Do you want to start a business? Do you know how to go about starting your own business? Don’t assume that you know. There are different types of company formation, and each one has its separate requirement. But they all have similarities on how to start a business.
For example, some businesses are built on expertise, while some are built on trading. Understanding the type of business you desire to start is essential. That would help you access your skills and identify your competences or even weakness.
Also, some businesses start on the idea of what is already needed. While some start on a vision of what needs to change. Both may even be in the same line of business. But they are not going to be doing the same thing.
You need to be clear why you want to start a business. And learn what needs to be discovered in that business. I strongly recommend that you find mentors who are already successful in your line of business. Or those who can help guide you successfully to start a business.
What is Business?
The dictionary definition is apt. It gives the idea of business as a person’s regular occupation, profession, or trade. And you should know that; what is business is not the same as what is a business?
To make it a business it needs to become a formal entity. The process of forming a company is different in many countries. And that’s why you will need to research on the country where you want to start a business.
In Nigeria, you will equally need to know how to start a business here. If you are a Nigerian, it’s different from if you are a foreigner. Some rules apply to foreign investment that doesn’t apply to the locals.
And finally, on the definition of business, I want to add; what is your business? This may surprise you, but the answer should be the reason you want to start a business. I have explained what the business is and what a company is. But when its to define what is your business, its to demand your specific role in the company.
There should be a reason why you want to start a business. And it’s not like the typical reasons, to make money or earn a living. The right question should be: what is your business in the company? How would you help the business? What particular skill or unique role would you be playing in the success of the business?
Why Do You Want to Start a Business?
If you can answer this question, sincerely you will succeed in business. And I don’t mean telling the truth. But saying the obvious. Let me guide your answer correctly. Your business is what your role will be in the company.
Now I don’t want you to answer wrongly. Think deep and think better. What should be your role? You are already the owner of the business. So, you can choose any title like CEO, MD, Founder, inventor, whatever title you desire. But your actual role in the company should be marketing. You are the chief marketing officer even if the company employ a marketing manager.
You have to learn how to market the business. It should be what you know more than anything else about doing business. In fact, go for training. Attend courses on marketing. Invest in learning new and better ways to market, even before you start a business.
It would be the best investment you make in your business. Although, that’s what most startup businesses don’t even consider when starting a business. There focus is more on forming the company, writing a plan, finding money and throwing their doors open to customers.
The founders may never know how to even market the business. Instead, they employ marketers. There is nothing wrong in hiring marketers. You should engage marketers. But you should be the first marketer for your business.
How to Register a Business
If you want to start a business in Nigeria, there is a formal registration requirement for it. You can also register a company in Nigeria as a foreigner. However, it’s not the same for a foreign person and a local.
And these requirements depend on the type of business you want to register. And the nationality of the individual or partners registering the company. You will also need to first apply for a search on the availability and reservation of the business name you intend to register.
After confirming the availability, you can now proceed to apply for registration on the class of the business you prefer within 60 days. But if your search is unsuccessful, meaning that the name had been registered or is under reservation by another firm, you can reapply with a new name.
However, the process is now available online and can be conducted on the Nigerian Corporate Affairs Commission (CAC) website.
Types of Business Formation
There are four types of business entities recognised by law in Nigeria. Your business must be registered under any of the categories. However, for a foreign-owned business, the minimum type of business is a limited entity. Even the minimum share capital based is pegged at ten million shares.
But a Nigerian can register all of the four types. And the minimum share capital is also lower than a foreign-owned business, at just one million share capital.
Let us take a look at the different types of business. And also show you the necessary registration requirements of business formation.
✔️ Sole proprietor
✔️ Limited Company
✔️ Unlimited Company
✔️ Public Company
Starting a Sole Proprietor Business
This type of business entity is only allowed for Nigerians. No foreign person can operate a sole proprietor business in Nigeria. It also has a minimum registration requirement. And can be applied directly by the owner without seeking the services of a lawyer or consultant.
It also has an affordable registration fee. And takes between 2 to 4 weeks to register a sole proprietor business with the Nigerian Corporation affairs commission.
