How to start a business in Nigeria?
How to start a business in Nigeria? Unfortunately, it is not so easy to do it. So I tried to collect all the information that should help you to decide if Nigeria is the right country for your business.
Many entrepreneurs only dream of owning a business, while others take action and succeed. When I began my business, I did a lot of research to determine the best action to take in making a business plan.
During this time, I was struggling with which type of business to start and where to market my company. After careful research, I decided to open my company business in Nigeria.
Many since then have asked me how I got started, so today I want to share the “how” with my readers, along with why it is good to have a company business in Nigeria.
Understand Factors That Affect Businesses in Nigeria
Businesses, in this area, succeed more rapidly with a functional ecosystem. Researchers have studied strongly in hopes of compiling all of the information into one place; this is done for business owners or entrepreneurs to key into and help each one succeed.
I am happy to report that these researches have narrowed it down to three main factors. These factors are the resources that form the business redesign, despite the consequences of geographical location and the company business type.
Access to funding, the source of human capital, and access to markets have become the leading resources that factor in existing businesses’ successes in Nigeria.
Let’s look at these three viewpoints a little closer.
Access to markets
Nigeria has a population of around 206 million people as of 2020. It is predicted to reach about 398 million by the end of 2050.
If 30 percent of these prospects market in spite of the type of business risk, the minimum market size shared amongst all businesses in Nigeria is 61.8 million potential clients.
That’s massive! Meaning, Nigeria is a viable market for all entrepreneurs to promote a business.
Human Capital Development
Sadly, the educational system of Nigeria remains neglected. However, the university system in Nigeria teaches undergraduates outdated business programs and educational plans that do very little for the knowledge of making good usable products that are suitable for market demands.
The repercussion of this leaves Nigerians without the skills necessary to compete in the global market of Nigeria.
Only a few Nigerians typically end up becoming entrepreneurs, with the other percentile never grasping the concept of how to start a company business in Nigeria.
Access to Funding
This is one of the key problems troubling Nigerian businesses. In fact, it is challenging to raise capital for a business in Nigeria.
During my research, I found that angel investments and venture capital were the two main sources of funding that is selected to enhance company business growth in Nigeria.
Unfortunately, Nigerians don’t have money growing on trees to lend out to those in need of funding; most are struggling to make ends meet.
Only a few undertake capital firms outside the country to invest in Nigeria. Sadly, the interest rates charged by these capital firms make that even impossible for some to even start a business.
Why is it Good to Have a Company Business in Nigeria?
In Nigeria, there is a limited amount of liability compared to other countries.
Starting a business in Nigeria can be risky financially, but it’s limited because the property and personal assets are protected.
Another reason is the tax benefits under Nigerian law require individuals to only pay personal taxes and not business taxes.
Therefore, the company business can hold onto more capital gain. Nigeria is a secure well-liked place for professionalism, competitiveness, business continuity, and more.
How to Start a Business in Nigeria
First of all, there are many steps to take when starting a business or purchasing an existing one. In this post, I have written out some steps I took that will help get an entrepreneur on the right track for a profitable company in Nigeria.
Step 1: Evaluate the Skills Needed for a Nigeria Business
Ask many questions out loud and answer them with complete honesty. Don’t be afraid, to tell the truth, because later on, it will be important information to know.
Do I have the skills and knowledge needed to start and run a business?
Do I have what it takes to succeed and lead other members of my business?
Do I have what it takes to bring in a profit for the business?
Do I have the motivation and enthusiasm to make the business a success?
Were most of the answers, yes?
If so, then my intuition believes there is a new successful entrepreneur ready to start putting together a company in Nigeria.
Step 2: Find a Nigeria Business Idea
When it comes to starting a business, not all business ideas are practical or worth implementing. The most excellent business ideas are sensible, realistic, and unique that is needed or desired by the market.
When searching for business ideas, consider the environment in Nigeria and try to come up with a solution, and implement it.
