How to Start a Business in Nigeria
by Ovais Mirza Director, DICCAre you a Nigerian entrepreneur? Do you need advice on how to
start a business in Nigeria? Do you need a sample business plan template or
feasibility study report? Or you need Small Business Opportunities and ideas
for starting a small business in Nigeria? Do you want to know the costs and
challenges of doing business in Nigeria? Please read on to find out all of your
doubts about “how to start a business in Nigeria.
I was inspired to write this article because I often come
across Nigerians bracing up to start a business; armed with nothing but a
presumed “million dollar idea.” Trust I have been there before.
Well, experienced entrepreneurs know that starting a business
successfully takes more than just an idea.
I am a Nigerian entrepreneur with successful businesses to
prove it (This blog is one proof) but this write up is not about me; it’s about
you.
I am an active member of Nairaland.com; the largest online
forum in Nigeria and everyday on this forum, I come across people wishing to
start a small business but don’t know how to go about it.
Also on Nairaland will you find individuals with cash but
they just don’t know what business to start or where to invest their money.
Well, this article will serve as a guide to those who want to
start a small business in Nigeria. Now how do you start a small business in
Nigeria? You will find out below.
But Just before I proceed to sharing with you some of my “how
tos of starting a business in Nigeria”, let me also tell you that the act of
buying and selling of goods or services called business may be categorized into
small scale or large scale business. But the introduction of the internet has
also created another type of business called the online business.
But the small scale businesses are more common in many
countries, especially in Nigeria, due to its size, problems, advantages,
benefits and source of funding are all easy to manage.
Any one can start a small scale business with a little
capital but the large scale business has a bigger size of employees and cant
easily be setup by small individual with low capital.
But either large or small, anyone going into business must
consider the following strategies and see if he/she can work it out. (Well, you
will be able to work it out with this definitive guide). :)
So let’s get down to business. BTW, I hope this helps you to
start a successful business in Nigeria.
Quick
Note: This post is the combination of both offline and online
strategy to start a business in Nigeria
16
things to consider before you start a business in Nigeria:
1.
Prepare Yourself
The first step to starting a small business in Nigeria is to
adequately prepare yourself.
You may think this is not important but it can be the thin
line between success and failure.
Running a business in Nigerian is tough but highly rewarding;
so to survive, you have to be tougher.
Nigeria is a harsh terrain to operate in but since we are
Nigerians; I believe we are well grounded to tackle the challenges on ground.
Therefore, if you’re an entrepreneur and you intend to start
a business in Nigeria that is gonna succeed, then it’s a must you have a good
knowledge of the business and should be able to ask questions from mentors or
other people on the same field of business.
Its important to know everything about the business which
could be the good, the bad and the ugly side of the business
Now the question is, how do you prepare yourself?
You can prepare yourself by attending a seminar on the chosen
line of business you wish to venture in and getting all the necessary
information about your chosen industry.
You can also prepare yourself by accepting the reality that
you can fail tomorrow; you prepare yourself by increasing your risk bearing
capacity.
And ultimately, you prepare yourself by making up your mind
to succeed despite the odds and competition.
2. Have
a Good Business idea
To successfully start a small business in Nigeria, you must
have a good idea. In fact, any idea or business opportunity will do; except you
are pioneering a new invention.
I emphasized that any business opportunity will do because
most Nigerians focus solely on the business idea without knowing that a
business idea is just a tip of the iceberg in the entrepreneurial process of
building a business.
“A business idea is
just another idea. But an idea backed by a strong feasibility, a thorough
business plan and a smart business team is no longer an idea. It’s now a solid
business opportunity worth pursuing.” – Ajaero Tony Martins
A good business idea alone does not guarantee success in
business; an average business idea with good business fundamentals does. The
world is filled with brilliant “million dollar ideas” but the world lack
seasoned entrepreneurs.
You don’t need to crack your head to create something new;
don’t bother re-inventing the wheel, just find a proven business line and learn
the fundamentals.
You can even decide to buy a franchise if the capital is on
ground. Nigeria has the needed population to absorb any product that is backed
by a strong business sense.
3. Do a
Feasibility study
The third step to starting a small business in Nigeria is to
do a thorough feasibility study before investing a dime in any business opportunity.
This is basically where the failure of most Nigerian entrepreneurs begin.
I have seen people who invest in a business idea or
opportunity simply because a friend or relative said the business is
profitable.
I have seen people jump into an industry blindly in reaction
to unverified information.
I know entrepreneurship is all about risk taking but jumping
into an industry without an adequate knowledge of its fundamentals is suicidal.
I know this because I am talking from experience; my uncle
made this very mistake and he paid dearly for it.
4.
Understand your Market
Before jumping into any business or industry; make sure you
have thorough understanding about its fundamental metrics.
Every business has an inside secret and if you must succeed;
you must find such secret.
Understand the market of the industry you are going into and
you will increase your chances of success.
The best way to begin such is by asking yourself the
questions below:
Who are the customers?
How do they want to be served
Who are your major competitors?
Who is the market leader?
Do you have a chance for survival?
Can you grab some market share in that proposed business
industry of yours? These are the questions you must answer before starting a
small business in any industry.
Don’t miss this post: 6 Steps To Decoding Your Target
Audience
Do you Have A Simple Business plan? (Img Credit:
Monetizeoloy.com
5.
Write a simple Business Plan
This is another point where most Nigerians miss it. It is
estimated that over 85 percent of small business owners in Nigeria operate
without business plans.
