Want to start a successful business in Nigeria without capital? here is a complete guide and legal accessories for starting a business in Nigeria.
Okay, providing an in-depth analysis of the 50 Best Small Business Ideas in Nigeria. and a series of industry-specific business plan templates; Now we will analyze in detail the legal requirements, the feasibility of the market and everything you need to start a business in Nigeria. So put on your entrepreneur hat and let’s move on.
Why start a business in Nigeria?
If you are not new to the country – Nigeria, know that it aims as the Giant of Africa. This is due to its large population and economy. This country has around 182 million inhabitants and is the most populous country in Africa and the seventh most populous in the world.
Nigeria has one of the largest youth populations in the world; and therefore, Nigeria can be said to be considered a multinational state, as it has more than 500 ethnic groups, of which the three most important are Hausa, Igbo and Yoruba. Nigeria has different languages as these ethnic groups speak over 500 different languages and are identified with a wide variety of cultures.
One of Nigeria’s business draws is the sheer number of people. In Nigeria, Christians live mainly in the south of the country, while Muslims live in the north. Experts predict Nigeria to be the 20th largest economy in the world, worth more than $ 500 billion and $ 1 trillion in nominal GDP and purchasing power parity separately. In 2014, South Africa overtook South Africa to become Africa’s largest economy. In addition, the debt-to-GDP ratio is only 11%, down 8% from 2012.
Nigeria is considered an emerging market by the World Bank. It has been recognized as a regional influence on the African continent, as a middle link in international affairs, and has also been named an emerging world power.
Nigeria is a member of the MINT group of countries, which are generally considered the globe of the following countries as the BRICs. It’s also listed with Next Eleven’s economies to be among the largest in the world. Nigeria is also a member of the Commonwealth of Nations, African Union, OPEC, and the United Nations among other international organizations.
Starting A Successful Business In Nigeria Without Capital A Complete Guide
- Be ready
The first step in starting a small business in Nigeria is to prepare yourself with dignity. You might think it doesn’t matter, but it can be a fine line between success and failure. Running a business in Nigeria is difficult but very rewarding; so you have to be harder to survive. Nigeria is a difficult place to work, but since we are Nigerians; I think we have every reason to solve the problems on the ground. Now how do you prepare?
You can prepare by attending a seminar on the chosen industry you want to pursue and get all the information you need about your industry. You can also prepare yourself by accepting the reality that you might fail tomorrow; You prepare by increasing your ability to take risks, and ultimately you prepare by deciding to succeed despite obstacles and competition.
- Good business idea
To successfully start a small business in Nigeria, you need to have a good idea. In fact, any business idea or opportunity will do; other than you a pioneer of a new invention. I pointed out that any business opportunity will do because most Nigerians focus only on a business idea, not knowing that a business idea is just the tip of the iceberg in the game. entrepreneurial process of setting up a business.
A business idea is just another idea. But an idea backed by strong feasibility, a thorough business plan, and a smart sales team is no longer an idea. Now, this is a good business opportunity to be seized. – Adjaero Tony Martins
A good business idea does not guarantee business success; an average business idea with good business fundamentals does. The world is full of brilliant “ million dollar ideas ”, but the world lacks experienced entrepreneurs.
You don’t have to rack your brains to create something new; don’t try to reinvent the wheel, just find a proven industry and learn the basics. You can even decide to buy a franchise if the capital is on the ground. Nigeria has the population to absorb any product backed by a strong entrepreneurial spirit.
- Carry out a feasibility study
The third step in starting a small business in Nigeria is a thorough feasibility study before investing a dime in a business opportunity. This is essentially where most Nigerian entrepreneurs fail. I’ve seen people invest in a business idea or opportunity just because a friend or relative said the business was profitable.
I have seen people enter the industry blindly in response to unverified information. I know entrepreneurship is a risk, but entering an industry without proper knowledge of its fundamentals is suicidal. I know this because I speak from experience; My father made this mistake and paid dearly for it.
When starting a business in Nigeria, there are a lot of things to look for. from an economic point of view. Some of the factors considered are: Human development and job creation, social policy and corporate social responsibility.
