Last Updated on June 23, 2019 by Chrisantus Oden
How to Start a Business: 5 Keys to Start a Successful Business in Nigeria
Many people take a leap of faith every year in their career choices. They leave their nine to five jobs and begin their own business or company. While many aspire to be entrepreneurs, a few of them really know the hurdles attached to starting a successful business. There are many requirements and steps to be followed to ensure that a business in Nigeria or anywhere else in the world starts and grows successfully. I finally took the dip myself after reading numerous papers to discover how to start your own business.
1. Have a Great Business Idea
Your first and foremost task is to have a good business idea. Take your time to figure out what you really want to do and whether you can make it work. In forming your idea, make sure that you solve a problem every day, that you have a skill that you can easily do or that you already know well and that people are willing to pay for it. You can also focus on launching another successful brand as a franchise. Franchising benefits from the fact that people already know and trust the brand, so you could start generating income from day one. It is much easier. An example is starting your own branch in Nigeria with fast-food Kentucky Fried Chicken (KFC). People already trust the name of the brand and will enter any branch around the corner. You can proceed to draw up a business plan if you have decided on the business idea you want to start up.
2. Have a Business Plan
Next is to draw up a business plan. Your business plan will help you determine which key problem your company will be solving, how it will add value for your target customer, how you plan to achieve short-term revenues and profitability, how you plan to reach market penetration & growth, how you are raising startup capital and more. You will be focused on the goal and guided by an integrated business plan to achieve what your business has planned for. Imagine a soccer team going into an unplanned game. Imagine an army marching without planning against an enemy. Then imagine a company without a plan. It is certainly going to fail. It may not be the last plan your enterprise would be working with in the long run, but before you start your business it’s necessary to create one.
You will have to show banks and investors why they ought to invest in your business when you are looking for financing for your business. Lenders and investors only risk their time and money when they trust that your company is successful and profitable. One of the most valuable tools to help you achieve your long-term objectives is a comprehensive, thoughtful business plan. It provides you with a direction for your business, defines your targets, identifies strategies to achieve your objectives and helps you manage potential bumps. Preparing a business plan helps you to identify the goals and strategies you want to achieve. So instead of spreading yourself too thin, you can focus your resources and your energy on what you need to do. The planning process also helps you to take into account possible bumps and establish a plan to manage them better when they arise.
Developing your business plan helps you step back and see what works and can be improved on in your business. If you have employees, the planning process can provide you with a good opportunity to get feedback on ideas and improvements. Your staff will appreciate this opportunity to participate. Business planning can appear to be overwhelming and long-term. However, many successful companies see this as a chance. The planning process enables you to learn about the various forces and factors that can influence your success. It helps you step back and look at what works and what you can enhance, if you are already in business. An enterprise plan helps to give you a sense of control over your business and livelihood rather than worry about the future.
3. Choose a Location
You must determine where your business is situated after having produced a comprehensive and highly intuitive business plan. Your company must ideally be close to your target customers and not to your competition. The customer demographic and everything, must be considered when you choose to locate your business office. The location you select must be around the people who are most likely to pay for your products or services.
Ultimately, the location you choose to situate your business could determine if your business will do well or not. Make sure you find out if most of the area’s human traffic falls within your targeted consumer base. You can use location analysis tools such as Google Analytics to provide you with information such as traffic patterns and lifestyle data from those who come and go in the area for a fee. Such demographics include age, occupations, and income from households. You will be able to know how well your product will sell in that vicinity by figuring out the nearby demographics. Alternatively, by looking at where your competitors are, you can save on the cost of location analysis. Due to human traffic, fast food chains usually locate their businesses right next to each other. Seeing the location of your competitors gives you a good gage of the feasibility of doing business in the area. It’s up to you to design your business model to attract more customers.
4. Startup Capital and Legal Structure
You need a clearly defined way of running your everyday business financially, acquiring products, promoting your brand, etc. before you start your business. This requires capital to carry out. There are several ways for your business to raise startup capital, ranging from angel investors, personal finance, friends & family and many more. When you have a clear way of raising and acquiring a part of your corporate start-up capital, you can move on to determining the legal structure that is to be established. However, you need to know the different types and how they could fit you before you decide on which legal structure you want to create. If you will be mostly the only person in the company, you should be following a sole proprietorship model. If you have more than one partner in the company, you can register a partnership. This means both partners are liable to the company. You would have to set up a corporation if you want to separate your personal liabilities from the liability of your firm.
Before you register your business with the relevant governing bodies, it is important to understand the legal structure you want to form around your company. It should also be noted that most SMEs are in bankruptcy, so it is not necessary that you should start your own business. However, it is always a good idea to have measures in place to protect your new business against bankruptcy that seems to plague small businesses today. If you’re not confident about this, you can recruit a legal aid to help you.
5. Register Your Business with the Government
The next step is to register your business with the appropriate governmental agency. You would need to receive an article of association if you are registering a company. Usually, this includes plenty of business information. You would need to use a lawyer for everything when registering a limited liability company. You can simply register the company as a business if you don’t want to register a company. In Nigeria, to register a business name, you don’t have to have a lawyer. The laws are different in other parts of the world. You should register with the Federal and State Tax Offices after your company or business registration. When you register with the Federal Inland Revenue Service (FIRS), your tax identification number would be provided, which you will use for many other purposes such as opening a bank account for your business and much more.
In conclusion, there are a lot of misconceptions out there about the friendliness of Nigeria to start-ups and generally small enterprise businesses. Most people are of the opinion that the government does not have policies in place to support these types of businesses but factually, the federal government of Nigeria has made strides in making Nigeria a friendly environment for entrepreneurs. Once you are armed with your business ideas and you follow the key processes that I have listed above, be rest assured that you are on the right path to successfully getting your business off the ground. However, I must add that following these key processes does not in any way guarantee business success.