Introduction
Shoes are an extension of clothing which is a basic necessity just as food and housing. Shoes are currently under ban in Nigeria. The present economic situation is an opportunity by local investors in Nigeria to respond positively to the ban. Before now, a lot of smuggling of second-hand shoes had been going on. However, in the new dawn, following the coronavirus lockdown and tumbling oil and commodities prices, the dependency on imported shoes by many of our citizens just has to change. Necessity is the mother of invention. Hence, if we must survive, we should produce what we need and consume what we produce.
On the part of government, the situation has heightened the necessity to put basic facilities in place to drive industrialization in general. State governments must as a matter of urgency set aside land for industrial development in their respective jurisdictions. Importantly too, against the backdrop of inadequate public power supply, each state governor has to station a centralized generating facility within designated industrial zones, to provide electric power needed to run emerging factories. We must industrialize. We must transform. We do not need imported shoes. Worse still, we do not need smuggled shoes. Arising from these considerations, the opportunities that lie in footwear production business are potentially vast.
Factors to consider before setting up a new Shoe factory
Anyone desiring to set up a successful Shoe factory must address the following questions:
• What type of Shoes will be in the highest demand in the surrounding market, and who will be the target customers?
• Does a commercial opportunity for making Shoes in targeted areas, which a new manufacturing venture could take advantage of?
• Which particular community within a particular state would provide the best location for a Shoe manufacturing venture?
• Who are the already existing key players in the industry and what marketing strategies do they employ that are worth-emulating? How are the commodities produced and how can they be sold; and what are the distribution strategies?
• How is a typical Shoe company managed, top-down? What are the specific complementary roles of the workers?
• What are the possible financing options for a beginner?
• What kind of risks could a prospective investor face?
• What is the level of profitability to reap in the business?
Raw materials
Raw materials needed for shoe-production are mainly a piece of leather or fabric or rubber or plastic and some sort of soling. It is also possible to make the sole of local shoes from a non-radial-belted tyre (that is, tyre that is cut with a utility knife into sections slightly longer than the particular shoe-sole, which are subsequently trimmed out on a band saw). This was the type of innovative and survival measure adopted by the people of the south-east during the Nigerian civil war.
Machinery & Equipment
The core machinery for making top-class shoes in big factories is an industrial sewing machine. The entrepreneur will also require other tools for tightening up materials on the shoes, and a special device for trimming the edges of the sole, as well as specific eye-letting tools. Additional equipment can be purchased depending on the type of shoes to be made. For manual processing, what is required is a simple sewing machine to stitch and fine-tune the edges after fitting the leather or other stuff on the sole; the rest of the operation is mainly by hand and small tools.
Risks
Identifiable risks that can pose threat to a proposed shoe factory include: machinery obsolescence, possibility of sourcing inferior raw materials, inconsistent government policies, possible threat from smuggled shoe items (you never can trust smugglers). Other risks are associated with technical efficiency, such as inaccuracy in measurement, cutting, designing and finishing. Shoemaking is a very precise business, and the slightest mistake could spoil the shoe. However, all these risks could be mitigated through expertise.
Process-flow
The step-by-step approach to making shoes depends on the type of shoes to be made. The basic production process involves: cutting the materials, creating the base and the heel, creating the top and side of the shoe and gluing with adhesives or sewing the fabric to the sole together. Leather is notoriously sturdy, so stitching fluidly is difficult, except to punch holes before joining to other pieces. Except for curt shoes, making eyelets (holes needed to fix laces through), is very important. About 4 to 5 eyelets with an inch in between, are ideal. Putting finishing touches to water proof the shoes with a sealant spray is an important aspect of the production process; also adding a creative design touch and stylizing are all cute. Glued soles are given some time to solidify. Other production process might involve packaging and transporting the shoes to the warehouses and markets for sale.
Market Opportunity (SS-DD)
Market opportunity means the gaps that have been created in the industry as a result of the inability of existing suppliers to adequately meet demand. The best approach to estimate demand for shoes is to consider the population structure and income class of the adjoining population. Footwear business ideas depend so much on the demand and expectations of the consumer one way or another. Hence, it is better to target average-income buyers since this is the most profitable niche. To achieve product differentiation that reflects the population structure, it is advisable to offer a huge variety of children’s, women’s and men’s, shoes. The ladies and the children have the highest demand for shoes; hence, more revenue could be made in that segment.
Supply & Turnover estimation
A sizeable proportion of made-in-Nigeria shoes, using more of manual methods, have their origin in Aba, Abia State of Nigeria. On the average, several micro-scale producers, trade up to N10m in annual turnover and make between N20, 000 and N30, 000 in weekly profits, in shoe factories at Ariaria market in Aba. In order to attain this expected turnover level, a proposed venture should have to come up with innovative strategies, borrowing and fine-tuning some of the already identified product, price, promotion and distribution strategies, which are being employed by existing producers.
Product and Pricing strategies are the most important of all the strategies. A good product sells itself. So, a winning strategy would be to design high-quality shoes or the model that targets the mass market in the average-income price segment.
Promotion is necessary to position a new business in the market, introduce the products, create awareness about their special features, and make customers psychologically attracted to the show-room.
Particularly for shoe making, branding is a necessary product and promotional strategy to adopt, given the importance of standing out among the competition.
In case the company decides to introduce a mass-produce market, there will be need to partly resort to online sales, involving the posting of advertisements with photos and description of ready models on the largest free advertisement websites.
An aggressive approach would be to canvass for contracts for supply to big clients that will demand large quantity or customized designs of shoes.
Cost implications & Sum Up
Meanwhile, the start-up cost profile of a small-scale shoe factory, deploying more of manual operations and employing about 15 persons will be as follows:
Preoperational costs
(Business Plan, Incorporation, Branding, Rent) 550,000.00
Machinery/ Equipment Costs for manual operation 434,000
Capital Utilities (Generator, Project Vehicle, etc.) 1,400,000
Fixtures & Fittings 909,000
First quarter Salaries & Wages 1,650,000
First quarter, Raw Materials 780,000
Fuel, Water & other non-capital Utilities 200,000
TOTAL COSTS 5,923,000
Underlying Assumptions:
There are 6 models of Shoes that will be produced
Details of the product, distribution and promotion strategies, machinery procurement processes, sources and possible arrangements, as well as revenue calculations, will be embodied in a Business Plan which the writer would be willing to prepare for interested prospective investors.
The writer may be reached via his email: chukwudiodili902@yahoo.com
