Entrepreneurship Zone: 09 April 2021: Nigerian businessman explains how he capitalised on opportunities in the furniture industry

Fri Apr 9 08:35:57 CAT 2021

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Entrepreneurship Zone: 09 April 2021: Nigerian businessman explains how he capitalised on opportunities in the furniture industry

 <https://www.firstmutual.co.zw/> 

In 2002, WOOD-ET AL began producing bespoke furniture from a three-bedroom house in Abuja, Nigeria.

“The living room was our office and was also used for storage for whatever we were producing. I had one room to myself, the most comfortable room,” the company’s founder, Kolade Ajani, laughs. “Another room was for my accounting clerk and we used the yard as our workshop.” He still has the company’s first accepted quotation, to the value of 38,500 naira, framed and hanging behind the desk in his office almost two decades later.

“It was a job to produce the skirting for a building by Ujat Construction in Maitama, Abuja. To this day, we have a good business relationship with them as our first client,” he says. “We got the job from a referral; a friend who knew and trusted me.”

For three years WOOD-ET AL operated from these premises before Ajani could afford to buy land in Nasarawa State, about 30 minutes from Abuja.

“We started with three employees and today we have between 60 and 70, including casual workers. The total fluctuates depending on the projects we are working on.”

The company has its corporate office in Abuja, a branch in Victoria Island, Lagos, and the manufacturing facility still at its original location in New Nyanya, Nasarawa State.

 <https://www.nedbank.co.zw/> 

Establishing the business

After obtaining his postgraduate diploma in business administration in 2000 from the University of Calabar in Nigeria, Ajani looked for employment opportunities.

“Because I had a qualification in business administration, I wanted to work for one of the banks. I had this zeal but they would not take polytechnic graduates. That’s when I decided to start my own business and create a job for myself and others,” he says.

“Abuja was a growing city at the time and if you saw something nice in terms of furniture it was usually imported from countries like Italy or Germany. I realised there was a gap and that we could try to make something of this.”

Two years later, then-president Olusegun Obasanjo banned the import of furniture into Nigeria. It was a game-changer, Ajani says. “That singular act put us on the map. It has created many good quality furniture companies in the country.”

The company originally produced skirting panels and steadily progressed to smaller furniture items. As more orders came in, Ajani used overdraft facilities to assist with cash flow. This, along with the revenue generated by the business, was the company’s only source of funding at the time.

In its fourth year, WOOD-ET AL began acquiring more sophisticated machinery to boost its production capacity. Ajani enrolled for a postgraduate qualification in entrepreneurship and went on various development courses abroad, mostly in the UK. “We travelled as far as China, to see the latest trends,” he says of that initial growth period.

“The company has grown from humble beginnings; it was not ready-made or a venture capital-type business in the beginning. We were prudent and had our eye on the goal. Slowly but surely, we got to where we are today.”

Accessing funding and keeping costs under control

In 2014, more than a decade after the company was founded, WOOD-ET AL accessed funding from the Bank of Industry in Nigeria to accelerate growth. “We put in a second set of machines for production,” explains Ajani, listing the cost of proper equipment as one of the major challenges for furniture businesses in Nigeria.

“If the furniture sector was more organised, I am sure you would see a lot of equipment companies set up shop here. The informal sector still accounts for about 40% of the annual revenue achieved by the sector,” he says.

Today, the company has three production lines, using machines by Italian woodworking machinery producer SCM, and everything is made to order. “We operate on a just-in-time basis. We take an order, source the raw materials, produce it and then install. This way, we keep our inventory costs under control, which has helped to keep us afloat in the current economic situation.”

Products on display at WOOD-ET AL’s showroom.

About 50% of the input materials required for production is imported.

The company’s customers are largely from the private sector – homes and offices – but it also provides furniture solutions to hospitals and schools. Its products include doors, dining tables, cabinets, wardrobes, office furniture and wall cladding.

Future opportunities and increasing competition

Looking to the future, Ajani sees Covid-19 as an opportunity, despite its impact on the economy. “To a large extent, Covid-19 is restructuring the world,” he says. Prior to the pandemic, customers would come into the showroom to order custom furniture, then threaten to import the items from China because the quoted cost was deemed too expensive.

With imports declining and becoming more expensive owing to the weakening naira, this is no longer the case. This has acted as an incentive for the company to ‘think inward’ and it is now developing innovative local products – the latest being a waterproof door.

Ajani admits the competition has intensified but believes it would be beneficial for the entire sector to bring more informal furniture manufacturers into the fold. “If the sector can formalise and structure itself more efficiently, the existing businesses would benefit from a more established value chain.”-Howwemadeitinafrica

Kolade Ajani

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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