. Costs around N16,000.
- Zebra ZP450 – High quality three-inch thermal receipt printer. Sells for N22,000.
- TVS RP-3150 – Affordable 80mm printer with drop-in paper loading. Available for around N15,000.
Important: Ensure the printer is compatible with your POS software and terminal. Thermal printers don’t require ink and are maintenance-free.
Cash Drawer
A secure cash drawer is necessary to store cash received from customers. Some options:
- APG Cash Drawer Vasario – Steel cash drawer with media slots and drawer locking. Cost is N12,000.
- Excelvan JCD-100 – Compact cash drawer with manual lock switch. Priced at around N8,000.
- Posiflex CR-4000 – Heavy duty steel drawer with six coin compartments. Costs N15,000.
Tip: The cash drawer should comfortably fit your currency notes and coins. Check drawer size, slot adjustability and ease of use before buying.
Barcode Scanner (Optional)
A barcode scanner speeds up checkout by instantly capturing product codes. Consider models like:
- Zebex Z-3100 -Compact laser scanner with omni-directional scanning. Costs around N12,000.
- Epson GM-870 – Feature packed counter-top scanner with auto-detection. Available for N15,000.
Info: Only required if you sell products with barcodes. Can be added later.
Business registration and licensing
To legally operate your POS business in Nigeria, you need to complete proper business registration and acquire the necessary permits/licenses:
Business Registration
Register your business name with the Corporate Affairs Commission (CAC) to obtain your RC (registration certificate) number.
Key requirements:
- Pick a unique business name
- Prepare incorporation documents like memorandum and articles of association
- Pay name reservation and registration fees (around N15,000-N20,000)
With RC number, you can open a corporate bank account, apply for tax ID number and business licenses.
Tax Identification Number
Apply for your business TIN (tax ID number) from the Federal Inland Revenue Service (FIRS).
This allows you to pay business income taxes annually.
POS Business License
Obtain a POS business license from your state’s ministry of commerce or internal revenue service.
For example, Lagos State issues LPOS license for N25,000 with annual renewal fee of N5,000.
NAFDAC Registration
If selling food items, register with NAFDAC to obtain approval for your product packages. This costs around N20,000 initially.
Local Government Permit
Your local municipal office may require a business permit costing N5,000-N10,000 depending on location.
CDS Certification
If accepting card payments, obtain CDS certification from Interswitch. This verifies your ability to accept secure card payments.
Other Licenses
Some locations require signage permit, waste disposal permit, fire safety certificate etc. Check with your local government to avoid penalties.
Key Tips
- Engage professionals like lawyers to ensure proper business registration
- Have all licenses and permits ready before starting operations
- Display valid licenses prominently in your shop
- Stay up-to-date on renewals to avoid disruptions
- Maintain accurate tax records to avoid problems
Proper registration and licensing ensures you operate legally. Renewals may be required annually depending on the permit type.
Allocate sufficient budget for this.
Finding the right location
Choosing the right location is critical to the success of your POS business in Nigeria. Here are some tips to help you find a good location:
Target Customers
First understand your target customers and market area. For retail POS, consider proximity to residential areas, offices, schools, markets etc. For restaurants, look at dine-in crowd. This shapes your location strategy.
High Foot Traffic Areas
Look for locations with high pedestrian and vehicular traffic throughout the day. Areas near transport hubs, shopping complexes, markets etc. attract natural crowds. Avoid isolated areas with minimal crowds.
Budget For Rent
Prime spots demand higher rents. Balance rent costs with expected sales at the location. Avoid stretching your budget as high fixed costs can sink your business. Negotiate best possible lease terms with the landlord.
Accessibility
Ensure the location is convenient and easily accessible for customers via public transport or private vehicles. Available parking space and proximity to bus stops/stations is a plus. Avoid locations with constrained access.
Nearby Competitors
Some competitors nearby indicates customer demand. But too many competitors can make the space overcrowded. Limit yourself to not more than 2-3 competitors in the vicinity.
Infrastructure Checklist
Assess power supply reliability, water availability, access roads, Internet connectivity etc. Also check policies regarding power generators at the site.
Security
Safety of customers and staff is crucial. Avoid areas prone to high crime. Check for CCTV coverage, security guards, street lighting etc.
Ambience and Visibility
The outlook and aesthetics of the space matters. Also consider signage opportunities for visibility. Avoid run-down, cramped locations.
By balancing all these factors, you can find an optimal location that attracts customers, meets business needs and fits your budget.