- target market
- complex tax system
- legal difficulties of international trade
- monetary barriers
- Differences in Marketing Styles
Factors or Incentives for Investors to Invest in a Business in Nigeria
The desire of investors to break when they sow. Thus, the country in which the funds will be invested should really have a very fertile soil which can lead to profitability. There are several incentives that attract investors to Nigeria. Here are some of the benefits of investing in Nigeria:
- Big market
- Economies of scale
- Promising economy
- State support for economic development through infrastructure development, assistance, among others,
- Economic freedom in the form of promising legislation and the few obstacles to setting up and running a business encourage entrepreneurship.
- Strict laws related to the protection of labor rights and the environment.
- Understand your market
Before moving on to a business or industry; make sure you have a full understanding of its basic metrics. Every business has an inside secret and if you should be successful; you have to find such a secret. Understand the market for the industry you are entering and you will increase your chances of success. The best way to start is to ask yourself the following questions:
- Who are the clients?
- How do they want to be served?
- Who are your main competitors?
- Who is the market leader?
- Do you have a chance of survival?
Can you gain market share in your potential industry? These are the questions you need to answer before starting a small business in any industry.
- Write a simple business plan
This is another point where most Nigerians miss this. It is estimated that over 85 percent of small business owners in Nigeria operate without a business plan. Although I won’t criticize them, because I started my first business without any business plan; I think it’s worth breaking out of the package.
Since most business owners operate without a business plan; why you can’t leverage it and make it a competitive advantage for your business. Banks don’t lend money to businesses that operate without a business plan, but what if you do? Well, I’ll leave it to you to answer.
Please write a business plan for any business you wish to undertake. Even though it is an informal one page business plan; Write this: Your one-page business plan may not grab the attention of the bank, but it’s the way to go because it will help you focus on achieving your business mission.
- Find a beautiful place
So are you looking to start a small business in Nigeria ? If yes; so where are you going to locate your business?
- Are you going to locate your business in your region or are you going to locate your business in an industrial zone?
- Are you going to stand out from the crowd by creating your own brand in a specially selected location?
- Or are you going to work in a mall or commercial location in Nigeria?
Top 5 Best Cities to Do Business in Nigeria
Nigeria is indeed a land blessed with milk and honey, but there are places where business may not flourish. This is due to the fact that there may be factors that hinder the success of a particular business.
- Lagos Island, Lagos State
- Onitsha, Anambra State
- Abuja, federal capital of Nigeria
- Aba Abiya, state
- Kano – Kano Specify
If you are going to be dealing with general goods; then you might consider locating your business in areas like Aba, Yaba, Tradefair, Idumota, Lagos Island, Oshodi, Mile 12 , etc. But if you’re in the service industry or building a specialty brand; You may be located in areas like Ikeja, Allen Avenue, Apapa, VGC, Victoria Island, CMS, Ikoyi , etc. But wherever you choose, make sure you’re well prepared to face the challenges of the area.
- Obtain the required licenses and permits
Now, I don’t have to dwell on that very much. If you don’t want the government and its law enforcement agencies to follow you on your heels; make sure you have obtained the necessary licenses and permits to operate your business.
Every industry has regulatory bodies that govern it; So be sure to check their operating policies to make sure you’re not going against the law. Keep in mind that you may need licenses and permits from local and federal governments. So be sure to factor their expenses into your budget.
Without these licenses, you risk being restricted by the authorities involved in business law enforcement in Nigeria. They include the following:
- Authorization from the fire department . You must obtain permission from your fire department if your business uses flammable materials or if your premises will be open to the public.
- Air and Water Control Permits Check with the state environmental agency for federal or state regulations that may apply to your business.
- Sign the permit , check the rules, and get your landlord’s written approval before diving into the sign design and installation.
- License of State – The Governments of States often require the same types of permits and licenses that cities. So, if your business is located outside any jurisdiction of a city or town, these permissions apply to you.
- Sales tax license . Sales taxes vary by state and are charged at the retail level. It is very important to know the regulations of the states and places where you do business, because if you are a seller you must collect state sales tax on every sale you make.
- Health Department Approval It depends on the size of the business and the amount and type of equipment you have. The Department of Health will want to inspect your facilities before issuing a permit.
