How To Start A Business In Nigeria.
This article will help you understand how to start a business in Nigeria, minimize risks, maximize your start-up capital, and increase profit.
We do amazing, meaningful things every day in small increments.
We build a life, a family, a career, legacy — all in bite-sized pieces that are impactful in the moment and magnificent in the long term. So as it is when starting a new business.
It requires implementing small simple business strategies each day till it sum up and result into a giant corporation.
Starting a business
It involves planning, making financial decisions, doing market research, and acquiring knowledge in areas you never thought you would learn about. Getting started requires a lot of work.
The amount of documentation, legal requirements, and strategic development can simply be overwhelming. Yet, putting in the effort is the only way you can turn the idea in your head into a successful business.
It’s about carefully executing a series of well planned business strategies. Obviously it’s going to take time, effort, and potentially a few challenges. The good news is that you can do it and succeed at it.
Put Your Best Foot Forward
Running a business can significantly impact your life and the lives of those around you and I have created this article “how to start a business in Nigeria” to help you put your best foot forward.
The steps described in this book will help you organize your thoughts, and iron out important details to guide you towards starting your own business in Nigeria.
Starting a business could be the best decision anyone can make for himself. Giving you the flexibility to work in your own time and space.
It also gives you the opportunity to maximize adverting platforms’ efforts to help increase profit for your business.
It’s also important to understand that starting a business in Nigeria could be a bit challenging considering the situation the country finds itself.
Factors That Cripple Businesses In Nigeria
I will like to mention a few of the key factors that cripple businesses in Nigeria so it doesn’t catch you unaware
Power Supply
Nigeria has a very low power distribution, many businesses end up generating power for themself so they can remain in business. Some businesses invest in solar plants while others use generators. This comes along with additional costs that should be considered before starting your business.
How important is electric power supply to your business and how will you like to source for adequate power supply that will be enough to keep your business afloat? This is a key factor you need a definite answer for before getting started.
Before we proceed, I will like to mention that this article on how to start a business in Nigeria will provide you with realistic challenges Nigerian businesses face.
How to overcome them so you can have an interesting business journey as a Nigerian who is doing business in Nigeria.
So, let’s proceed…
Transportation
Depending on the part of Nigeria where you reside, some major cities in Nigeria are known for heavy traffic.
That could result in delaying your commodities, making it spend a longer period of time before getting to its destination. Some cities known for heavy traffic in Nigeria include Lagos, Abuja, Port Harcourt, Ibadan, Aba, Onitsha, among others.
If you are considering starting your business in any of these cities, then it’s important to understand that heavy traffic needs to be considered while planning your business.
This will affect your product delivery, getting raw materials on time, meeting with clients and other factors that are paramount to having an effective business that delivers great value to its customers.
Government Policies
Apart from registering your company and filling your tax documents, some businesses require special government licensing to prevent them from operating an illegal business.
Some of these businesses include food production, beverages, skin care products, soaps, and so on.
If your business falls into any of these categories, you might need to talk to a NAFDAC official or check their website to figure out the procedure for getting approval for your business.
The above-mentioned factors are the key reasons why many business owners are kicked out of business untimely because it caught them unaware.
Now that you understand these challenges, I believe you will consider including them in your plan if any of these factors are likely to affect your business operations.
Let’s dive into how to start a business in Nigeria
Some other factors needs to carefully understood before starting your business, and those are the factors we analyzed in details in this part of the article.
Determine if entrepreneurship is what you want
Before diving into the details of your potential business, it’s best to take stock of yourself and your situation. It’s important you provide answers to these questions.
- Why do you want to start a business? Is it money, freedom, flexibility, to solve a problem or some other reason?
- What are your skills?
- What industries do you know about?
- Do you want to provide a service or a product?
- What do you like to do?
- Will it be a full-time or a part-time venture?
- How much capital do you have to invest?
- How much capital do you need?
Your genuine answers to these questions will give you a clear picture of why you are starting a business and help you narrow your focus to what matters most.
