Starting small business in Nigeria. Tips for starting a small business in Nigeria for entrepreneurs.
Plan your small business
Test your business idea
It is important to test your business idea when starting a small business. You should do this by carrying out a market research.
This will help you decide if there are already many similar options to the product or service your are potentially offering.
Your innovative product may already have similar alternatives sold in Lagos traffic.
How is yours different? Testing your business idea will help you determine if there is a market for your product or service.
In addition, testing your business idea will help determining how many people will be interested in your product or service.
How you’ll locate your potential customers and determine pricing.
Writing a business plan
A good business plan is a map that guide you along the way as you start your small business.
In your business plan you should have a structure for your business. Also, think about how you’ll run and grow the business.
A good business plan can help you get funding because it gives investors confidence about your business ideas.
In writing your business plan, a useful trick is to take the most pessimistic time frame you can imagine to achieve your first sale and then double it.
Once you know what the pessimistic timeline is, ask yourself whether you, your employees, and your business can survive it.
Understand the regulations
When planning your small business, make time to understand the regulations. Regulations can make markets or take markets away quickly.
Also, regulatory changes can open new markets or shut others down, sometimes with very little warning.
Other aspects you need to consider which are closely tied to understanding business regulations are:
- Business location.
- The legal structure of your business.
- Choosing and registering your business name.
- Tax requirements.
- Applying for licenses and permits.
- Opening a business bank account.
Presenting your business ideas to funders when starting a small business
Here are tips for presenting your ideas to funders when starting a small business.
- Research your market. Hopefully, you did a thorough job at the planning stage. You should be able to answer questions such as: What are your competitors doing? How is your so-called innovation different from what Aba entrepreneurs are already doing? Be prepared to clearly articulate how your business idea is different in your pitch.
- Know your potential investors. Successful people who bring money to the business typically also bring an ingrained formula for success. Study and know their past successes. They are unlikely to want to deviate from the formula that has brought them success. But, every situation is different.
- Therefore, be aware of how their success formulas can help you. But, you also need to know where they can hurt you. For example, those with big money typically look for “Type A” CEOs. Venture capitalists typically look for these aggressive, assertive CEOs types that will drive the growth and revenue of the company. If you aren’t this type of person, think twice about accepting a venture capital. Make sure you are the right type for a start-up backed by the right type of investor.
- Did an accountant or business advisor prepare your business plan? Get familiar with the figures in your business plan before you make a pitch. Review the figures with them and understand what the figures represent and mean.
- Keep the pitch simple and well structured. Make sure you practice well before making your pitch. In addition, prepare for possible questions and avoid jargon when answering the questions.
- Mind your body language right from when you walk into the room. Speak with confidence. Use props only if they will enhance your pitch.
- Show the investors you have done your research well and have thought deeply about your business idea.
- Do this by addressing the weaknesses of your business idea. You will get a lot of questions, so be prepared to give valid reasons for your decisions.
- All investors want an exit. Taking money from individuals brings one level of expectation. Taking money from individuals who have also taken other people’s money increases the level of expectation.
- If you take money from people, don’t forget that they will want to get their money out at some point. Plan for it and be ready to clearly explain your exit plan.
BUILDING AN EXECUTIVE TEAM WHEN STARTING SMALL BUSINESS in Nigeria
If you are setting up a business executive team for your start-up company and have no money to offer at the start of the venture.
Through your close networks, you may be able to recruit executive team members that are willing to support your business ideas at little or no cost (at least initially).
However, it is important that you are surrounded by a team of people that you can use their expertise and experience.
For example, those that have built companies (preferably in your industry).
Ask for advice
Ask for their advice, and listen to it. Your board is important; try to have one or two independent board members.
Alternatively, incubators and accelerators in different states in Nigeria offer entrepreneurs mentorship opportunities. You can find one close to you to help you.
An executive board plays an essential role in the success of your business. Listen to them.
