Every year, a lot of people take a leap of faith to quit their nine to five jobs and start a business. While many aspire to be entrepreneurs, few really understand what it takes, or know how to start a business. There are a lot of requirements that must be fulfilled, and steps that must be followed for you to successfully start and grow a business in Nigeria or anywhere else in the world.
If you’re ready to take the bold step to become an entrepreneur, this step by step guide is a perfect business plan on how to successfully start a business in Nigeria. These steps will help you to plan, manage, and prepare your business for success.
Step by Step Guide On How To Start A Business In Nigeria:
Your first and most important task is to have the right business idea. Take your time to determine what you really want to do, and if you’d be able to put in the work to achieve it. In arriving at your business idea, ensure that the business would be solving a problem people experience everyday, involves a skill that you can easily hone or are already good at, and is something people are willing to pay for.
You could also focus on starting out as a franchise for another successful brand. The advantage of franchising is that people already know and trust the brand, so it would be a lot easier for you to start up and start generating revenues from day one. An example of this would be to start up your own branch of a Kentucky Fried Chicken (KFC) fast-food somewhere in Nigeria. People already trust the brand name, and would enter any branch they find around the corner.
When you’ve settled on the business idea you want to start up, you can proceed to writing a business plan.
The next thing is to write a business plan. Your business plan will help you determine what key problem your business is going to solve, how it adds value to your target customer, the business lifespan, how you intend to generate revenues in the short term & subsequently profits on the long term, how you intend to achieve market penetration & growth, how you will raise startup capital, and a lot more. A comprehensive business plan will keep you focused on the goal and guide you towards achieving what your business has set out to become.
Imagine a football team going into a match without a plan. Imagine an army marching against an enemy without a plan. Then imagine starting a business without a plan. All are definitely marching out to failure. Your initial business plan may not be the final plan your business works with, but it’s mandatory that you create one before you start your business.
After you’ve written a comprehensive and highly intuitive business plan, you must determine where your business will be located. Ideally, your business must be close to your target customers, not your competition. Where you choose to locate your business office, customer demographic, and all, must be decided. The location you choose must be around the people with the highest chances of paying for your products or services.
For example, if you intend to start up a wholesale clothing store in Lagos, Nigeria, the ideal location to set up a store would be at the mandilas market in Marina, Lagos Island. If you intend to setup a poultry farm, an ideal location would have to be a rural area close to a major city, so you can easily supply distributors, if you intend to start retailing computer and mobile accessories, a great location would be computer village in Ikeja, Lagos, Nigeria.
The location you choose is highly important and must be customer-friendly.
Before you start out your business, you must have a clearly defined means of how to financially run your day to day operations, acquire merchandise, promote your brand, and a lot more. These things require capital to be executed.
There are various ways to raise startup capital for your business; ranging from angel investors, to personal finance, friends & family, and a lot more. Once you have a clear means to raise your business startup capital and have acquired a part of it, you can move on to determining the kind of legal business structure you want to setup.
Before you decide the legal business structure you want to setup, you need to know the various types, and how they could suit you.
If you’re going to majorly be the only person in the business, a “sole proprietorship” model is what you should go for. You can register a “partnership” if you’re going to have more than one partner in the business. This means that both partners are going to be liable to the business. If you want to separate your personal liability from your company’s liability, you’d have to setup a “corporation”.
Understanding the legal structure that you want formed around your business, is important before you proceed to register the business with the appropriate government bodies.
The next step is to register your business with the government. If you’re going to be registering a company, you’d need to get an article of association. This usually contains a lot of information about your business. To register a limited liability company, you’d have to use a lawyer for everything. If you don’t want to register a company, you can simply register it as just a business.
In Nigeria, you don’t compulsorily need a lawyer to register a business name. In other parts of the world, the laws are different.
After your company or business registration, you’d have to register with the federal and state tax offices.
When you register with the Federal Inland Revenue Service (FIRS), you’d be provided with your Tax Identification number which you will use for many other purposes like opening a bank account and a lot more.
After successfully registering your business and getting your Tax Identification Number (TIN), you’d need to setup a business bank account to save your business startup capital and revenues.
The next step is to hire the right employees to co-run your business.
If you’re starting a small business in Nigeria, you’d mostly not need more than one employee to take off with. But no matter how many employees you need to work with, make sure they’re the smartest people you can find.
After all the legal paper works are complete and thoroughly validated, you’d need to focus on growing your brand and acquiring customers.
At this stage, you’d need to let your target customers easily and quickly identify the problem you’re solving for them. Let them know how your business adds value to their lives, so you can start generating some revenue, and get feedback on what you’re doing right and wrong.
Identifying these factors and correcting them early on would set you up for success on the long run.
After you’ve started running your business and have successfully satisfied your first set of customers in your initial test market, the next step would be to reach a wider audience. At this point, you’d need to create more awareness, expand to newer locations, and a lot more.
The information in this article, would arm you with the right tools on how to start a business in Nigeria. Knowledge is power! And with this detailed guide on how to start a business, you’re good to go!