Knowing yourself, and working in a job that caters to your strengths is a sure way to be happier in your business journey.
Since you will be spending most of your time working on your business, it’s important you choose a business you are passionate about.
Loving what you do
Loving what you do will keep you focused and get you going during tough times till you finally get things right and when you do, you will grow faster, bigger and stronger because you love what you do.
It’s not enough to start a business just to make money especially if this is your first business, starting a business you are passionate about helps you deliver better services.
You will be eager to learn about your business and making your customers happy will be your ultimate goal.
Before starting any business it’s important to conduct a self-assessment test
You need to plan, set goals, and above all, know yourself. What are your strengths? What are your weaknesses? How will these affect your day-to-day operations? You could conduct a SWOT analysis on yourself to figure this out.
SWOT is an abbreviation for Strengths, Weaknesses, Opportunities, and Treat.
At this point, you need to conduct a SWOT analysis for yourself and you have to do it now. Get a sheet of paper and a pen.
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- Write down your 8 biggest strength
- Write down your 4 weaknesses
- Write down 6 opportunities surrounding your business idea
- Write down 4 possible treat you might encounter
The result of your SWOT analysis should give you a clear understanding of your overall business idea.
The result helps you focus on your strengths, pinpoint your weaknesses so that you can come up with solutions to help you address your weaknesses.
Identify the opportunities and advantages around your business idea and figure out possible treats so you can avoid them.
As you get started, your business will likely dominate your life so make sure that what you’re doing is stimulating and interesting, not completely outside of your expertise.
You’re going to be in it for the long-haul. Use what you learn from the SWOT analysis to think through what you want your life to be like, not just what you want from your business.
These are some questions you need to ask yourself
Get your sheet of paper and your pen so you can write down your answers. The questions are…
1) What would you do if money wasn’t an issue?
2) What matters to you in business?
a) Making a lot of money from your business no matter what the situation might be?
b) Delivering better services that will make your customers proud of your business?
3) What really matters to you in life?
4) Do you have the support of your family, especially your immediate family members? They may have to contribute largely to your business, so it’s important to have them behind you.
5) Write down 5 people you admire most in business
a) Why do you admire them?
b) What are their likable traits?
c) What can you learn from them?
Answering these questions will get you thinking about your goals and about what motivates and inspires you.
Use your answers to make sure that you are matching the business you want to start to your personal aspirations.
Suggested Article: How to increase your productivity
Find a Problem to Solve
While learning about how to start a business in Nigeria, it’s important to note that all businesses solve a problem.
Plumbers fixes leaking pipes. Hollywood movies fulfill people’s boredom, curiosity, interest, and the need to escape and relax. Clothing brands help people express themselves and feel attractive.
Here’s the golden rule: The bigger the problem you solve – and the better you solve it – the more money people are willing to pay.
Let’s use healthcare services as an example. They solve a big problem by giving people the chance to live, which is why almost everyone is willing to spend a lot of money on getting better healthcare.
On the other hand, not many people will pay you to stop their table from wobbling. It’s not a big problem, and they don’t need help solving it.
The bottom line is that: If you want to identify the best part about how to start a business in Nigeria, you need to find a good problem to solve.
Here are three examples:
Target market: Fashion-conscious men and women
Problem: The fashion-conscious want to stand out without spending too much money.
Solution: Create a clothing line that’s flamboyant and budget-friendly.
Target market: Marketing managers at multinational companies.
Problem: Businesses need to drive traffic to their website.
Solution: Write article that rank on Google to drive traffic to your website.
Target market: Working Moms with young children.
Problem: Many moms want to work out regularly, but they don’t have much time.
Solution: Create a time-saving fitness program and schedule.
Now that you have identified a problem to solve, it’s time to select a business idea that aligns with your personality and also develop your business idea.
Best Business Idea
The first stage on how to start a business in Nigeria is to choose a business you understand in details. Make sure you have a clear understanding of how the business works before getting started.
