One fateful night, on our way back from visiting my In-laws, with tears in my eyes, I was forced by my wife/business partner to face the bitter reality, my business at its current state was dying, and I was the infection killing it.
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Six months before my wedding, I was getting ready to take my first business trip to China. My first business was a little over a year old, and it was doing well enough to pay for my trip to China. My father-in-law who I consider to be one of my mentors took me to the kitchen and told me that I needed to start a new business on my own, I was about to get married, and I needed another stream of income.
I spent the following three weeks in Yiwu, China contemplating his words, thinking of what business I could start, then it hit me I could become an Uber partner. At the time Uber had expanded into Nigeria, they created a system where they connected those who wanted to drive on their platform but could not afford a car, to those who could afford to get a car on their platform but did not want to drive. My brother-in-law who was on the trip with me helped me out with the numbers, and it made sense.
After a month of research, I realized that becoming an Uber partner was the best way to go. The plan was simple, start off with two cars, lease them at 50 thousand naira (50K) a week, save every single dime both cars made towards adding a new car every year, get to five cars which would give me 1 million naira a month and Omo I don blow!. Only if life was ever that easy. I soon came to the realization that nothing in business ever goes according to plan.
I took my business proposal to my top two investors/creditors; my wife and father, got my funding, and by the third week of January 2017 I had gotten my first two cars and registered it on the platform. It was time to make my millions, or so I thought. I asked my cousin who is currently my business manager and business partner to come on board with me, to help manage the drivers and the business as a whole. With no form of structure or process whatsoever and a million naira in our account we started operations, MKI Transportations was born.
The Waves of Problems
The first big issue arose not even barely a month into business. Uber’s initial policy on payments were card payments only, so at the end of the week all the money our cars made will go to user's account, the company would take it's 25% cut, then the rest of the money would be sent to my account. I would receive my 50k fee and send the rest of the money to the driver. Then Uber had the "bright" idea to introduce cash payment, and everything went downhill. So we knew exactly how much the drivers made in a week, but when it was time to make payment, they came up with stories and ended up not only owing me but also Uber. The introduction of cash payment came with the added problem of having to run down drivers for your money. Such a daunting task.
The next reoccurring issues were the drivers. During the first two weeks they made their weekly payments on time, by the third week they started owing, by the fourth week they didn’t pay at all, and by the fifth week we took our cars back, and would start looking for new drivers to begin that cycle all over again. In fact, I had a driver who broke that record. It did not even take him up to the fifth week to owe us money.
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In his first week he made over 70k naira, enough to pay my weekly fee, then he came back at the end of the week and gave me 3k naira and said he had to take care of some expenses, and I should allow him another week to pay what he owed. Imagine the nerve! The issue then was, when you sacked a driver and went back to Uber, you ended up selecting from the same pool of drivers that have been rejected by other people. It got to the point that Uber stopped having meetups to connect drivers and car owners because of the driver wahala.
The next big issue occurred on my honeymoon. I got a phone call from my business manager saying "have you heard the news?” I replied "what news? " he responded saying "Uber has just slashed their rates by 40% to be able to compete with other ride-sharing platforms, and Uber drivers are protesting.” With all the research I did, I was ready for Uber to raise its percentage after they have taken over the market; after all, that was their practice in other countries. I was never expecting for them to slash prices. Now drivers had to work twice as much to make the same amount of money they were making already, which meant I could no longer charge the 50k fee.
One key issue that I never took into consideration was how much repair cost was going to eat into the weekly revenue. These cars were being put through 18 hours of consistent abuse. This would not be a problem if you had reliable mechanics to maintain the cars. I had to find out the hard way that mechanics can make or break any transportation business. I will only say one thing about Nigerian mechanics; they will make you question your faith in God. There is no way a loving God would create a group of people with the sole purpose of frustrating your very existence. I mean there was an instant in three days, which the same car had spontaneously caught fire, and had water damage, all in less than a week.
I hope I am not discouraging you guys yet! Haha, I guess behind every successful story, there are always trials and hardships. Let’s go on!
The business would have been able to withstand the crashing waves of problems if it was built on a solid foundation of proper record keeping. But it was not. Now I know and continuously preach that it does not matter how much you have coming in, if you cannot track how much is going out, you are setting yourself up for failure. I remember the month we made 750k naira from a single client, that months revenue was a million naira, that was the most amount of money the business had made at that point, but by the next month, we were completely broke. I could not figure out where all the money went to. So it was only a matter of time for the whole business to come crashing down. I promise I am not bad at business, I am just learning the hard way.
Continue with Part 2 here
About The Author: Tobore is the founder & head of operations at MKI Transportation. In addition to that, he has two other businesses. Across his businesses, he employs 30 people, which gives him a lot of joy to be able to create jobs for others, and put a smile on their faces. He likes to refer to himself as a serial entrepreneur. In his spare time, he coaches young men to pursue their passion and make a life for themselves. He loves spending time with his wife, and finding ways to make Nigeria a better place. You can find him on Instagram and Facebook with: Tobore Idoghor.
Have you had a similar experience as Tobore, when setting up a business? or what are your thoughts on this article? contribute the conversation, leave your comments below. Remember to like, share, and subscribe to never miss an update.