How to Start a Dredging Business
Dredging is the operation of excavating material (e.g. Gravel, Mud, and Sand etc.) from a water environment. It can also be said to be the removal of sediments and debris from the bottom of lakes, rivers, harbors and other water bodies.
It is the digging of dirt, sand, gravel, pebbles, rocks and organic deposit from the bottom of the creek, waterways and lagoon by using a vessel known as Dredger.
The process of dredging comprises the use of a vessel called dredger and the requirement for structures and buildings made this business a significant one. However, the need to construct one thing or the other have made dredging business to be highly demanded for. Its products can also be utilize in production of materials used in construction and the retrieving of boggy zones.
Dredging business can be started by less than a Million Naira and you will get a good and high return on investment. Moreover, it has been proven that, active participants in the business, will break even between 3 or 4 months of starting the business.
Meanwhile, Sand dredging activities can be found in Epe to Ikorodu, Lekki to Ojo and Badagry area of Lagos. And, in Delta, sand is mined in Uvwie Local government Areas, Ovwian, Ugolo, Agbarho, Oteri, Ughelli towns, Udu, Ughelli North and Okpe.
Finally, most of the Lagoons area in those places mentioned above are dredging site for sand dealers.
Registration and Licenses of Dredging Business
Many company has been involved in this line of business and they always spelt it out in the memorandum and article of association as Sand dredging and reclamation of land.
You need to know that, the main uses of materials gotten from dredging is for building. Before technology boom, Sands and gravel has been the major materials used in building, and even after technology now brought and glass and steel building; sand and gravel are still been used majorly in erecting a structure.
Therefore, Sand dredging industry became popular because of the needs and requirements to cater for the housing industry in Nigeria. So, here is the registration process of dredging business and its categories:-
Although, dredging business succeeds in so many places in Nigeria, but it is more rampant in riverine areas. Registration of the business and its categorization includes:-
- First Category – Manual Dredging: – In starting this category of dredging business, you will first of all, send an application to the Ministry of Waterfront and Infrastructural Development. Then, you will install utility expense of N50,000 or more and provide the details of the zone in which you are to be carrying your dredging. Also, you will verify the Ecological impact Analysis (EIA) and the Edge review of the area. Finally, you will provide dredging procedure account and these comprises of payment of N200,000 and N100,000 annually and proof of access towards the portable barges and the payment of N50,000 annually.
- Second Category – Sand dealing and dredging:- In starting this category, you will also send an application to the Ministry of Waterfront and infrastructural Development and install utility expense of N50,000, as well as providing details of the area. You will also provide Environmental Impact Analysis and the hydro graphics. Then, you will study the area and the duplication of authentication and endorsing with installation of the proportion of expenses. After this, you will make payment for Entirety installment which is N100, 000 and the accessing of boats and proof showing you owns them (possession).
Finally, you will make entirety payment of N75, 000 and the payment of N500, 000 entirely on an annual basis.
- Third Category – Dredging Companies:- In starting this category of dredging business, the processing is quite much than others. Because this is a company. And the process are outline below:-
- You will send an application to the Ministry of Waterfront and Infrastructural Development
- You will provide details of the description of your dredging location and the payment of the use of N50,000
- You will provide the report showing the Environmental Impact Analysis and the Provision of the review on Hydro graphics
- You will review the proposed area and the duplication of the current duty freedom
- For you to install charges, it involves endorsement and the paying on annual basis and the ownership proof or access to barber.
- You will pay N75,000 and N500,000 on annual basis.
Market Size and Demand of Sand
Nigeria population is increasing day-by-day and there is a dire need for more infrastructure; that’s why dredging business has been highly demanded for. However, for a structure to be constructed you will need sharp sands, gravel and so on. So, dredging make it possible for you to get those materials inside riverine and coastal parts of the country. This is why states like Rivers, Delta and Edo have more prospective for this business.
Moreover, places like Lagos state (especially Lagos Island and Lekki) has a high demand for sand because most of their lands there are water-logged area, where they need to sand-filled those lands to make it possible for them to build a structure on it. Also, there are so many construction projects going on in that area; they also need Sand in successfully carrying out the project. So, Sand is so important for human habitation, survival, social and industrial development.
Marketing Strategy of Dredging Business
In Marketing your dredging business, you need to make use of so many marketing strategies and this strategies may include:-
- Erecting a bill board at the closest junction to your Dredging location. This billboard will make it easier for people to identify where you are located and also know what you are
- Advertising your business on Radio and Television sets
- Advertising your business on social media platforms. Basically, big firms used to go online to search for reliable dredging company they can work with.
- You can as well, design and print a handbill and distribute it to people. Inside this handbill, your address will be there and your company number.
- Another way of marketing your dredging business is to pay a one-on-one visit to various locations where some people that stored sands for future sales are located. When you met them, you will explain to them how you sell your sands and also used a discount price to attract them to you.
Process in Starting and running Dredging Business
In commencing the business, the first thing is to carry out the analysis of the market and acquire details about the business. You need to also know that, Dredging business involving gravel and sand used to be successful in a place where new housing or construction is taking place.