It’s not enough to assume you know it all, it’s time to start learning more about the business. Learn about how you can deliver the business in a unique way that will make you stand out from your competitors.
Your business idea is the most important and the most delicate aspect of starting a business, if you choose the best business idea for yourself then chances are you will have an interesting journey as a business owner.
But! if you choose the wrong business idea it will difficult to overcome the challenges that come with starting a business.
The truth is that…
There’s no business idea that runs smoothly from the idea to the launch stage.
Every business comes with its own challenges that’s why you need to be clear about your business idea, make sure it’s a business you are passionate about so that whenever you face any challenge your desire to see your business succeed will keep you going.
By then it becomes easy to endure and overcome the challenges that usually appear at the beginning of most new business.
Refine your idea
After choosing your idea, it’s important you refine your idea. Talk to people who are already in the same business, they are the best set of people you can learn from, spend time with them to help you see how the business really works. These are your mentors and competitors.
Learning from them will help you decide if you are ready to embark on the day-to-day activities you see them engage in.
This also gives you the opportunity to refine and find a better solution to the areas they are having issues with their business so you don’t end up having the same issue.
During this process, you get to understand how customers are responding to competing brands, things customers like and dislike about the business, and especially about your competitor’s mode of operation.
These are the pieces of information you need to help you improve on performance.
Validate Your Business Idea
It’s not enough to just think you have a good idea and run with it. You need to validate that there is a need for your business. You also need to start addressing whether this idea is sustainable or not.
Once you decide on a business that fits your goals and lifestyle, it’s time to evaluate your idea. Who will buy your product or service? Who will your competitors be?
This process will help you address your opportunity, value proposition, the market size, and competition sections of your business.
There are a number of ways you can do this, including:
- Performing general Google searches.
- Speaking to people already working in your target industry.
- Reading books by people from your industry.
- Researching key people.
- Reading relevant news sites and industry magazines.
- Taking a class on Marketing & Sales.
The more you know about your industry, the more advantage and protection you will have.
Evaluate your target audience
It’s not enough to just state the current market. You need to know what portion you’ll be able to claim and if it’s really possible.
To determine how attractive your prospective market really is, I suggest doing a market analysis.
A quick way to conduct a market analysis is to provide answers to these questions:
- How urgently do people need your product or services?
- What’s the market size? Are there already a lot of people paying for products or services similar to yours? Have you honed in on who exactly your target market is? Being specific will help you focus your marketing message and investment.
- How easy is it (and how much will it cost you) to acquire a customer? If you’re selling real estate, this may require a significantly larger advert investment than a clothing store.
- How much money and effort will it cost to deliver the value you would like to be offering?
- How long will it take to get to market? A month? A year? Three years?
- How much up-front investment will you need before you can begin?
- Will your business continue to be relevant as time passes? A business that repairs iPhone X screens will only remain relevant so long as the iPhone X sticks around. If your business is only relevant for a specific period of time, you will also want to consider your future plans.
If you like, you can even take things a step further and consider the consumer needs currently not being met by businesses in the industry.
Take a look at potential competitor
This is a good time to take a look at potential competitors. And remember, the presence of competitors is oftentimes a good sign!
It means that the market for your product or service already exists, so you know that you have potential customers who are willing to spend money on your product or service.
While you’ve got the time, learn as much as you can about your competitors, about what they provide to their customers, how they attract attention, and whether or not their customers are happy.
If you can figure out what’s missing before you even get started, your job will be made that much easier when you finally start your business.
Lastly..
It’s important to field test your idea, services, or products. As you conduct research, take the time to speak to your potential customers.
Present them with the concept you intend to launch, ask about competitors they may have used and the price they’d be willing to pay.
If you can, it may be worth developing a minimum viable product (MVP) to help showcase what you’ll be providing.
Until people pay you, all you have is a list of assumptions.
Market research, surveys, and feedback from friends and family can point you in the right direction, but the calling card of real product validation is the sound of the cash register ringing.
