How do you go about marketing your oil and gas business effectively when you have limited capital? How do you find new customers or clients in the tough oil and gas industry; when you have not established your credibility and competence?
This article will answer your questions. I recently got an email from a reader seeking advice on some business challenges he is facing.
Now to be sincere with you, I get tons of emails daily but I am very picky about the ones I answer and the reason is because I have provided most answers in my articles on this blog. Secondly, most readers tend to ask me generic questions that are very broad and would require a full text-book volume to answer.
However, there’s this particular reader who emailed me with a challenging question. One of the reasons why I took the pain to reply is because this particular person is a doer; he acts on advice given, even when it seems impossible.
Sometime ago, this same person asked for my advice and I responded in through this article “4 steps to financing your business when no one wants to invest with you.” Now he is back again. Please for those seeking advice on how to start a business even when you have no money, I suggest you read my reply to his first question; which I linked to above.
Below is an unedited excerpt of the message he sent me. Take note of the bolded part.
It’s your friend *Name withheld*. It’s really been a long time since we last spoke over phone. My dear brother, I haven’t been able to start-off a business after all this while. The blog I tried to set-up did not see the light of day. Because after setting up the blog, I wasn’t making any money from it. So I had to abandon that project.
Right now, I have incorporated my company with the C.A.C, as a Limited Liability Company; and I have opened a corporate current account. I wish to be an independent petroleum product marketer and I have decided to start-off as a supplier of petroleum products, like diesel (AGO), petrol (PMS) and kerosene (DPK).
For example, I can supply diesel (AGO) to big hotels, telecommunication base stations etc, and I can supply petrol (PMS) and kerosene (DPK) to filling stations. I have been gaining experience and learning the trade under a friend of mine.
To become a petroleum product marketer, it’s basically about sourcing and purchasing the products from the storage depots in Apapa, here in Lagos and then taking the products to the buyer, after price has been agreed.
I have two challenges, my brother.
1. Getting funds to buy the products from the storage depots in Apapa. For example, a truck of 33,000 liters of petrol (PMS) is about N3.5Million – N4Million (which includes all the dues, expenses and transportation to the buyer).
2. Getting my own customers. I mean people/filling stations I can supply to.
Firstly, to tackle the 1st challenge, I met someone who works with a reputable oil marketing company. They import petroleum products into the country. I told him I don’t have money to start the business or buy the product and that I needed help.
By the special Grace of God Almighty, he promised to be giving me the products on credit to supply on credit; then I pay the product immediately after delivery of the product to the buyer and then share the profit with him 70% for me and 30% for him. Thank God, I have been able to leverage on this person and formed a strategic alliance with him.
Secondly, I intend go to nearby states to Lagos (since the petroleum products will be sourced from Lagos), like Oyo, Ondo and Osun states, to source for buyers of petroleum products (e.g filling stations). But my challenge is that I don’t know how to proceed with this move. I know this involves a lot of marketing. How do you think I can go about sourcing for filling stations in the aforementioned states?
Please advise me. Your advice will be very useful.
(Name withheld), from Lagos.
It is the early hours of the morning, 01:48A.M GMT+1 to be precise and I am yet to go to bed. Why? The reason is because I was moved by the challenges you are facing so I made up my mind to reply before going to bed.
First I want to thank you for the effort you have taken so far. Secondly, I want to thank you for acting on my advice to find out your own path. I give advice almost on daily basis but rarely do people act on it. Why?
The reason most people never act is because I usually disappoint them. They rush to me seeking for advice, expecting me to give them the Holy Grail or underground secret to making money.
Some even go ahead to ask me to suggest a business that will provide them an ROI of 40% monthly starting from scratch. On a more serious note, it’s quite funny and sad as well. This is why I am taking the pain to reply you publicly, so others can learn.
Now back to the business at hand. With the little knowledge I have about the petroleum industry, I can tell you that it is a tough industry and highly capital intensive. But success can still be found even in the toughest businesses. For you to have taken the pain to learn the ins and outs of the business, I believe you are a step ahead.
But you still have a long way to go. You have gained the knowledge and basic education of being an independent oil and gas marketer; now it is time for you to gain some personal real life experience.
Marketing Strategies for an Oil and Gas Company
Now when it comes to running a business and sourcing for customers, I want to state clearly that there is no magical spell and no shortcut to success. You have to start from the scratch and learn fast, or your business will die. Secondly, I want you to understand that there is no laid down rule for finding customers or selling your products.
You just have to try a lot of tactics and strategies; then you choose the ones that worked best and replicate it. Before I go any further, there’s a very important question you must answer. In fact, finding an answer to this question may be the beginning of your breakthrough in the oil and gas marketing business. And the question is this:
Why should the petroleum product retailers or consumers boycott their existing supplier to buy from you?
Yes, this is a very critical question you must answer. It is a known fact that petroleum products are commodities that can hardly be branded and the price is strictly regulated. So why should the filling stations and telecom companies buy from you?
What is your Competitive Advantage? What separates you from the other marketers? Can you compete with faster delivery? That’s left for you to find out but the truth is that you need a key point on which to convince the gas stations and companies to patronize you.
a. Send Business Proposals
This might work for hotels and telecom companies because these companies often require formal applications and protocols, but it may not work for filling stations because most fuel stations in Nigeria are run informally by low skilled workers.
You can write proposals to these companies highlight why they should consider you as their petroleum products supplier. But bear in mind that the chances of failure is higher when applying this tactics because you will almost never get a reply.
b. Talk to those that matter
This is the most difficult but effective way to look for customers for your petroleum products. Walk to filling stations or your target customers and speak with them face to face but make sure you are speaking with the owner, manager or decision maker, so that you won’t be wasting your time and effort.
c. Concentrate on finding just one customer
Sometimes in life, you just need one customer to grow speedily. So concentrate your effort on pursuing just one customer, provided you have established the fact you have a good chance of winning a deal.
If you are lucky to get the deal, go all out to impress this one customer by delivering on your promises; then politely ask your customer to recommend you to his/her friends and associates in the industry.
d. Look within your neighborhood
Don’t despise the days of little beginning, so look within your neighborhood. Consider the roadside or street retailers of Kerosine (DPK); I mean those that have mini storage tanks.
These retailers are often a source of supply to majority of populace that fall within the poor and middle class range; so they are constantly in demand for supplies. You can talk to them face to face and see if you can cut a deal.
e. Advertise on mass media
If you have got some money to spare, you can choose to advertise your services on newspapers, magazines, or any other media that will connect you to your targeted customers.
And lastly, I want to encourage you not to give up. You have come this far, therefore, it’s too late to quit. Always remember that all it takes is just one customer to set the ball rolling. Secondly, you must never forget that integrity is the most important business asset.
Call it honesty and you won’t be wrong. Even if you lose everything, provided you uphold your principle of integrity; you will surely bounce back. I sincerely wish you all the best and I look forward to seeing you a success.