How to start a business in Nigeria: Everything you need to know
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Starting business in other part of the world might be easy but in Nigeria it is an herculean task, that is why entrepreneur must know the process before embarking on business creation which is the purpose of this article: to show you step by step of creating new business in Nigeria.
Creating a business in Nigeria require a rugged nature, ability to go on in face of failure that could be caused by unfavorable environment, bad government policy and regulation.
Not only should entrepreneur in Nigeria should have perseverance they should also be able to court government official if they want to be in business for long.
With all been said it is time to go into steps of creating business in Nigeria, but before that I will like you to take note of the following.
Factors that can prompt individual to start a business
Below are the factors that can prompt people to start business in Nigeria. Identifying your own push or pull factor will help you align your personal goal with business goal.
These are unwanted condition that can push people to start their own business, they are
Low paying job
These are circumstances that can encourage people to start their own business, they are
Encouragement from family and friends
Availability of capital
Desire to be independent
Steps to starting business in Nigeria
1) Idea generation
Though idea is worthless execution is the deal, yet you can’t start business without having a profitable idea.
You need to look inward and outward to find business idea that align with your personal goal, idea you have passion for and you are ready to till day and night for, even in the face of failure because it will surely come
To find business idea is not hard if you can equate business idea to peoples need, yes business is the same thing as need, what you set out to do when you start a business is to meet peoples need so go out look for what people are in dire need of, either services or goods then build your business around it.
But mind you make sure the idea is a painful and not pressure, business idea that solve people’s painful need will stand the test of time than pleasure which people can do without.
Also when choosing business idea make sure it has little or low competition, you don’t want to compete your profit away, high competitive business usually have low profit margin as a result of competitiveness which would have beat down the price.
Do not think business idea, instead look for people’s need and turn it into business.
Below are the forms your business idea can take
- Modification of existing product or services
- Consultancy/professional advice
Sources of business idea
Below are where inspiration for business idea can come from, before you read it I want you to know that you can only take idea from your inspiration if it align with the need of people.
- Working experience
- Availability of natural resources
- A gap in the market
- From literature
- Frustration with system or ways of doing thing.
2) Feasibility study
Now that you have your business idea on ground the next thing is to check if such business Idea will be profitable in your chosen location and how profitable it will be.
Some business might be profitable in one location, state or country and fail when repeated in another location, state, or country. You need to check if the idea is worth dying for because you will spend between 2 to 5 years of your life before you will see desirable growth and profit.
Go out, interview potential customers, know what they want, the cost of producing it and the price to sell it, this will give you accurate information of what profit margin to be expected from your business. Click here to read more on how to conduct feasibility study.
If you do not want to go through the process you can hire a professional.
Choose wisely when it is time for locating your business, location is very important if your business revolve around manufacturing as there are designated place for manufacturing company in each state of Nigeria.
Check your location well to avoid confrontation from the government. Your location should have a good road network and not far from source of raw material.
4) Business plan
Business plan is the next thing. What do you see your business becoming in the next 3 to 5 years, write them down and steps you will take to achieve it.
Business plan could be a direction or a way to obtain loan and investment or it could be both depending on what you want your business to be.
If you want your business plan to be a direction only for you and your company you can omit some pages like executive summary and go straight to the point, if it is for loan and investment you will need to write a standard business plan.
Click here to read how to write a business plan that can get you loan and investment in Nigeria.
5) Forms of business
At this junction you need to specify what form of business you want to create. Whatever form you chose it can make or mar your business so choose wisely, do you want control? big business that you can take public? or business that you can share the risk with a partner.
Though every form of business has advantages and disadvantages,it is only one form that will be suitable for your condition and need also it is easier to create a form of business than to transit to another form so choose wisely.
Register your business with the CAC (Corporate Affairs Commission) to avoid future confrontation with the government .
Your business will also be entitled to any business relief coming from government. Look for other government agency you need to register with for instance; you need to register with NAFDAC if you are dealing with food.
You will have little or no problem with marketing if you do your feasibility study because you would have known the best advertising medium that your customer can relate with, for instance using internet to promote your goods or services to people between the age group of 22 to 49 will be a good idea but a waste of money if your target group are below 22 or above 49.
Anyway, marketing is a trial and error, try deferent medium and focus on one or two that your customers use most.
Advice: when doing trial and error marketing try to minimize cost.
Staffing is another important factor in business, your early staff should know at least something about your business for instance, if it is cosmetic business make sure they know about beauty, you don’t want to hire employee that won’t be able to give your customer adequate information or advice regarding your product.
Also, employ staff that will complement what you are selling; a cosmetic shop that target female should have 70% female staff while a male boutique should also have up to 70% male as it staff.
If you are planning to grow big, you should have a policy and regulation that will form a culture. Your first set of employee will be the champion of your culture so make sure you start with them.
Growing your business in Nigeria
Starting or creating business is just the tips of iceberg in owing profitable business in Nigeria, to tell the truth it is hard, you will meet a lot of set back and you will want to quit many times, but keep moving there is a light at the tunnel. To grow your business take note of the following
- Have strong reason for starting your business, it will help when things are not going your way
- Hire those that have passion for your business
- Network: try to create connection with people that can help your business such has government, supplier, influencer in your industry
- Have a presence on social media
- Create website and content that make people aware of your business (you can contact us for that)
- Money is the back bone of business, source for fund at all cost and watch your cash flow
Creating a successful business in Nigeria is hard, but possible if you’re a ready to give what it takes, and what does it take? You need patience and a strategy to move from one steps to another, do not start from the top even if you have the necessary fund, going from one step to another will not only give you time to know your industry, it will also allow you to understand your customer better.
To the broke entrepreneur
Do not look down on yourself or business, your situation is the best ingredient to start and grow business, because you have nothing to lose, you can go at it with full force.
Let your brokenness make you hungry for success and surely you will create and grow business that will stand the test of time.
Keep hungry, be patience, see you at work.
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