So, the first and arguably best way to validate your product is to make a few initial sales.
There are a number of ways to validate your business as you’re developing it. Most focus on a single essential action: commitment.
Let early customers have some form of commitment to show that, yes, people really are interested in buying this product and they aren’t just telling you what you want to hear.
This simple practice proves to you that you are selling something that people truly want.
Set Realistic Goals and Expectations
One of the biggest reasons for failure in businesses comes from naive expectations.
I constantly hear stories of people pouring thousands of dollars into ads thinking they’ll triple or quadruple their money only to end up with that big, fat zero.
So, let’s try to paint what a realistic scenario looks like. Your first year in business is all about trying to figure out what works best.
Most people approach their first business with a sense of false optimism. If that guy can do it, so can I. Sure, you can. But don’t ignore the fact that that guy is probably on his fourth successful business and he’s been running it for several years.
It takes time to build a business. If you go into it thinking you’re going to dominate the world on day one, you’ll be failing in a matter of months due to drastic disappointment.
Perseverance
The difference between a successful business and a failed one is perseverance.
Do you have what it takes to keep promoting your business even when you have no customers or website visitors after some months? Are you patient enough to play the slow and steady game? (meaning that you might not see sales right away but will see bigger returns down the road)?
Now that you know that those first few months will take every ounce of hustle you’ve got, how will you approach your goals in the foundation stage of your business?
Maybe instead of focusing on your first sale, you might focus on creating content to drive relevant traffic. Or maybe before you start a business, you start building a following on Instagram so that you have an audience when the time to launch comes.
Write your business plan
Before writing your business plan, it’s important to choose a name for your business.
What’s in a name? For starters, your business name is a universal face of your marketing; it shows up everywhere you do.
Word of mouth is hard enough to earn, so there’s no reason to make life harder with a dull, confusing, or irrelevant business name.
Next on our list of steps to start a business is your business plan. Writing a business plan helps formalize your idea and can streamline the business-creation process by getting you to sit down and think things through methodically.
Planning is everything
Many entrepreneurs say they rarely look at their plan once they’ve launched—but they’ll also tell you there’s value in thinking through and researching your idea; writing a business plan is the perfect canvas for this exercise.
In fact, writing a business plan may reveal more insight into how to start a business in Nigeria, especially as you get to the logistics parts.
At the very least, you’ll quickly figure out what questions you don’t have answers to. Having a firm grasp of your “known unknowns” is important because all it means is that you’re actively not prioritizing finding a solution right now.
That’s a lot better than being unprepared or caught off guard, especially if you struggle to answer these questions while seeking funding.
When seeking outside financing
A business plan is a necessity. But, even if you are going to finance the venture yourself, a business plan will help you figure out how much money you will need to get started.
What it will take to make your business profitable, what needs to get done, when it needs to be done, and where you are headed.
While you might use your business plan as part of your pitch to investors and banks, and to attract potential partners and board members, you will primarily use it to define your strategy, tactics, and specific activities for execution, including key milestones, deadlines, and budgets, and cash flow.
You have a head start with your Lean Plan
Here’s the thing, your business plan does not have to be a formal document if you don’t need to present your plan to outsiders.
Instead, your plan can follow a Lean Planning process that involves creating a pitch, forecasting your key business numbers, outlining key milestones you hope to achieve, and regular progress checks where you review and revise your plan.
What is a Lean Business Plan?
The lean business planning method is about taking small steps, consistent tracking, and frequent course corrections.
The lean plan itself only includes what adds value to management, without waste. The plan itself is lean, small, streamlined for internal use only, just big enough for optimizing the business.
If you aren’t presenting to investors, a lean plan will help you get things moving fast.
It consists of a high-level overview of who you are, the problem you are solving, your solution to the problem, your target market, and the key tactics you will use to achieve your goals.
Hopefully, you’ve already started developing your Lean Plan at this point as you explored your business idea. If not, now is the time to get started.
The process will help to uncover any holes or areas you have not thought through well enough.