You can find more details and all the requirements for each business formation on how to register a business in Nigeria.
Forming a Company as a Nigerian
As a Nigerian starting a business in Nigeria, it’s not all that smooth sail. There are regulatory bottlenecks here and there too. You still have to meet all the necessary requirements to get your class of business registration approved.
A Nigerian can register all the four classes of business. And apart from a sole proprietorship, you will need shareholders to form any of the other types of business class.
However, there is also the services of law firms that can help you ensure compliance with all the regulatory requirements. Apart from forming a sole proprietor, the other classes of business formations you are mandated by law to employ the services of consultants.
You still need to provide most of the basic requirements like that of foreign investors with some exemptions.
Forming a Company as a Foreigner
To start a business in Nigeria as a foreigner is not cumbersome at all. You just need to know the requirements, which are not much. A foreign own company share capital is N10 million minimum base. Certificate of capital importation is necessary for funds repatriation. You will need a business permit from the ministry of internal affairs.
These are just some of the unique requirements that don’t apply to Nigerians. Also, foreign investment into Nigeria is monitored by the Nigerian investment promotion commission (NIPC).
However, it’s best to hire a consultant or use the company lawyer. It usually takes between 2 to 4 weeks to process a company registration. That’s if everything goes smoothly. There may be document rejection or even rejection of business name approval. And that could increase the time.
Issues on Starting a Business In Nigeria
When you want to start a business in Nigeria, you should also be abreast of the problems in the marketplace. Don be ignorant of what could affect your business. The country’s ease of doing business level isn’t on the best rating, according to the world bank index.
If you are a foreigner coming to start a business in Nigeria, these would mean more to you. Those in Nigeria already know what’s obtainable. Although, some of them still overlook them until when they are confronted with the obvious realities.
Top 5 of the challenges:
- Widespread corruption and lousy value system
- Unfavorable market developments
- Inconsistencies in government regulations
- Difficulty accessing capital & credit
- Poor infrastructures and electricity supply
However, you can carefully prepare yourself on how to confront these challenges. You may need to put the right policies in place to withstand some of these challenges. But a foreign investor can enjoy exceptional hospitality and favours in Nigeria more than a Nigeria can get.
How Business Work in Nigeria
It may amaze you how business work in Nigeria. Although every country has its peculiarities when it comes to business processes, Nigeria seems to be exceptional in some areas.
Most Nigerians start a business considered as moving business. People look out for the opportunities believed to be in high demand and rush into them. So, at some point in time, SME’s are investing in opportunities that seem to have the most top consumer interests.
And when these interests wane the market is hurt, and late investors lose out. These are results of seminar organisers who hype on these opportunities while the demand lasts.
For this reason, many investors lose out on needed time to build on more lucrative opportunities. But you need to know that a successful business is not built on fading trends. It has to be on solid investment principles.
What is trending now may not trend tomorrow. Your business shouldn’t start on such premise. You need to research your business ideas thoroughly to know it would work in season and out of season.
Nigeria may have a challenging business environment due to the lack of significant infrastructures but its a very productive environment. You must invest in only consumer-driven businesses. Whatever people would need in the next 50 years or more is a good business idea that would work in Nigeria.
Investment Opportunities In Nigeria
If you are thinking of the opportunities in Nigeria to invest in, there are thousands of them. The investment advantage of Nigeria is more significant than that of the continent put together. The lack of necessary infrastructure in itself is one elaborate opportunity that may exist for a long time.
However, one of the most massive investment opportunities in Nigeria is in its agriculture. This one is both large and untapped. With an abundant population of the country, food is a significant need that has not been met. And the other reason is to provide the necessary raw materials to kickstart the boom of its industrial sector.
Also, it’s manufacturing sector is less than 3 per cent utilised. The country is probably one of the largest importers of consumer products in Africa. It has small industries. Which is also the primary reason for colossal unemployment.
This three-sector alone can sustain millions of investors in the country. You can also see what NIPC calls priority sector of investment in Nigeria.
