Running an online sports and virtuals betting shop can be tasking yet rewarding. This is the concluding part on how you can also run a profitable sports and betting virtuals betting shop. For Part 1, follow link… Running a Profitable sports betting shop.
After I put the post up, it became obvious that people were indeed interested in this topic as the below screenshot of my WordPress site stat tool shows.
- How Much Will it cost me to run the business and how do I manage these costs?
There are some costs that you cannot do without, while some others can be managed. Find a breakdown of some of the costs you will need to incur on a monthly basis per shop
- Fuel: To run your generator, you need to fuel it. Depending on the situation of the public power in your area, you either may not have to use generator at all – in some areas, they have constant power only during the day, or you may have to run on generator for most of the day – majority of cities, town and villages in Nigeria. For this you may spend between 5000 and 20,000 Naira per month
- Internet: This business requires being online. Besides just being online, you need to purchase service from a good provider, otherwise all your effort to satisfy your customers will be frustrated. This will cost you between 2500 and 10,000 Naira per month
- PHCN: Well, either you use it or you don’t, you get billed – and you have to pay. So set aside between 500 and 4000 Naira per month; because if you are on post-paid, your bill will never be proportionate to your consumption.
- Salary: This is one area where one can easily get it wrong. First, do not pay your “sales people” a fixed amount. Since you get paid commission, which is performance based, you need to also ensure that your sales people are rewarded based on performance. I recommend a mix of salary + commission (e.g 1 – 2% of sales).
- Other Miscellaneous costs: These include dues, service charge, generator maintenance e.t.c.
You can manage your expense on powering your business by purchasing a UPS or Inverter to be used in-between power outages. You will need to monitor your Internet usage to ensure that your staffs are not watching Nigerian movies on YouTube in their free hours. Also you need to protect your WiFi access so your carelessness does not turn it to “free-to-air”. As for salaries, employ the best hands and be prepared to compensate them when business is booming.
- How much will I make as commission?
This depends on the company you opt for. Commission will be calculated as a percentage of either gross sales or gross profit. Usually, you will be offered between 5 and 10% of gross sales or 30 and 50% of gross profit. In addition, your commission may be subject to profit/loss sharing, and some companies offer a mix of both gross sales and gross profit. As a business person, your aim is to maximize every opportunity after careful analysis has been done. By this I mean you may mix and match offers, based on factors such as competition, level of awareness, proximity to the city, timing, risk appetite e.t.c. Generally, stay away from offers that involve a profit/loss sharing, no matter how juicy the percentage may look.
- How much will I keep as profit?
This is not difficult to derive. Whatever is left from your commission after you have paid all your expenses will be your profit. To increase your profit, you can either do two things, 1. Reduce your cost or 2. Increase your commission by increasing sales or profit. On the average your target profit should be between 30 and 60% of your gross commission. The higher, the better.
- When do I break even?
Again, like every other business, you do not break even the instant you start. Factors that affect this are numerous, but the bottom-line is the volume of sales that is achievable. The more revenue that can be generated by your shop, the faster you will break even. Plan your business such that you break even in 3 to 5 months. I will like to restate the need for you to have a secondary source of income or savings while your new business stabilizes. You will need this to keep the business rolling while it matures.
It is easy to benefit from economies of scale in this business. Once you are able to set up your 3rd, 4th…shop, so long as they are within the same geographical area, you can share internet plans among the shops, rotate staff based on shop demand, reduce the impact of cashier departures amongst many others.
In conclusion, there are few businesses that offer the mileage, coverage and rewards that online sports betting offers, and I hope in your search for a guide, you have found this post helpful.
Do you have any question? Drop your comment below.