If this is a new idea, think of what the company business can offer the market and create something that will enhance the design for a lower price.
Do a lot of research, and don’t be afraid to ask questions, including other entrepreneurs.
Step 3: Start Conducting a Market Research
Before starting a company in Nigeria, be sure to understand what all goes into it.
- Who are the customers?
- What are people buying now?
- What is the purpose of the purchase?
- What product am I going to present?
All these questions must have an answer to conduct complete and thorough market research. Also, it is vital to research the competition that the company business will be competing against for strategy purposes.
During this step, research should be done on the products and services the competitors are implementing. The Nigerian market is eccentric; as an entrepreneur, the right mindset is essential to operate in a market like Nigeria.
Step 4: Start Developing a Business Plan
Writing a business plan for a new business can be done in many ways.
By placing information on how to start a business in Nigeria in one place.
It can help all of those who are involved to see the whole picture.
At this point, the plan is just coming together, so don’t worry if something might seem to be unrealistic because it can be revised or tweaked later on.
The chance of success or failure on a company in Nigeria will depend on the needs or demands that develop, the development of the business plan, particularly business ideas for the Nigerian market. It also will depend on the ability to foretell potential revenue and position the company business for growth.
With that said, here are the ideal things that should be incorporated into a business plan for the Nigerian market.
Start an Executive Summary
The executive summary page of the business plan should include all the highlights and major points on how the Nigerian business is going to make it happen.
Be sure to include more than one mindset when doing this process. Brainstorming several ideas will, in fact, give a better hold on the business plan.
Start a Business Description
In the business plan, describe the Nigerian business industry and how the new business will make a difference.
Explain the short and long term goals that will be the heart of the business success in the industry and what changes are in place if the plan should begin to weaken.
Placing this information in the business plan will show a strong thought out start for the business.
Look into the analysis of the market business industry that the business will be a part of; then, identify who is the target market.
Knowing who the target audience is will help with the marketing strategies and overall marketing business plan. All this information is essential to the business plan for funding possibilities.
Being acquainted with the target market will help to create the perfect technique to communicate the product value, boost and generate sales, and get the product out there for all to see.
To begin a company in Nigeria, an entrepreneur must have the mentality and ability to identify business opportunities where others feel uneasiness about exploring.
Start a Competitive Analysis
Knowing the strengths and weaknesses of other businesses in the same marketing industry will help to uncover the potential areas for growth.
It also will help to clarify any threats the company business will have from its competitors.
In terms of squeezing out weaknesses that may be a dilemma for other companies in Nigeria, the tactic would be to use the information collected to influence and strategize the company’s selling point. Utilizing this in the business plan will help with strategy tactics.
Design, Development, Operation and Management Plan
The design and development phase only applies to those who are looking to be in the product development market. Part of this phase is to determine a budget for product development.
Next, write up an operation and management manual as part of the business plan to follow. Be sure to include a detailed budget plan for expenses.
Resources and Funding
Resources are a big part of starting a company in Nigeria, and without them, there will not be a business. The best way to keep track of the resources is to write them down, including personal resources.
If finding these resources are unattainable, look into other ways to obtain them like
- Bank loans
- Equity Investments
Most new companies are doomed to fail without the proper resources and funding; therefore, make sure there is enough capital to keep the business moving along.
After the business plan is all written down, look at it closely is there anything in it that doesn’t add up or make sense. If so, tweak it until it does.
Step 5: Register the Business
The next step on how to start a business in Nigeria is to register it with the Nigerian Corporate Affairs Commission (opens in a new tab), often referred to as CAC.
There are a few questions that will be asked of the entrepreneur about the Nigerian business before it can be registered. Here are a few I had to answer myself.
What kind of Nigerian business is it?
There are three Nigeria business types:
- Sole Proprietorship
- Private Limited Liability Company
- Public Limited Liability Company
The ownership of the company will determine the type of business it is.