In addition, make sure some board members do not have a vested interest in the business beyond a shared desire to see it meet its growth objectives and contribute to its success.
Building your team
A dedicated core team is essential for a small business start-up. Although this dedication may be tested if the company struggles.
Build a management team that does not rely solely on one person.
There is big risk when one individual is the heart and soul of a business.
Many small businesses have failed because everything depended on the business owner.
However, if your team has interchangeable parts, if something happens to the business or one of the senior management team, the business can still rely on the skill sets of other managers.
Recruiting employees when starting small business in Nigeria
In addition to developing an effective and diverse executive team. You need to find the right mix of “veterans” and “new blood” when building a team for your small business.
Young people often bring energy, new technology, and room to grown and learn, but experience is also important.
Recruit employees that will ride it out through the tough times. Empower your employees to take ownership of problems and give them the responsibility to make decisions.
In an entrepreneurial setting, it is critical to work with people who you know will deliver, even under time pressure, money pressure, etc.
Therefore, surround yourself with proven and trusted colleagues.
Other useful tips are:
Create an environment where people are free to talk to whoever can give them the answers they need.
Communication is key; don’t build structures that get in the way.
A start-up is a much different environment than a large company, and you can’t always predict how a given person will respond based on their past performance in a large company.
Some people thrive in start-ups, and some people struggle.
Tips for hiring and keep the right employees when staring a small business
- Build an attractive company culture. A small business that promotes a more attractive company culture (e.g. commitment to a valued cause, healthy work/life balance) than its rivals would appear more appealing to potential employees.
- Create an informal team climate and team support. A small business that emphasize an informal team climate would be more appealing to potential employees. In such a company, the business owner is available and actively involved.
- You as the business owner, is not only managing a business but also serve as a mentor to your employees. A small business with relational qualities such as climate that encourages innovation, managerial or team support, opportunities for feedback, informal learning, and creative thinking would be more successful in hiring talents.
- Increased responsibility/empowerment for employees. Businesses that support employees’ creativity and their individual contributions to the business success would enjoy a more innovative, success-driven image. These qualities will appeal more to candidates with high levels of proactive behaviour.
- Risk-taking employees will be more attracted to work settings in which supervisors and colleagues encourage entrepreneurial risk-taking and where there is regular pay rises. In such conditions employees can make the best use of their risk-taking dispositions.
Some other useful tips include:
- Adopt flexible work practices. New patterns of work are evolving to suit the changing nature of business. For example, contracting-out of job, part-time employment, short-term contracts, teleworking/homeworking.
- Flexible working practices can be cost effective for your small businesses and attractive for potential employees.
- However, degree of flexibility varies significantly due to the nature of your business.
- Small businesses that adopt flexible work patterns could be more attractive to potential talents.
- Focus on personal development by offering challenging jobs or tailored tasks to your employees.
- Provide opportunities for enhancing their skills through relevant training courses, development and educational programs.
- Enhance employee growth and performance through rewards.
- Encourage and implement new ideas by employees.
- Small businesses that can communicate these offers would be more attractive to potential employees.
Getting customers when starting a small business in Nigeria
Getting your first customer when starting a small business is important. Particularly, when moving into a new industry.
You may find out that what is “well known and ordinary” to you may be perceived as new and innovative.
This could be either because it is unfamiliar or because it may not have been used in that way before.
Therefore, your product or service doesn’t have to be the next “New Thing”; it just has to be new to your customers.
Identify your niche market
Identify your niche market, a product and market focus. Know who your target clients are.
At first, you should focus on one market and one product.
In addition, know the kinds of business you would refuse.
You can’t do everything, especially at the beginning. You can’t be all things to all people.
If you try to, you will likely find that you will accomplish nothing.
Depending on what you are building, you may be better off developing your product in obscurity and letting the market come to you, rather than chasing a crowded market.
As you develop your product and meet with potential customers, new markets may present themselves.
Try to have your first customer as early as possible. Early customers are not only a source of early revenue, they can also validate that you are on the right track.