List of legal documents required to do business in Nigeria
There are several documents that must be in place to do business in Nigeria. Not having all or more of these documents in place means you may just end up in the queue. Here are some documents you will need:
- Registration certificate
- Business plan
- Non-disclosure agreement (NDA)
- Insurance policy
- Contract documents
- Registration of a patent or copyright
- Operating agreement
- Business license
- Tax Identification Number
List of government and parastatal agencies responsible for business registration and licensing and permits in Nigeria
Here is a short list;
- NAFDAC-: This organization is an organization created to interview companies involved in drug trafficking, food manufacturing, production and distribution, among others. They are responsible for issuing licenses.
- Corporate Relations Commission (CAC) -: This is the Nigerian institution which has a great responsibility in issuing founding documents and licenses. Anyone considering doing business in Nigeria should tackle this body
- Federal Internal Revenue Service (IRS) -: The Internal Revenue Service is a very important part of Nigeria. The government agency is the tax department of the government. The IRS is responsible for collecting taxes and administering the Internal Revenue Code.
- Advertising and signage LICENSE: . If you are planning to do business in Nigeria, you will need to be prepared to obtain a license / permit from this authority. This permission is tied to displaying advertisements about your business publicly and everything in between.
- Register your business
Most businesses operate in Nigeria as sole proprietors; You can follow the same path. But if you really want to build a successful business that will stand the test of time; I will advise you to register the company name or include it in your cost forecast as a short term plan.
You can choose between a single owner; form of limited or public liability entity. Once you have chosen your legal entity, you can register your business name with the Office of the Board of the company in Abuja, Alausa Lagos or anywhere near you. I will advise you to seek legal advice to avoid unnecessary mistakes.
- Raise funds
Before you decide to start a small business in Nigeria , I want to assume that you have the necessary capital to at least start a business.
- Start a business
After going through all of the above processes; this is where you start the real business, this is where you start the business. Most people make good plans, do feasibility studies, and even raise the capital needed to start a business. But for reasons which are better known to them; they just don’t start.
Perhaps it is because of the fear of failure; but I know that not everyone has the courage to start a business. Most can only dream of it, but few dare to take risks. Are you ready to take the risk and start your own business here in Nigeria ? Only you can answer this question.
In fact, this is where your job as an entrepreneur becomes more difficult, as statistics show that 75% of all new businesses start going bankrupt within the first five years. And the 25% who survived; 80% of them will fail in the next five years. This means that about 90% of all start-ups will fail within the first ten years. These statistics may be crude, but they are fully true. Are you ready to lose it all ? If you answered yes, start.
- Look for leverage
The fastest way to grow in a business is to influence the structure of established businesses. So if you want to grow taller; then look for leverage. The leverage effect can take the form of a bank loan, a line of credit with suppliers; enter into a strategic alliance with a major player or obtain a contract. Whatever leverage you decide to use; dark.
- Survival is a game
If you can get to this point, congratulations because you have just started your own small business in Nigeria. You have started the game and have shown stability ; now is the time to break through.
At this point survival is the name of the game. You might be hit by more powerful competitors; You may make a business mistake or even face complex business challenges like changing government policies, but don’t give up. Stay strong and fight it.
A quick overview for foreigners wishing to start a business in Nigeria
Nigeria is located in the western part of the country. Africa is located in the Gulf of Guinea and has a total area of 923,768 km2, making it the 32nd largest country in the world (after Tanzania). It is actually comparable in volume to Venezuela and about twice the size of the US state of California. It borders with Benin, Niger, Chad and Cameroon over 4,047 kilometers and has a coastline of at least 853 km. Nigeria is between 4 ° and 14 ° north latitude and 2 ° and 15 ° east longitude.
Nigeria is an emerging market and has already reached a lower middle income level, according to the World Bank. It has abundant natural resources, economic, legal, communications, well-developed transport sectors and a stock exchange (Nigeria Stock Exchange) which is the second largest in Africa.
Nigeria was ranked 30th in the world in terms of GDP (PPP) in 2012. Nigeria is the United States’ largest trading partner in sub-Saharan Africa and supplies one-fifth of its oil ( 11% of oil imports ). It has the seventh largest trade surplus with the United States in the world. Nigeria is the 50th largest export market for US goods and the 14th largest exporter of US goods. The United States is the country’s largest foreign investor.