While I won’t criticize them because I started my first
business (Pro Motivator) without any business plan; I think it’s worthwhile
when you separate yourself from the pack.
Since majority business owners are operating without business
plans; why can’t you capitalize on it and make it a competitive advantage for
your business.
Banks don’t lend money to businesses that are operated
without business plans but what if you have one? Well, I leave that for you to
answer.
Please write a business plan for any business venture you
want to undertake. Even if it is an informal, one page business plan; write it.
Your one page business plan may not get you the bank’s
attention but it’s a way forward because it will help you concentrate on
fulfilling your business mission.
6. Name
the Business
Getting a business name not only shows the business is
registered but gives an impression that your business is not a scam.
The name of the business makes it save for investors or
sponsors to come invest in it.
You need to register your business, give it an uncommon
business name and get started.
Don’t miss this one: 8 Mistakes To Avoid When Naming Your
Business
7.
Obtain the necessary Licenses and Permit
Well, I don’t need to hit much on this. If you don’t want to
have the government and its law enforcement agents on your heels; make sure you
obtain the necessary licenses and permit needed to operate your line of
business.
Every industry has regulatory bodies governing it; so be sure
to check their operational policy to make sure you are not going against the
law.
Special edible product like foods and drinks need an approval
from the food and regulatory body. It varies from countries to countries but
anyone planning to go into business need a business license for its operation.
Also remember that you may need licenses and permits from
both the local, state and federal government. So make sure you factor their
costs in your budget.
8.
Register your company
Most businesses operate as sole proprietorships in Nigeria;
you can choose to go the same way. But if you are truly out to build a
successful business that will stand the test of time; I will advice you
register a business name or factor it in your cost projections as a short term
plan.
You can choose between the sole proprietorship; limited
liability or public liability form of entity.
After choosing your business entity, you can get your
business name registered at the Corporate Affairs Commission’s office in Abuja,
Alausa Lagos or anywhere nearest to you.
I will advice you go through a lawyer to avoid unnecessary
mistakes.
9. Find a Good Location
So you want to start a small business in Nigeria? If yes;
then where are you going to locate your business?
Are you going to site your business within your neighborhood
or are you going to site your business in an industrial area?
Are you going to separate yourself from the crowd by building
your own brand in a specially selected location?
Or you are going to operate from the center of trade or
commercial places in Nigeria?
Note: If you intend dealing on general merchandise; then you
can consider locating your business in districts such as Alaba, Yaba,
Tradefair, Idumota, Lagos Island, Oshodi, Mile 12, etc. But if you are in a
service business or you are building a specialized brand; you can situate in
areas such as Ikeja, Allen Avenue, Apapa, VGC, Victoria Island, CMS, Ikoyi,
etc. But wherever you choose to situate, make sure you are well prepared to
face the challenges of that terrain.
10.
Raise Capital
Before making up your mind to start a small business in
Nigeria, I want to assume that you have the necessary capital to at least
launch the business.
11.
Start the business
After going through all the processes above; this is where
you get down to the real deal, this is where you start the business.
Most people make wonderful plans, do feasibility research and
even raise the needed capital to start a business. But for reasons best known
to them; they just fail to start.
Maybe it’s because of the fear of failure; but what I do know
is that not everybody has the guts to start a business. Most can only dream of
it but only few dare to take the risk.
Are you willing to take the risk and start your own business
here in Nigeria? Only you can answer that.
Actually, this is where your work as an entrepreneur gets
tougher because statistics reveal that 75% of all new businesses started fail
in their first five years. And of the 25% that survived; 80% of them will fail
in the next five years.
It then means that about 90% of all businesses started will
fail in their first ten years.
This statistics may be harsh but it’s the truth in its
entirety. Are you prepared to lose it all? If your answer is yes, then start.
12.
Choosing the Right Business
Have said a bit about this above. But just to clear your
doubt the best lucrative type of business is to solve people’s problems.
And I strongly believe that if an entrepreneur can find a
solution to problems regarding any field he’s about to venture into, his
chances of succeeding in his business is well higher than if he just started a
business that doesn’t outline nor value people’s lives.
13.
Look for Leverage
The fastest way to grow in business is to leverage on the
structure of well established businesses. So if you want to grow; then look for
leverage.
Leverage can be in the form of getting a bank loan, getting
credit line from suppliers; striking strategic alliance with a bigger player or
getting a contract. No matter what leverage you decide to pursue; go for it.
14.
Market The Business
Business without marketing is a waste of time. Marketing is
the sole of business which can be inform of word of mouth, Internets e.g Google
adwords, facebook adverts, blogs, banners, t.v and radio commercials.
Marketing could be in any form but it’s something that must
be done if a were business were to thrive.
15.
Survival is the Game
If you can make it to this stage, then it’s congratulations
because you’ve just started your own small business in Nigeria. You have
started the game and showed resilience; now is the time to break it through.
At this stage, survival is the name of the game. You might
take some pounding from stronger competitors; you might make a business mistake
or even face intricate business challenges like a change in government policy
but don’t give up. Stay strong and fight it through, I will see you at the top.
16.
Patience is the Key
Well, too many individual want to become rich and successful entrepreneurs in a short period of time, especially my Nigerian Counterpart. Good but it takes patience and hard-work to actually reach that height. So you will do well to deploy patience if truly you want to achieve the most from starting a successful business in Nigeria.
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Created on Oct 1st 2020 05:53. Viewed 174 times.