Oil: From Middleman To Major Player – Vital Lessons For Everyone
There are a myriad of reasons why people decide to start a business e.g. financial independence, passion, forced circumstance etc. Whatever the reason, as an entrepreneur, you must always think of the next project/phase. It’s only a matter of time before competition catches up, ”you either grow or you die”.
The story of Rainoil Limited is one of grace, discipline and resilience. My early career started as a Production Engineer in Kano and then as an Auditor with the professional services firm Pricewaterhouse (Lagos) in 1992. I also worked briefly at Ascon Oil Company Limited. Although I incorporated Rainoil Limited in 1994, I left Ascon Oil Company Limited in 1997 to focus on the business.
That same year, we obtained our first petrol service station on lease, somewhere at Ipetu Ijesha, Osun State. In 1999, we built our first petrol service station in Igbodo, Delta State.
From an early stage I had imbibed the discipline of growing at my pace…gradually.
Today, Rainoil has evolved into a fully integrated downstream company with a staff strength of over 700 with operations across 15 states. The group’s assets include:
- A 50-million-liter capacity petroleum storage facility in Oghara, Delta State
- A 50-million-liter capacity petroleum storage facility in Calabar, Cross River State
- Over 50 Retail Petrol Service Stations spread across the country.
- A fleet of 6 ships with which petroleum products are imported into Nigeria
- A fleet of over 90 tank trucks with which petroleum products are distributed across Nigeria
Growing a business to the next level requires basic tested strategies. I will proceed to outline some of the strategies that have aided Rainoil’s growth:
a. Strategic planning and investment
Plan based on the identification of as many future scenarios as possible. Leading companies tailor strategic investments to align with projected customer demands. Looking back, investing in our petroleum product depot in Oghara was one of the most strategic decisions we made. This was a novel initiative at the time, which has significantly propelled the company’s growth. Currently, we are expanding into other sectors within and outside the oil and gas industry.
b. Financial discipline
Keep your earnings in the business. You must have the right mindset about money. Money is primarily for production and expansion. Rainoil is a company that we have grown organically for the most part. We have consistently ploughed back profits into the business.
c. Cash is king
Healthy working capital management determines business agility and survival. We operate a primarily ‘cash and carry’ business, we implement short-term cashflow initiatives e.g. negotiate favourable vendor payment terms, extend creditor payments, minimise credit sales, delay fixed asset ‘non-critical’ replacement/investment.
d. Strategic cost management
Identify and eliminate/redeploy unnecessary costs heads. Identify opportunities for obtaining cheaper (quality) inputs towards reducing overall production costs.
e. Develop trusted relationships with customers
Satisfy and retain your customers. At Rainoil integrity is a core value as we always honour our obligations. Customer trust is not a negotiable commodity.
f. Leverage technology
Technology should function as a change agent in the use and adoption of best-in-class knowledge sharing processes, so companies can improve their use of critical data. At Rainoil, we have implemented an Enterprise Resource Planning (ERP) Application. This has been a necessary tool to drive the rapid expansion across the group.
g. Communicate effectively
Management needs to ensure their employees are aware of issues with implications for them. It is also important that employees are fully aware of the wider context, so that any legitimate change initiatives designed to reduce costs are accepted rather than resisted. It’s important for leaders to be honest, forthright and direct with their employees and communicate with greater frequency.
In closing, my advice to entrepreneurs is to stay focused and disciplined. Staying power keeps you going despite adversity. You don’t put your hands on the plough and look back.
Mr. Ogbechie is the Group Managing Director of Rainoil Limited, one of Nigeria’s leading oil companies.