What is the business name?
After deciding on a Nigerian company business name, go to the Nigeria Corporate Affairs Commission (CAC) website and check the availability.
If the name is already registered, it can’t be registered again by a new company, so it will have to be a different name.
If the name of the new company isn’t there, complete a pre-registration form – CAC-BNo1 and follow the steps.
Step 6: Start a Tax Registration
Now that there is a business name, the company must register at the tax office in Nigeria. All tax-related matters are under the Federal Inland Revenue Service (opens in a new tab) (FIRS).
To officially register in Nigeria, the company business owner will need to have a Taxpayer Identification Number (opens in a new tab) (TIN) in place.
What is TIN?
A TIN is a legal requirement for all entrepreneurs interested in operating a company business in Nigeria. The TIN identifies the company business from other firms in the area.
Step 7: Open a Business Bank Account
Having a corporate bank account in Nigeria provides credibility to the business company name and image; it gives investors a sense of loyalty and confidence when working with a newfound business.
Having a separate account for the company business can help keep business expenses in order.
Step 8: Set up a Simple Bookkeeping and Accounting System
To the untrained eye, accounting and booking may seem alike, but that is a misconception to most. In fact, accounting and booking are different in many ways but do overlap at times.
Bookkeeping involves daily entries of all financial transactions by a company business in Nigeria, while accounting is an advanced explanation of the transaction.
Every new startup company business in Nigeria needs a system for keeping track of all transactions and records. Not only is it a necessity for reporting finances, but it is also an excellent way to get good insight and reporting on the company’s overall capital growth.
It is always beneficial to seek professional assistance when setting up a bookkeeping and accounting system for the first time.
Step 9: Incorporate a Strong Business Team
Many entrepreneurs skip this step or forget about it altogether, this is only because of being good technically already and knowledgeable.
As a result, it leads entrepreneurs to believe no other skills are needed to start or run a company business. Sadly, entrepreneurs may know in the field but have no idea how to run a business, creating a circumstance that could have been avoided if only there were a business team hired to undergo the aspects of running the company, it could thrive.
New entrepreneurs lack some skills when it comes to running a business, but with the right team members, the skills will soon come naturally.
Create a business team where there are no weaknesses or minimal experience, and be sure to pay the team well. If building a strong business team is not in the budget, then work with the primary skills necessary to start and run the Nigerian business and gradually add more team members as the company business begins to grow.
The success of company businesses in Nigeria comes from a team effort. The stronger it happens to be, the more opportunity there is to complete the short and long term goals of the business.
Step 10: Acquire Office Space
Interestingly enough, these days, many businesses can start from the comforts of home until it begins to expand.
A company business that works solely off the internet doesn’t necessarily need an office space outside of the home until the clientele grows, and there is a need for more staff members.
If the company business is at the stage of needing more office space, look at the location that would be beneficial to the business. Locate the business office in an area where it is near its resources, raw material, or market.
For instance, a Nigerian business that would do exceptionally well on a commercial property area may, in fact, do poorly in a residential area.
Step 11: Create a Nigeria Business Website
In today’s world, most businesses are online, so it is important to have a strong source of web presence. Potential customers look online for what is needed or wanted if there is no web presence or very little; the customer will look elsewhere. With that said, it is not just okay to create a business website; it needs visibility.
Websites that have no traffic or presence is useless to the business. The main reason for a business website is to draw in new clientele and growth to the business.
If the site doesn’t provide this for the company business, it can leave the business without a web presence and capital gain. Pay close attention to the interface of the company business’ website and the design.
Another critical aspect is to be sure it is searchable through the Google search engines. Does the website show up on the first page of the search?
If not, work closely with a professional that knows about Search Engine Optimization (SEO).
The professional can help incorporate keywords relating to the business into the company business website. It is also beneficial to make it mobile friendly as many potential clients may use these types of devices for research of a particular product.