Resource: Latest Best Location for POS Business in Nigeria
Marketing your POS business in Nigeria
Effective marketing is indispensable for any POS business to succeed in Nigeria. Here are some proven ideas to market your POS outlet:
Social Media Marketing
Create social media pages for your business on platforms like Facebook, Instagram and Twitter. Post engaging content and run Facebook ads targeted by location and interests.
Email Marketing
Collect customer email addresses and send promotional emails. Offer incentives for signing up for emails. Send email blasts about new products/services.
SMS Marketing
Gather customer phone numbers when they make a purchase. Send bulk SMS about deals, discounts and other updates. Keep messages short.
Loyalty Programs
Offer loyalty cards and rewards to encourage customer repeat visits. Give points or stamps for purchases. Reward with discounts or free items on milestone points.
Cross-Promotions
Partner with nearby businesses to promote each others’ services. For example, a restaurant can display coupons from a POS retail store nearby.
Local SEO
Optimize your Google My Business listing with good photos, descriptions and accurate information. This improves visibility on Google search and Maps for local queries.
Printed Flier Distribution
Print colorful fliers with business information and hand them out near your outlet. Distribute at traffic intersections, malls, parking lots etc.
Billboard/Signage
Invest in a good billboard or signage near your shop if you have the budget. This builds visibility and recall value.
In-store Promotions
Place standees, posters and other branding material prominently within your outlet. Offer discounts on selected products/services on specific days.
A solid marketing plan combining online and offline tactics will boost your POS volumes and revenues significantly.
Resource: No. 1 Guide to Market POS Business in Nigeria
Managing costs and making profits – Tips to control costs and become profitable
To sustain your POS business operations in Nigeria and become profitable, you need to closely monitor costs and find ways to boost revenues. Here are some useful tips:
Monitor Transaction Costs
The fees you pay for card payments on your POS terminal can eat into profits. Negotiate the lowest possible charges with your POS provider. Track transaction costs weekly to identify any spikes or irregularities.
Optimize Inventory
Carry optimal inventory levels to avoid tying up excess capital. Use your POS software data on fast moving products to plan stock levels. Don’t overstock slow moving items. Turnover inventory fast.
Source from Reliable Suppliers
Find suppliers who provide quality products at low prices reliably. Build relationships with key suppliers and negotiate bulk purchase discounts. Avoid suppliers with quality issues or delivery lags.
Manage Employee Costs
Employee salaries are often the biggest recurring expense. Hire staff only based on outlet needs and sales volumes. Cross train staff to optimize costs. Offer commissions on sales to boost motivation.
Minimize Waste
Implement measures to reduce spoiled inventory or food wastage. Track waste daily and identify causes. First-in-first-out stock rotation, improved storage etc. can minimize losses.
Save on Utilities
Use energy-efficient equipment and lights to reduce electricity costs. Turn off idle devices and adjust usage during peak power rate times. Install solar power solutions if you have high energy bills.
Promote Off-Peak Hours
Offer happy hour discounts orpromo deals during traditionally slow business periods to better utilize capacity. Extended hours on weekends/holidays also help.
Upsell and Cross-sell
Encourage customers to upgrade their order. For example, upsize drink order for just N50 more. Cross-sell accompanying products like dessert with a meal.
Diversify Offerings
Introduce related new product lines or services that attract customers. For example, selling prepaid airtime and data along with POS retail.
Analyze Data Insights
Leverage the sales and inventory data from your POS to make smart business decisions. Identify top selling items, busy times, customer groups etc.
Careful cost control and targeted efforts to boost revenues will help your POS business in Nigeria maximize profits over the long run.
The key is finding the optimal balance.
Resource: How to Calculate Profit in Your POS Business in Nigeria
Key Takeaways
- Setting up a POS business in Nigeria requires moderate capital outlay of around N100,000-N150,000 covering hardware, software, registration and initial setup costs.
- Essential hardware like POS terminal, printer, cash drawer and software like Cap POS form the core infrastructure.
- Proper business registration, licenses and permits from CAC, FIRS, NAFDAC etc. are mandatory to legally operate your POS outlet.
- Carefully evaluating factors like foot traffic, rents, safety and accessibility is crucial for finding the ideal location.
- An effective marketing strategy using social media ads, SMS campaigns, local SEO and other channels is indispensable to attract customers.
- With good business planning and execution, it is very much possible to start and successfully run a POS business in Nigeria with a capital of N100,000.
