STARTING A BUSINESS IN NIGERIA

HOW TO START A BUSINESS IN NIGERIA

INTRODUCTION

Starting a business in Nigeria is simple but can be difficult at times, especially if you don't know the country's business terrain very well. Before we deal with How to start business in Nigeria, let's first look into the reason why doing business in Nigeria is considered to be a good choice.

No matter who you are and your financial capacity, there is business for anyone to start in Nigeria at all level. Even without money, you can still start business in the country if you are smart enough and ready to master the art of trustworthiness, good service rendering, and how to run errand.

Nigeria is one of the best places to do business in the world in terms of profitability and competitiveness.

Another thing that makes Nigeria one of the best places to do business is the 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 lightest taxation and 'not too' complex regulatory framework.

  The question now is; how anyone could start a new business of any form in Nigeria?

DEFINITIONS

Business:  A company or organization that trades (buy and sell), makes products and provides services.

Entrepreneur: An entrepreneur is one who initiates a new commercial enterprise; searches for business ideas turn it into business opportunity in the sole of making profits.

Nigeria: Nigeria is the case of study been look at on the topic; ‘How to start a new business’.

(MeMat) - Memorandum and Articles of Association

C.A.C – Corporate Affairs Commission

STEPS TO BE CARRIED OUT ON HOW TO 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 on 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; It is believe we are well grounded to tackle the challenges on ground. Now 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.

Idea is the first step towards starting any business anywhere in the world. You must have an idea of business you wants to venture into. Ideas sometimes goes together with passion, if there is something you are passionate about, it could be easy for you to form business idea base on that.

For instance;

Here’s an entrepreneur’s passion for internet and computer is what helped me develop the idea for internet base tech company. Advantage of developing business idea base on your passion is that the passion you have for it will help you sustain the business in turbulent times. Going through the table, you'd get to see plenty of potentially profitable business ideas that may interest you, pick one that closest to your heart and work it out.

Services	Agriculture	Commerce	Industry
Haulage and Logistic Services	Tomato Farming in Nigeria	Fashion Sells	Internet Startup
Professional Photography	Poultry Farming	Electronic sells	Foods and Beverages
Professional Cleaning	Rice Farming	Grocery Supermarkets	Renewable Energy Supply
Hotels and Hospitality	Pig Rearing	eCommerce	Furniture Making

What you have on the table above are some of the business ideas that fly in Nigeria. There are hundreds of small and medium scale businesses that are profitable in Nigeria.

 “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. Once you have a business idea you want to work on, the next thing is to develop serious business plan.

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 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 dad 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.

5. Develop A Business Plan

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. Business plan is especially important because further to providing you with a clear set goal and objectives, it can provide a reference point you can return to at any point in time in your business.

People tend to overlook this most important aspect of business without understanding the value. Just looking at a plan and seeing how far you have come is a great motivational tool to help you carry on. It can help you determine whether you have drifted somehow from your original vision and allow you to get back on track.

Much have been said about the importance of business plan for entrepreneurs. Planning is the key to success in any venture, make you have a well written business plan before you proceed to start a business in Nigeria.

Developing a business plan is another point where most Nigerians miss it. It is estimated that over 85 percent of small business owners (entrepreneurs) in Nigeria operate without business plans.

Since majority entrepreneurs 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 good 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.  Find a Good Location

Logical Questions for thought:

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 centre 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.

7. Obtain the necessary Licenses and Permit

As an entrepreneur, you need to be legalized for a valid business i.e. 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. 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 or business

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; it can be advised that you register a business name or factor it in your cost projections as a short term plan.

Depending on the magnitude of the business you wants to start, you need to register your Business in Nigeria with the Corporate Affairs Commission (C.A.C) to enable you do business in the Nigeria legitimately.

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.

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. 
The registration Fees to be paid to and at C.A.C for matters under the Act are as specified in Companies and Allied Matters (Fees) Regulations 2003 The Minister of Commerce makes the regulations in exercise of the powers conferred upon the Minister by sections 16, 632, 668, and 692 of the Companies and Allied Matters Act and all other powers enabling the Minister in that behalf. The Minister may change the Regulations as and when he deems fit and the changes will be published in the official gazette. Stamp Duty is payable in respect of the Memorandum and Articles of Association (MeMat) and the MeMat must be stamped before it is presented to C.A.C for filling. Stamp Duty is Chargeable by the Federal Inland Revenue Service (FIRS) and is assessed on behalf of the FIRS by the Federal Commissioner of Stamp Duties according to a scale fixed by the Joint Tax Board.

All the payments are made in the national currency of Nigeria which is the Naira and the symbol is N  (the capital letter N double struck through) It is also denoted in international notation as NGN. It is best done going through a lawyer to avoid unnecessary mistakes and dupe.

9. Raise Capital

Before making up your mind to start a small business in Nigeria, an entrepreneur needs to have the necessary capital to at least launch the business. Capital is the startup fund in starting a business.

Financing a business is one of the biggest challenges that faces any entrepreneur anywhere in the world and Nigeria is not an exception, but it can be sorted out easily especially if you are a Nigerian. It involves sourcing for startup finances.

10. 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 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.

11. 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.

12. 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.

Analysis of an instance of generating business opportunity:

Over 160 million people with reasonable purchasing power that is said to be one of the highest in Africa, makes it a top [go to] destination in Africa when it comes to business.

Some companies who have neglected the country in the past are left to bite their fingers with regret. A good example can be found in the telecoms sector. Many telecoms giant neglected the country, coming up with all sorts of negative analysis about how telecom business is bound to fail in Nigeria. It took the guts of MTN and Econet who were almost unknown in Africa then to invest in Nigerian market. As a result, these companies have been transformed from obscurity to one of the biggest Telecoms companies in the world through the success they recorded from the Nigerian market alone. Other telecoms companies like Vodacom that turned their back on Nigerian market where made to lure their loses. Don't let that happen to you, if doing business in Nigeria is in your plan and you have come with a business idea, you need to take the step now before others do.

CONCLUSION

For you to start a business in Nigeria, you need to understand how business works in Nigeria, the market evaluation, the risks, and the legal and bureaucratic frameworks involved. The steps on how to start a new business in Nigeria should be followed sequencially and orderly as stated above.