Starting an LP Gas retail business in Zim
THE use of liquefied petroleum (LP) gas has significantly increased in Zimbabwe. This shift began after the country’s economy was dollarised in 2009, resulting in frequent power cuts.
Although the power situation has improved, the introduction of prepaid meters by the Zimbabwe Electricity Supply Authority has made many households more conscious of their electricity consumption.
As a result, Zimbabweans continue to switch from electricity to LP gas solutions, which are more affordable.
The annual usage of LP gas in Zimbabwe has grown by over 700 percent in less than 10 years, with ample room for further growth.
Key considerations: Before starting an LP gas retail business in Zimbabwe, several factors need to be considered.
These include the size and location of the business, the product offerings and target market. It is crucial to conduct a feasibility study and market research, and develop a business plan before venturing into this business. Starting a business solely because someone else is doing it and claims it is profitable is not a wise approach.
Requirements: To establish an LP gas retail business, it is necessary to have suitable premises and equipment. The structure should be constructed using deformed bars, angle iron and square tubing, with non-combustible roofing sheets.
Additionally, digital scales for weighing the gas and large gas cylinders for storage are required. The location of the business should be chosen strategically, considering the presence of potential customers with sufficient purchasing power. A simple google search for 48kg gas cylinders can lead you to the best suppliers in the industry.
Products: The primary product of an LP gas retail business is LP gas itself, which can be sourced from local wholesalers. In addition to gas, other products such as gas cookers, gas cylinders, gas stoves and gas equipment accessories can be sold. These items are typically imported from South Africa.
Licences: To operate an LP gas business legally in Zimbabwe, it is necessary to obtain the required licences. This involves visiting the City Council, Fire Brigade, Environmental Management Agency and the Zimbabwe Energy Regulatory Authority (ZERA). ZERA is responsible for regulating the entire energy sector in Zimbabwe in a fair and transparent manner.
Management and employees: The number of employees required for the LP gas retail business depends on its size. Employees are responsible for handling operations, serving customers, co-ordinating with suppliers, managing inventory and placing new orders. For a small outlet, one or two employees may suffice.
Market demand: The demand for LP gas is substantial in Zimbabwe, with a monthly usage of approximately 3 million kg.
LP gas is widely used for cooking in households for economic reasons, convenience and as a preferred fuel source. It also has numerous industrial applications, such as space and process heating, cutting, welding and powering machinery. LP gas is even used in agriculture for heating greenhouses and providing heat and light to livestock.
Business plan: A comprehensive business plan specifically tailored for the Zimbabwean market is available for the LP gas retail business. This plan provides valuable insights into the industry, market, operational strategies, risks, profitability and costs associated with running the business. It serves as a guide for launching and successfully operating a retail LP gas business, helping entrepreneurs plan and budget effectively.