It may cost the company business some money to get the business website up and running with an ample amount of web presence but is well worth the cost.
Step 12: Implement Marketing Strategies
Many entrepreneurs commonly forget that this step is ongoing and start to slack. The repercussions of not implementing business marketing strategies will leave the company business in ruins or for it to be in a nonprofit status. Meaning, the business can’t bring potential clientele without business marketing strategies in place.
No matter what kind of business it is, marketing strategies change over time and need tweaking from time-to-time. To be the face above all competitors, put the team together, and start brainstorming new business strategies to build a strong customer base.
Set up a business meeting weekly or daily to start strategizing new marketing ideas and decide which ones to implement. Always keep in mind that poor marketing can lead to a weak customer base and eventually cause the company business to fail.
Step 13: Develop a Brand
The customer base is pouring in, and the net to ratio is climbing, so is branding necessary?
Many entrepreneurs fall into this trap because money is coming in. However, the business will generate so much more if it was branded.
Many restaurants in Nigeria lack this concept, so it will be easy to stand out above others that aren’t branded.
Many restaurants develop a brand around customer service. It is simple to do, and it cost nothing except time to train the staff. Having a logo for the business and ID cards for all employees is a great tactic.
Step 14: Promote the Company Business
After the company business is set up and running, it is time to promote it. Always look for ways to showcase the business and its brand. Start implementing this process at all times to keep the business in good standings of the marking business industry.
Be proud of the company business and make sure it is known. Involve the staff in this process by asking for input, hold meetings, and write it all down. Utilize the information to adjust the business plan as needed.
When the staff is involved in promoting the business, it can lead to a better work atmosphere and add more skills in decision making. Now that I have gone over all the steps it takes to succeed and how to start a business in Nigeria, I want to talk about some of the available companies.
Business Opportunities in Nigeria
There are many business opportunities in Nigeria, and I have searched the web for the most logical and easy to start up business ideas to help get the ball rolling.
Agriculture on a large scale is a great Nigerian company business to start. Many that live there skip over this opportunity because of thinking it’s only for the poor.
However, many don’t realize that there is government funding available for the land. Meaning, all the proceeds are money free and clear without any debt.
Some farming business examples in Nigeria are poultry, catfish, rice, pig, waterleaf, snail, and tomato.
Argo-Products Exportation is a great company business to be in since Nigeria is blessed with an abundance of food. Every day, many products leave the shores to other countries, but this type of business can also sell food locally. Nigerians have a desire for food and other supplies as well.
Nigeria also has high resources in minerals such as coal, iron, and limestone, so mining would be another great business to start in Nigeria. The mining industry is something that will continue to grow as more and more people get involved.
Since mid-2013, the Nigerian government has implemented a policy to move forward with the mining industry. An entrepreneur with experience and a business team can easily add the business to the sector.
Setting up a Security Company
Like any other country, Nigeria has a big demand for security services. Sadly, the government is only able to employ a certain amount of security for the country.
Many businesses and individuals realize this need and will start to employ security companies. There is an increasing need for bodyguards, security devices, security guards, and executive professionalism.
Start a Training Center
Teaching Nigerians the knowledge to successfully succeed in life is an amazing honor for the country as a whole.
With education only reaching so far, a training center will give the additional skills needed for a job, career, or business.
Some training courses that would be great to offer in Nigeria are corporate management skill training and skill & vocational acquisition training.
Start a Daycare Center
When both parents need to work to make a living, children need to have a safe, loving place to be. A daycare center will be the ideal place for children to stay.
Nigeria does have some centers in place, so the goal here would be to make a daycare center in Nigeria that is clean, safe, and secure with nurturing staff.
How to start a business in Nigeria – Conclusion
This article is intended to offer a general guide on how to start a business in Nigeria. I recommend clicking on the links that are placed in this article for further information on the matter.
Don’t be afraid to ask questions in discussion or send me email through the form in contact section.