Also, you need to check out the prices charged for each tons of those gravel and sand and other materials you are to be excavating from the water and compare their tons prices among different existing dredging companies.
There are two sorts of dredger, which are:- The discontinuous and The Persistent. The discontinuous one burrows and lift the head while the persistent burrows constantly and raise and transport the materials immediately.
Basically, dredging involves using hydropower and this result in the cuts and sucks the material from below the waterway. So, this cutting and sucking up utilizes a stool set up on the top of the cutter head and this passes materials through the sunction pipe.
Furthermore, sucking through a pump occur through a pipeline and move towards the shore. So, when the materials arrive at the shore, a tipper will now be used to move the sands, gravels or any other type of materials gotten from the dredging to a particular location, where it is now used to been stored for people to come and buy.
Equipments/Tools used in Dredging
- Swamp buggy
- Low bed
- Pay-loader etc.
Need for Business Plan
Before going into dredging business in a medium or large scale, you need a well-prepared business plan that will make you foresee what the business look like. It will give you an overview of what you will invest in the business (Financial projection) and your expected revenue in the business.
A good business plan will also make it easier for you to access loan from the bank or from investor. When investor see that your business plan is well-articulated and see all the necessary things that will give him assurance that, if he invested in your business, he won’t make a loss. However, for your well-articulated business plan, contact us at www.bullscapitalltd.com .
Your business plan will have the following contents:-
- Executive Summary
- Product and Service Offerings
- Vision Statement
- Mission Statement
- Business Structure
Role and Responsibilities
- Chief Executive Officer
- Administrative office
- Sales Executive
- Machine Operator etc.
- SWOT Analysis
- Market Analysis
- Market Trend
- Target Market
- Competitive Advantage
- Sales and Marketing Strategy
- Sources of Income
- Sales Forecast
- Pricing Strategy
- Payment Options
- Publicity and Advertising Strategy
- Financial Projections and Costing
- Sustainability and Expansion
Location of the Business
In finding a suitable place for your Dredging business; the major thing you need to put to consideration is nearness to riverine area. Because dredging is carried out inside water, therefore, you must make sure anywhere you want to locate your dredging business, it must be close to a riverine area.
The second thing to consider is easy access for tipper; this tipper will carry the sands or other materials dredged out to another location where it is needed or where it is to be stored.
Sources of Fund for the Business
Dredging business can be funded by your own personal funds and can as well be funded by external investor, after they have to assess your business plan and they are convinced that, you actually know what you are doing.
Apart from funding your business from funds from external investor, you can also get loan from banks. Banks will also assess your business plan before they grant you loan for your business. That’s why, you need a good consulting firm to prepare your business plan for you.
Most of those doing this business, sell the sand and other materials they got from dredging to big construction companies by per cubic meter and they also sell to sand dealer that have lower capitals in the business (Manual dredger).
In making passive income in this business, investors purchase boats and hand them over to sand dealers who give them huge returns on a weekly basis. However, within a 5 months period, the initial cost of the boat will be recoup and good profit will be make throughout the life span of their boat. Therefore, you can also go into dredging business as an investor.
Competition in the Business
Competition is high in dredging business because of the high demand of the business in our country. Therefore, in doing this business, you must have your own boat to be ahead of competition. Though, it is believed that, competitors in the business used to set trap for each other in order to get someone else out of the business.
But, if you come into the business with the mindset of, “there is no business without competitors”, then you will able to handle to apply different tactics in gaining competitive advantage over your competitors in the business.
Opportunities available in Dredging Business
There are so many things in which you can do in dredging business, some of them are:-
- Sand exploration and search
- Channeling rivers, fabrication, urban reclamation, team management and renewal and safety
- Hydro graphic surveying
- Leasing of the dredging tools like excavator, swamp buggy, payloader and dredger
- Supplying sand to different places.
Tips you need to take cognizance of in order to be successful in the dredging business
- Consider the environmental factors during dredging
- Ensure you make proper registration with government authorities
- Make sure you get all the necessary vehicle particulars and renew them when they got
- Get the necessary trucks and maintain them adequately for transporting sand.
- The trucks and tippers should be branded accordingly and also utilize proper staff.
- When supply your customers, make sure you supply according to their specifications and use estimated prices.
- Make sure you promote your business well. Make excess use of social media and connect to the relevant clients.
- You must always be ready to travel anytime and make sure your service vehicles are function in other areas.
Finally, dredging business is a profitable business because infrastructures like building and roads are rampant in our country, and materials gotten from dredging are needed for it. However before starting the business fully, make sure you do appropriate registrations with the government as well as maintaining your boats, tipper and trucks adequately.
About the Writer
Olusipe Abiodun Yinka is an Audit Associate in Bulls Capital Limited. He has a National Diploma in Accounting from Abraham Adesanya Polytechnic, Ijebu-Igbo, Ogun State; as well as a Degree in Accounting from Alex Ekwueme Federal University, Ebonyi State. He is a creative writer and a Trendsetter. Apart from writing, Olusipe is also an entertainer.
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