What goes into a formal business plan?
If you do need to write a formal business plan document, you should follow the outline below.
The standard business plan includes nine parts:
- The Executive Summary
- Target Market
- Products and Services
- Marketing and Sales Plan
- Milestones and Metrics
- Company Overview
- Management Team
- Financial Plan
- Appendix
Select your tools
Taking the steps to start a business means having more to do than reasonably can be done. That’s why business owners shouldn’t underestimate the value of good software.
It’s one of the best ways to reduce the heavy lifting involved in running a business.
The right tool fits the job to be done, so the first step to earning back some of your time is figuring out which streams of work continually eat up portions of your time.
Are there repetitive tasks in that list that don’t require much decision-making? Software is perfect for streamlining or automating that sort of work. You can also deploy software early to support some of your marketing and sales work.
While there’s a genuine risk of getting distracted with excess tools, there’s a portion of marketing that will benefit from automation from day one.
An important area to consider looking into software to help you manage is Accounting – Accounting software is one of the best ways to start your business off on the right financial foot.
Save as much manual number crunching for valuable investigative work as you can; let software help you with the day-to-day stuff.
Consider pairing up with partners
Entrepreneurship is on the rise and success in business sometimes comes in pairs. Rome wasn’t built in a day and neither was any successful business.
There’s going to be a lot of time and resources that’ll go into your business.
And having someone you trust to build alongside can allow you to break up the workload so you progress faster. It’s also great for holding you accountable.
The important thing to stress about a partnership is that you really need to know how well you work with someone.
Is this person trustworthy? Have you worked together before? How has the two of you managed conflicts in the past? Do your skill-sets balance each other? Will a business relationship ruin your current relationship?
Make sure to ask all the tough questions before choosing a partner.
Launch your business
At this point, you now have an idea on how to run a successful business. You’re ready to take the last and most exciting step: launching!
The preparation you’ve already done has laid a solid foundation to support your launch, so you can focus on marketing activities and making sales.
While every launch will be unique, there are some elements that can boost any business performance during the first few days in business.
- Use your network – Promote your business first and foremost on free channels that are already available to you, which includes your family and friends, personal social media and your contacts list. Sending one-on-one emails asking for support can go a long way toward gaining traction.
- Consider offering discounts – Rewarding early customers with a discount that fits with your profit margins can help you get traction early on, especially when your store is new and may not have many customer reviews or social proof points.
- Test paid ads – Even if you start with a small budget, paid ads can be one of the most effective ways to get in front of your ideal audience. Testing early and learning from your results can help you drive your first few sales and optimize your ad performance as you scale.
Promote Your Business
The most important part of starting a business is the promotion stage. Getting your business in front of people will help you generate sales so that your idea turns into a business. Here are a few ways you can promote your new business:
- Facebook: You can run Facebook Ads by going after targeted interests and including relevant brands as an interest to capture their audience. You can also post in Facebook groups as your fan page which is great for businesses with niche audiences.
- Instagram: Grow your Instagram followers so you can make sales with each Instagram post. You can also add direct links in Instagram Stories to capture more sales.
- LinkedIn: Build your personal brand by creating posts and sharing thoughts on articles on LinkedIn. Invite relevant users to follow you to increase your reach.
- SEO: By optimizing your website for google search and creating blog content you can generate more leads, email subscribers, and website traffic.
- Quora: Answer niche questions on Quora to promote your website. You can use SEO tools to find high-ranked Quora keywords to help increase your visibility on the platform.
Conclusion
Now that you know how to start a business, there’s an exciting adventure of creating the business that awaits you.
Pushing yourself to finally take life by the horns and take that first step can be a bit scary. But once you get started, you realize that the process of starting a business can be pretty fun.
There will be challenges and roadblocks along the way, but as long as you push ahead and learn from mistakes, there’s nothing that’ll block your success.
All you need to do now is take that first step and you’re well on your way to starting a business.
I wish you great success as you start your new business.