Easy Businesses to Start in Nigeria
The Nigerian market is a consumer-driven economy. Most of the thriving businesses are trading companies. So, it’s usually quicker to start a trading business in Nigeria. Even without registering the business most Nigeria engages in trading business.
However, the most sort after business opportunity in Nigeria is to either be a distributor of the brand product or a major retailer. Almost all the brand names in the world have distributors in Nigeria.
The fastest way for foreign brands to push their products into Nigeria has been through distribution arrangement. The likes of Alaba, trade fair, Idumota and Onitsha markets are dominated by distributors of foreign brands. Also, significant brands like Coscharis are distributors of international brand products. Examples are BMW cars, Ford Motors, etcetera.
Franchise Businesses in Nigeria
Another easy business in Nigeria is the franchise business. Although it’s still low for now. And it’s due to the huge capital requirement. One thing also to notice in this business is that it’s dominated by foreign investors.
It’s a handful of Nigerians that actually operate franchise brand in the country. The rest is owned or managed by foreigners.
But the franchise is one easy business to start in Nigeria. It’s also profitable due to high brand equity that it enjoys. Another reason franchise business is booming as a result of Diaspora returnees. These Nigerians who are also used to the brands overseas now form the main crop of customers to these franchise brands.
Popular franchise is Nigeria includes Dominos, KFC, Chicken Republic, etcetera.
Manufacturing Opportunities in Nigeria
I wouldn’t classify this one among the easy business opportunities. But given the vast potentials of the manufacturing sector and the high imbalance in this sector, I’m obliged to reclassify it as an easy opportunity.
The most significant employment gap in the country is caused by inadequate investment in the manufacturing sector. The problem is the high turnaround time enjoyed with importation business. And the inefficiency of the power sector.
But on a long-term, the manufacturing industry is a goldmine. With China industrial advancement in production equipment over the high-cost ones from Europe, the Nigerian manufacturing sector is an easy opportunity to invest money.
Finding The Right Business Ideas
Sometimes people assume that for a business to be successful, you require a big idea. That’s because their concept is wrong. A company is built on the principle of providing a solution.
If there is any reason to doubt, it should be only on the potential of the market for the solution you want to provide. The size of a business idea should only be measured by the volume of the potential customers in need of the solution.
That means if you are starting a business, consider the size of the market. Because every idea is a good idea, even if it’s only one person that needs the solution. But if you also want to make money from it, then you have to consider the market potential as well.
So, in all the numerous business ideas you might be interested in, weigh their provisions as well as their market size. You can pick any business you find interesting to you. You can read more about business ideas here.
Why You Need to Write a Business Plan
For most SME’s their business started without any form of business plan. And that is serious because most of them began without the right funding. That is not to imply that the reason is a financial one, for accessing loans. That’s not even one of my points. But if you know why you need to have a plan, it might help in growing your business faster.
You may want to ask, why do we have a map of the world? Why do we even have a Nigerian map? It might surprise you that most of these maps are not actually accurate. So, why do we still have them?
It’s better to have a lousy guide than not have one at all. If your business has a plan, it might help keep you from deviating. It will help to remind you why you started the company in the first place. And it can also help to show what you have accomplished and guide you to set new goals.
Also, a business plan is like a building plan. If you don’t have one, you might be building a structure that is doomed to collapse some day. And if you have the idea inside of you, just take time to write it out. You can see how to write a business plan to help you.
Understanding Your Target Market
One of the many reasons for writing a business plan is the education you get about the business you want to start. There are probably many things you may not know how to start a business. But you will gain some insight during market research.
There may be other potentials of the business you didn’t know before. It may even be the right target audience. Or the best marketing strategy to adopt. Nothing would help your business more than a business plan would do.
And coming back to marketing, it’s the most critical strategy you must learn about starting a business. In fact, if you don’t know how to market the company don’t even start it at all. Marketing is too important to play around in your business.
The most important reason you should even begin a business should be you have found a better way to sell a product better than your competitors.
