9 Steps to Starting A Successful Business in Nigeria
Starting a successful business in Nigeria is easy but may pose as difficult, especially if you don't understand the business topography in Nigeria very well. Are you a Nigerian entrepreneur looking for advice on how to start a business in Nigeria? If you are, then this article is for you.. Continue Reading
Starting a successful business in Nigeria is easy but may pose as difficult, especially if you don’t understand the business topography in Nigeria very well. Are you a Nigerian entrepreneur looking for advice on how to start a business in Nigeria? If you are, then this post is for you. No matter who you are or what your financial capacity may be, there is some business you can start in Nigeria at any level. Even without money, you can still start and grow a successful business here in Nigeria if you are willing to learn about the pros and cons of the business market in Nigeria and the principles of entrepreneurship.
Really, Nigeria is one of the best places to do business in the world in terms of profitability, competitiveness and return on investment. With over 160 million people with reasonable purchasing power which is the highest purchasing power you can get in Africa, Nigeria is considered the top destination in Africa to go to when it comes to business.
Companies that have neglected Nigeria in the past have had to bite their fingers in regret. A good example can be found in the telecommunications industry. Many telecommunication giants neglected the country, coming up with all sorts of negative analysis about how telecommunication business was bound to fail in Nigeria. It took the guts of MTN and Econet who were almost unknown in Africa then to invest in the Nigerian market. As a result, these companies where transformed from obscurity to one of the biggest Telecoms companies in the world through the success they recorded from the Nigerian market alone. Other telecommunication companies like Vodacom that turned their back on the Nigerian market were made to regret their loses. Don’t let that happen to you.
Another point that makes Nigeria one of the best places to do business is this issue of taxation. Though some companies do complain of back handedness and multiple taxation, Nigeria still remains one of the countries in the world with the most considerate taxation policies and ‘not too’ complex regulatory frameworks. If you are thinking of starting a business in the country, you need to understand how business works in Nigeria, the market evaluation, the risks, and the legal and bureaucratic frameworks involved. This is the purpose of this article; to help you all the way. Enjoy the ride!
Steps to Starting a Business in Nigeria
Procure a good business idea.
Your business idea is the first step towards starting any kind of business anywhere in the world. To successfully start a small business in Nigeria, you must have a good idea. You must have an idea of the business you want to venture into. In fact, any idea or business opportunity will do; except you are pioneering a new invention. It doesn’t have to be something new; 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. Ideas most times go together with your passion. If there is something you are passionate about, it should be easy for you to formulate a business idea based on that thing.
According to Ajaero Tony Martins of mytopbusinessideas.com, “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.” So, 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.
Get yourself prepared
The second step to starting a business in Nigeria is to adequately prepare yourself. You may think that this is not important but it can be the thin line between success and failure. Running a business on the Nigerian soil is tough but highly rewarding; so to survive, you have to be tougher. Nigeria is a harsh but potential-filled terrain to operate in, that is the reason why you need to be well-grounded to tackle the challenges on ground.
You can prepare yourself by attending seminars and workshops 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 can prepare yourself further by increasing your risk bearing capacity. And ultimately, you prepare yourself by making up your mind to succeed despite the odds and competition.
Carry out a feasibility study
The next step to starting a successful business in Nigeria is to do a thorough feasibility study to ascertain the business viability before investing a dime in the business opportunity. This is basically where the failure of most Nigerian entrepreneurs begin.
A lot of people invest in a business idea or opportunity simply because a friend or relative said the business was profitable and they end up being disappointed. Others jump into an industry blindly in reaction to unverified information and end up with bankruptcy. Even though entrepreneurship is all about risk bearing, jumping into an industry without an adequate knowledge of its fundamentals is suicidal.
Proper planning is essential for the success of any business. Develop a robust business plan that includes every aspect of your business and follow it judiciously. Your business plan is especially important because apart from providing you with clear set goals and objectives, it can provide you a reference point to return to at any point in time in your business. A lot of people tend to overlook this very crucial aspect of business start-up without understanding the implications. Just looking at a plan and seeing how far you have come is a great source of motivation to help you carry on. It can help you determine whether you have drifted somehow from your original vision and consequently help you to get back on track.
Many Nigerians miss it here. It is estimated that over 85 percent of small business owners in Nigeria operate without business plans. You need to separate yourself from the pack if you are to succeed. Besides, banks don’t loan money to businesses that are operating or that plan to operate without business plans. Even if it is an informal, one page business plan; write it down. Your one page business plan may not get you the bank’s attention but it’s a step forward because it will help you concentrate on fulfilling your business mission achieving the desired goals and objectives.
Related – How to write a good business plan
Get familiar with the market
This is a very important step. Before jumping into any business or industry; make sure you have thorough understanding about the fundamental metrics of its market. Every business has an inside secret and if you must succeed; you must find that secret. Understand the market of the industry you are going into and you will increase your chances of success.
Ask questions such as: Who are my customers going to be? How would they want to be served? Who are my major competitors? Who is leading the market and what are they doing differently? Do I 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 any business in any industry in Nigeria.
Secure a good location
Where are you going to locate your business? That should be the next question after you must have become well familiar with the market. 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 centres of trade or commercial places in Nigeria?
“If you intend dealing on general merchandise; then you can consider locating your business in districts such as Aba, 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.” – mytopbusinessideas.com
Register and license your business
Most businesses operate as sole proprietorships in Nigeria and 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. Don’t forget to obtain the necessary licenses and permits.
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 else that is nearest to you. It is also advisable to go through a lawyer to avoid unnecessary mistakes. Hire a Lawyer to register your business and carryout other bureaucratic requirements. More so, your Lawyer will help formulate your business policy and operational legal terms.
Source for capital and start-up financing
Before making up your mind to start a business in Nigeria, you should have procured the necessary capital to at least launch the business. Financing a business can often be one of the biggest challenges faced by an entrepreneur anywhere in the world and Nigeria is not an exception. There are a number of ways to source for business start-up capital and it shouldn’t be difficult especially of you are a Nigerian (Nigerians are really innovative people).
The truth is that it will mostly depend on the magnitude of the business. If you do not have the start-up cash, you may resort to borrowing either from friends or from the bank (in this regard, you have to be cautious to avoid starting your business on the wrong foot of bad debt). Debt is only good when the money will be invested for cash flow or capital gain.
You can also look for levarage. The fastest way to grow in business is to leverage on the structure of well established businesses. So if you want to grow faster; then look for leverage. Leverage apart from getting a bank loan can be in the form of 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.
Start it small