Previously, economic growth was hampered by years of military rule, dishonesty and misconduct. The restoration of democracy and the economic reforms that followed successfully put Nigeria back on track to reach its full economic potential. As of 2021, it is Africa’s largest economy, overtaking South Africa.
Nigeria facts and figures that will interest you as an investor / entrepreneur
There are many facts and figures that make Nigeria work. It’s no surprise that people are forcing states to do business in one form or another because of the vast resources and minds the country has. Here are some helpful facts you might find useful:
- Nigeria, with a population of 174,507,539 in 2013, is the most populous nation and the 7th most populous nation in the world. This means that Nigeria lags behind Pakistan, Brazil, Indonesia, US, India and China (1.3 billion).
- Nigerians represent 1/5 of the total population of black Africa.
- Nigeria, with 521 languages, ranks fourth in the world. This includes 510 modern languages, two second languages without native speakers, and 9 extinct languages.
- The Portuguese reached Nigeria in 1472. In 1880, the British began to conquer southern Nigeria. The north was conquered in 2003.
- With a net worth of 16.1 billion USD, Aliko Dangote of Nigeria is the richest black man in the world.
- According to the 2006 census, Nigerians were the most educated ethnic or racial group in America.
- The proclamation of colonial townships in 2014 created “foreign quarters”, “Sabon Gari”, institutionalizing the Sabon-Garuruwa system for the “residential” segregation of foreigners in Nigeria.
- Amaros was the name of repatriated Brazilian and Cuban slaves; The “Agud” people of Lagos today. This Brazilian community includes those who were deported from the courageous “little uprising” in Portugal.
- Nigeria has the second largest economy in Africa and is classified as an emerging market due to its rich natural resources and well-developed financial and communication sectors.
- The transport sector and the country’s stock market are increasing their finances. The Nigeria Stock Exchange is the second largest in Africa.
- Oil is the main product that plays an important role in the country’s economy; it is the twelfth largest oil producer in the world.
- Manufactured goods such as leather, textiles, T-shirts, plastics and food products contribute to the country’s economy.
- Agriculture It is also important that it employs nearly sixty percent of Nigerians. Cocoa, sugar cane, yams, corn, palm oil, peanuts, coconuts, citrus fruits, pearl millet and cassava are the main agricultural products.
List of 10 well-known foreign brands doing business in Nigeria
Over the years, several brands have come to Nigeria and they are good at it. They have grown from small to large and they are getting stronger every day.
- Promasidor – Bell
- Indomie noodles
- Klin detergent
- Shoprite Stores Shoprite
- Nestlé Foods Cerelac
- Franchises UAC Foods Mr Biggs Stores
- Frieze – Peak Milk
- The Boulous group of companies raised a roll of toilet paper
- Multichoice DSTV and GOTV
List of 10 Notable Indigenous Entrepreneurs in Nigeria
Just as there are foreign entrepreneurs doing business that differ in Nigeria, there are also local colleagues. These native tycoons have grown from small to strong and have become a force to be reckoned with. Here is a list of local brands doing business in Nigeria;
- Aliko Dangote Dangote Business Groups
- Mike Adenuga, Globalcom Telecomms
- Sahara Oil Tonye Cole
- Ibukun Awosika Chair Center
- Dzhimoh Ibrahim
- Ifeani Uba
- Linda Ikeji’s Blog Linda Ikeji
- Seun Oseva Nairaland
- Femi Otedola
- Ben Murray Bruce Silver Bird Group
- Bola Tinubu – Continental Television
List of Top 10 Most Popular Indigenous Businesses in Nigeria
Owning a business in Nigeria is not rocket science. Many people have built strong businesses over the centuries; while some have not made it through their early years, others have stood the test of time and continue to grow stronger and stronger over the years. Infecting these companies has gone beyond being known only in Nigeria, to the whole world. Here are the 10 most popular local businesses in Nigeria:
- Dangote cement
- Ashaka cement
- Sugar butter
- Silverbird Television
- Continental TV
- Oil and Gas Capital
- Guarantee trust bank
- Zenith Bank