Action Points On Starting a Business
The moment you decide to start a business, the journey to success begins. But you have to know the steps to take rightly. Most companies fail in their first three years of starting. And the reason varied depending on the type of business, the experience of persons involved and the amount of capital invested.
But most importantly, the steps they took might be ignored but it all adds up to how to start a business that will be successful.
Be Careful Of ‘Moving’ Businesses
What is natural most times on how to start a business is to join the trend. However, Trends have a way of waning, even faster than imagined. Avoid entering the reigning trends if it doesn’t have the features of a long-standing business.
You can do that with a service but don’t do it with an entire business. Unless it’s a business like fashion that keeps trending and re-trending with time.
Research Your Business Well
You need to know your numbers well. Starting a business shouldn’t be a result of an impulse. You have to be sure of the profitability of the business you want to start. You need to know your market potentials.
That means, finding out what the market needs, what has been provided and what is lacking. And most importantly, what you can contribute to the market that is comparatively different from the competitors.
Your market research helps you find the winning formula for your business. You shouldn’t even leave this out when you want to start a business.
Draw Up A Business Plan
Of course, if you have done your market research, you won’t miss out to draw up your business plan. You need to preplan the: what, why, how, where and when of the business. And a business plan template is the right document for it.
You can write a full business plan, or you can choose to draft a simple business plan. Although, I don’t always recommend that, it’s better than not having a plan at all. A simple plan merely consists of what, how, where, when and who. It may not contain full details like market research and revenue projection. But it should be detailed enough to show you the direction you need to take to start a business successfully.
Register Your Business
Registering your business is essential. It gives you access to open a bank account in the business name. And it also helps to separate your personal income from your business income.
Starting a business entity comes with a lot of advantages, like getting funds from both banks and external investors. But it’s an excellent way to begin branding your business.
It helps you article the name of the business, its aims and objective, and even the vision and mission of the company. Then, it leads to the company logo, motto and etcetera.
Finding Miney To Start A Business
The reason to think about money is that of the role it plays on the overall startup. You need money to finance every aspect of starting a business. Your business also grows as fast as the financing. The more money you can invest the faster the company grows. It’s like adding more production lines. If you are producing in a hundred thousand capacity, your capacity increases by as much money added.
Even if you may not need the money as you start a business, you may need money for expansion. That is also a critical time for financing the business.
Start a Business Website
Your first step to open your doors for business is to start a business website. There may be a good reason to start your site early. You can start offering your products globally from day one.
That would give you a significant advantage as a beginner. A great business website is a revenue generator. And it should be a good investment to have one early.
Step Seven: Create Social Media Handles
Your social media handles should help tell the world when you are ready for business. Your social media handles can serve as a branding tool and the customer support service platform. You can make it work for you more than just socialising.
Understand each social media platform in line with your kind of business. For example, Facebook and Snapchat are great for demography targeting. Facebook has older demography, and Snapchat deals with the younger demography.
But with YouTube, you can build users even if you don’t have a fan base. Because YouTube users do searches on the platform, unlike Facebook users.
There is also a reason your website should come first before your social media handles. Your social media handles should always refer followers to your site. That way you don’t over publish on your social page.
Step Eight: Get the Required Business Licenses
If your business requires licenses like trade license, you should get them before opening your doors for business. Also, things like tax registration should be done as well. And if you are a foreign investor, you need certain permits and certifications.
As a registered business entity, getting the right licences and approvals will impact positively on your reputation. And it will open more doors of opportunity than what you may know that exist.
Nigeria is one of the fastest growing economies in Africa to start a business. And with a population of over 198 million, the potential for investors is enormous. It also has the lowest labour cost, with cheaper cost of living compared to some other African countries.
Although, it suffers from political challenges. But the country has been stable and managing unrest very well. And the main cities are Lagos, Port-Harcourt and Abuja, which is the federal capital territory.
Starting a business in Nigeria has more benefits than the perception of the country in the international market. Although it’s still a major trading partner to China, it’s wholly in love with American products and lifestyle.