Starting a business can be exciting. For many, it is like giving birth to a child: it can be painful but most would feel that it is completely worth the trouble.
Sadly, though, most people do not realize just how hard it can be to go past the starting phase. The news gets even worse for Nigerians: while it is hard to launch out in business anywhere in the world, it is especially difficult in Nigeria. Some of the reasons for this are unclear / confusing regulations, erratic power supply, poor roads and infrastructure, lack of access to capital, and many others.
The point of this post is however not to discourage you from starting a business in Nigeria. It is rather to tell you some of the things I feel, based on my 15 plus years of running a business here, which you should avoid. I must mention that not all my scenarios will match yours, and I recommend rethinking my thoughts into your context.
1. Registering Your Business Before it is a Business: Registration or incorporation papers from the Corporate Affairs Commission do not make a business (although they confer a seal of legality to it). What makes a business- any business- is customers! Until you have patronage, you are not yet in business. Most people put the cart before the horse, focusing on registrations and paperwork. Instead of that, I would recommend that you should find your first set of customers, and then register your business. Be sure that your model works and there is market demand for it.
2. Registering a Legal Form You Don’t Need: One of the most common mistakes entrepreneurs make is to register their ventures using legal forms they don’t need. To put this in other words, there is a world of difference between the implications of being “incorporated trustees”, “business name” “private company limited by shares”, or “private company limited by guarantee”.
I remember the first time I registered a Limited Liability Company. I was convinced by a “professional” that limited liability was the best and I could use that registration for any kind of business in the future. While that was true to an extent, his information was very incomplete. Had I known the tax implications and stress involved for a company that was still very young at that time, I would have stuck with my business name. It would have been much cheaper to continue as a business name until the business grew big enough to take on the implications of limited liability.
Educate yourself about these things. The “professionals” often don’t understand these differences from a perspective of someone doing business.
3. Starting a Business without Understanding Your Business Model: Many people do this because they see other people who are successful in a particular line of business and they assume that they will be able to get the same results without having the same mastery of the model. The truth is that the same business idea can be implemented in different ways and achieve different results. In my neighborhood, there are two top-notch schools with very high ratings. One charges school fees of over N100, 000 per term while the other charges close to 10 times of that amount. Both have high patronage but obviously very different revenues. In other words, two people can sell the same product, attract completely different audiences, and earn very different incomes. The determining factor is your business model and you should understand this before you start your business. You should also revise it from time to time so that it remains relevant given the realities of operating where you are.
4. Not Researching about the Dynamics of Your Environment: Location can be very crucial in determining the success (or failure) of your business. There are two petrol stations opposite each other around my house. One attracts massive patronage while the other just gets by. What is responsible for the difference? The side of the road each one is located on! One is better positioned for morning sales because being a residential area, vehicular traffic is high when people are going to work and at that time, they are want to ensure that their cars are fueled. Obviously, this same example may not be applicable in a neighborhood with different dynamics.
5. Contracting Out Your Role in Your Business: One of the fastest ways businesses die in Nigeria is the exit (or lack of active participation) of the founder(s). If you are unable to make time out for your business, perhaps you should not start it.
Hiring people is great but to utilize staff time, you need structure. Structure requires leadership and it still comes back to you, especially at the early stages. This explains why many Nigerian businesses thrive while their owners / founders are in the country but dwindle when managers are appointed to oversee them due to the death or migration of the founder.
I should mention that your aim should be to get your business to a stage where you do not have to be actively involved for it to grow. I fully support putting such structures in place. I am only recommending that you should be willing to sacrifice the initial time and effort needed to attain the level of growth and structure needed to leave it alone.
PS: If you would like to know more about starting a business in Nigeria, I’ve got great news for you. I have an online course that covers much of what you need to know- from whether you should even be in business to the appropriate corporate registration categories, defining your business model, turning your ideas into products, selling, etc. Please enroll at https://creativeskillsvillage.com/courses/how-to-start-a-business-in-nigeria/
