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Rainoil: Starting Your Business From The Scratch

I read this story on Gabriel Ogbechie, who happens to be one of my mentors, I was really inspired. It felt like he was talking about my exact start-up experience. Please be inspired!

Good afternoon everyone. My name is Gabriel Ogbechie, I am the Managing Director of Rainoil Limited. Rainoil Limited is a company playing in the downstream sector of Nigeria’s oil and gas industry. We’ve been in existence for about 19 years. The title of our lecture today is RUNNING A SUCCESSFUL BUSINESS IN NIGERIA: My Experience. So, essentially, we will be talking about running a business in this country from my own point of view. I am essentially going to share my own experience; it’s an experience that has worked, but I don’t want to delude myself by saying that is the only way through which it works. But let us learn from my own experience and see what we can get out of it.

I attended the University of Benin. I left the university in 1987. I took a degree in Engineering, I did my Youth Service in Kano, 1987-88. I worked briefly in Kano, then came to Lagos and joined the company called Pricewater House. I was in Pricewater House up until 1992, then I joined another oil company called Ascon Oil Limited. I was on a fixed salary of N30,000 a month. And I asked myself one very simple question: ‘Gabriel, what else can you do to make N30,000 a month?’ I asked myself that question as I believed then and I still believe today that anything you can do to make your salary can take the place of your job. If you are working in an organization; let’s say a bank and they are paying you N200,000 a month. Essentially, what they are saying is give us your time from 8-5, perform these duties and we will give you N200,000 at the end of the month. Anything you can do to make that N200,000 can take the place of your work. So, I asked myself that question: ‘Gabriel, what else can you do to make N30,000 a month?’ And I said if I could sell one truck of diesel, I will make one naira per litre and a truck of diesel is N30,000 litres. If I am to sell a truck of diesel and make one naira per litre margin, I will make N30,000, which was my salary. A truck of diesel, 92,93,94, was selling for N300,000. We were buying it for nine naira per litre and selling it for ten naira per litre making a one naira per litre margin. So, I said if I could sell a truck of diesel, I will make one naira per litre, which was N30,000. So, I set out to raise N300,000. But first things first, I needed to incorporate a company. So, 1994, I remember that my wife and I went to meet a friend who is a pastor and lawyer. We went to their house one evening and we started bandying names around. ‘Gabriel, why don’t you call it Gab Oil, why don’t you call it this oil, that oil and my friend said Gabriel, you know Rain stands for blessing, so why don’t we call it Rain Oil and I said you know what, you are right, but then instead of Rain Oil, we are going to merge the two together to make one word, Rainoil Limited, and that was how Rainoil Limited, was incorporated in November 1994. I got my certificate of incorporation, put it in the drawer and I called it step 1.

Remember, I had a hypothesis. The hypothesis was that if I could sell a truck of diesel in a month, I will make N30,000. So, I set out to raise N300,000. I didn’t have the money, I wrote proposals, I went to those who I knew had the money. I was so sure that it was going to work, but all I heard was come here today, come here tomorrow. Stories!

So, I learnt my first lesson: people rarely give money to those who don’t have. Do I have a witness in the house? (All: Yeah)

My office was in Isolo, Ire Akari Estate Road and I had a stockbroker who was on Bank Anthony Way in Ikeja. With as little as N2,000 in my pocket, I will drive from Isolo to Ikeja, meet my stock broker and say buy me 1000 units of First Bank; 1500, I will drive to Ikeja and tell him to buy me 800 units of Nigerian Breweries. By 1996, I was getting frustrated, I couldn’t raise the N300,000. One evening, I brought out my capital market file and I started itemizing all the stocks one by one: 1000 units of 7UP at 70k per share, N7000;, 2000 units of First Bank at N6 per share, N12,000; I itemized the stocks; it went into 2 pages. When I summed it up, I was surprised, it came to N497,000. I was shocked. Those were the days of shares certificates, not these days of CSCS. I gathered the shares certificates, took them back to the same stockbroker, he verified the ones he could verify, sold the ones he could sell and at the end of the day, I had my N300,000.

Now, recall that I had a hypothesis that if I sell a truck of diesel, I would have N30,000. So, I needed to go into the market place now to test this hypothesis. I went to a company in Ogba called First Aluminium. I had a classmate in the university who was working there. So, he introduced me to the purchasing manager, a man called Mr. Ojo. I was the sales man; I’m still a sales man. So, I had no much challenge. All I needed was for Mr. Ojo to give me an LPO to supply them 30,000 litres of diesel at N10 per litre, making 30,000. So, Mr. Ojo told me to come on this faithful Tuesday and pick my LPO. So, this day, I got to First Aluminium, very excited. ‘Ehn, Mr. Ojo, what’s up with the LPO?’ He said, ‘Gabriel, the LPO is not ready’. I said why? He said GM. I got up, he thought I was leaving. First Aluminium had a GM, his office was down the corridor, a man called… I didn’t know him as a person, but I knew him by reputation. So, I approached his office. He had a secretary who used to sit by the right side of his door. I knew that if I made the mistake of telling that secretary that I wanted to see the GM, that would have been the end of it. So, I approached the door. ‘Good afternoon ma’. Before she could raise her head to see who was greeting her, I had opened the door to the GM’s office. ‘Good morning sir, my name is Gabriel Ogbechie, my LPO is on your table. Please…’ He said from which company, ‘I said Rainoil’. He said, ‘Which one is Rainoil? We only buy from Mobil, Total and Unipetrol’. I did all the marketing I could do that day, he wasn’t ready to sign the LPO, Gabriel Ogbechie wasn’t ready to go anywhere. He was seated, I was standing. At some point, he got tired of me. He wanted to leave me in his office, so he got up. As he approached the door, I just used my body and blocked the door and said to him, ‘Help a young man who wants to grow, sign this LPO’. He looked at me long and hard, went back to his table, signed the LPO and said, ‘I don’t want to ever see you in my office again’. I said thank you very much sir.
I took this LPO, we made the supply. By the time we made the supply, price had moved; instead of N30,000, I made N45,000. I was so excited. We got the cheque December 1996, I cannot forget. It was an SGBN cheque. The cheque drawn on Societe Generale Bank, Oba Akran branch. You know when you start a business from the scratch, you remember some very minute details. By the time the cheque cleared, Christmas had come. 1996, we went on Christmas break, came back in January, did the second supply. This time, it was to Limca, on Abimbola Way, in Isolo. They paid cash, margin N60,000. It was working. The third supply was to one company called United Spinards, on Apapa-Oshodi Express Road. Margin N25,000. It was working. Meanwhile, I was still on my job. Warren Buffet, in one of his books, says if you want to test how deep a river is, you don’t go with your two legs. But by May 1997, it was clear that it was sustainable. So, I left my job to face the business squarely. From that singular seed of N300,000 in 1997, we’ve been able to grow the business to what it is today to the glory of God.
Today, Rainoil Limited, we own about 40 petrol stations spread across this country.

Watch out for part 2 and concluding part of ‘The RainOil Story’ Thanks.

Tokunbo Fasoro
Biempowerment.com

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One comment

  1. Nice piece….very inspiring….looking forward to part 2…..

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