Doing business in Africa’s most-populous nation comes with its own challenges, and you have to do due diligence and market research for your products and services before commencing operations. More often than not, entrepreneurs and investors want to replicate a successful business model from other locations, forgetting that there is a uniqueness that comes with the Nigerian market and consumers.
In 2020, President Muhammadu Buhari signed the Companies and Allied Matters Act (CAMA) into law, to ease doing business in Nigeria. This law is only an offshoot to starting a business in Nigeria which entails other intricacies that will be discussed in detail below.
1. Market Research
This is an important part of starting a business. Market research begins from the moment of business idea conception, getting to know if your idea will sell within the Nigerian market or appeal to consumers. Tech lawyer and founder, Adetola Onayemi revealed that Nigeria has 144 fintech apps but needs more to cater to its growing population. However, conducting in-depth market research on tech startups will help entrepreneurs realise which part of fintech has shortages that need to be filled.
Doing feasibility studies of business locations is also part of market research. Asking your potential customers a few questions about the problem they would like you to solve for them. This will help you understand the loopholes that your own business can plug. Also, your market research should cover competitors that currently exist in the market, get conversant with their products and services, and then draw up a plan for how your own business or product can stand out among them.
2. Business Plans
A ‘Nigerian Business Plan’ is what you need to help you scale the market. This business plan should outline marketing strategies for breaking into the Nigerian market and make consumers choose your product or patronise your business. As an entrepreneur, it is in your business interest to develop a unique business model that speaks to the common Nigerian and their current situation. Replicating a model that worked successfully in a European or Asian market may backfire when used in the Nigerian market.
Your business plan should include branding and launching, marketing, distribution, taxation, business registration and company executives, getting special licences, funding and business scaling.
3. Business Registration
When you have perfected your business plan, the first step in the implementation stage is registering your business. The Corporate Affairs Commission (CAC) at the federal level and the Chamber of Commerce at the state level are responsible for registering a business.
The CAMA 2020 has restructured the process for business registration, however, the size of your company and business ventures is a huge consideration that can either hasten or delay your registration as a corporate company in Nigeria. For instance, small business gets incorporated because CAMA 2020 has streamlined its documentation and registration process while registering a corporation and NGO has become more cumbersome.
4. Tax Identity and Special Licences
The federal government has mandated all businesses operating in Nigeria to file tax returns annually with Federal Inland Revenue Services (FIRS), some states have also made this compulsory under state tax law. To be able to file tax returns you need a Tax Identification Number (TIN) issued by FIRS while states like Lagos issue taxpayers ID.
For your business to get industry credibility, you need to obtain special licences from specialised bodies and regulators like the National Agency for Food and Drug Administration and Control (NAFDAC), Central Bank of Nigeria (CBN), National Office for Technology Promotion and Acquisition (NOTAP) depending on your industry.
Recruiting and hiring will aid your business sustainability and help in achieving set goals and deliverables. Every single unit within the business is important to its growth, hence, hiring a manager, business development officer, social media influencer, and sales officer should align with the long-term plan of the business. The location of the business should be considered before hiring the team considering the realities of Nigeria’s business environment.
Starting a business in Nigeria requires you to have in-depth knowledge of more than the aforesaid five, but they are the most important ones that can either make or mar your business.