In lieu to recent recession and lack of employment in Nigeria, most
people have ventured into private businesses/companies to fend for
themselves and as well as to make a name for themselves.
Private business is owned by one person or a group of small people,for
example a family, whose shares are not traded on a stock market.
In as much as most people are venturing into private businesses in
Nigeria 80% of new businesses and startups in Nigeria fail within the first
three years. Starting up a business in Nigeria could be a wonderful
experience when your business ventures succeeds, we have the likes of
Aliko Dangote, Linda Ikeji and Ifeanyi Patrick Ubah as testimonies, however
before that there could be great challenges and difficulties that abnew
business or startup has to phase. Here are some highlighted challenges:
Access to capital and loans:
One of the most difficult tasks, for
any entrepreneur that wants to start up their very own small
business, is to raise capital for it. Simply put, capital is the amount of
money used in starting up a business or allocations used in
buying/spending on goods, services & activities. Except you’re one
of the rich kids in the block, raising capital is never an easy task and
often requires a lot of determination and patience.
Lack of financial capital is the single most significant challenge when
it comes to doing business in Nigeria. Even with series of financial
programs meant to support business, the government has always
been in a struggling position to ensure that financial capital is easily
made accessible to entrepreneurs. In most cases, entrepreneurs
have to turn to personal savings, business loans, families and
friends, or government grants to get financial capital for business.
Corruption and bribery:
While Nigeria is among the world’s
leading investment destinations and is formally a well-functioning
business environment, corruption and bribery are still serious
obstacles. There are some federal structures and policy in which one
has to pass through in some leading contracts and business deals
that could help boost your businesses, which can lead to demands
for bribes from public officials.
In 2013, Nigeria was ranked 14 most corrupt country in the world
according to Transparency International’s corruption perception
index, and organized crime is a significant problem in some parts of
Lack of infrastructure
The lack of good infrastructural facilities is a
serious problem affecting the development of businesses in Nigeria.
The state of infrastructure in Nigeria is sad. The infrastructure
challenge is faced by all the entrepreneurs, especially those who
work in the agricultural or industrial sectors. The unstable power
supply and poor transportation system have forced a lot of
businesses to close down. To run the business, most entrepreneurs
need to use generators and spend a lot of money on buying the
fueling generators and on fuel to run them. Sometimes businesses
do not even get up to 5 hours of electricity in a day, and some
companies introduced night shifts as power often comes on at night.
The insufficient supply of electricity has negatively affected many of
businesses. The truth is that many businesses have even moved
from Nigeria to other countries due to electricity problems.
Poor knowledge on how to run a business:
success of the business depends not on the government politics,
economic problems or insufficient capital but on the lack of the
entrepreneur’s experience and knowledge on how to be a successful
businessman. While some people have a chance to take
entrepreneurship courses, many start a new business from scratch
with no economic background.
Those who venture into any kind of enterprises, do not always know
how to manage and grow a business properly. They need to learn to
get relevant and adequate information about management and
marketing. What is needed is sufficient problem-solving skills in case
problems arise. Every entrepreneur faces a challenge of getting
familiar with high-tech trends that are especially hard to embrace in
the modern business.
Marketing strategy challenge:
Many businessmen face this
challenge which consists of the knowledge on how to market
/advertise products and services: print, online, mobile etc.
Businessmen want to maximize their return on investment with
efficient, targeted marketing that results in increased profits.
With no appropriate knowledge about the most effective marketing
strategies, most Nigerian entrepreneurs are trying to save money
and focus only on buying basic needs excluding the basis of
advertising and reaching targeted audience and consumers
doorsteps.The solution to this challenge is to investigate the market
and produce only those products and services that are currently or in
demand and how to make those products reach the consumers with
ease through advertising and publicity. Businessmen should be
adapted to creating marketing plans. It is important to find out what
marketing activities are effective in motivating purchases. If
businessmen do not make a marketing plan, they usually get stuck,
that’s why the business fails.
Businesspersons face a lot of challenges, and many
books have been written about the ways to overcome
them. While economic education doesn’t make a person
businessmen, it is important to get a relevant
information about the mechanisms of running a
business. Many difficulties the small and medium-sized
businesses struggle with can be solved, but
entrepreneurs need to be willing to face them and put
the needed efforts to build the successful
business.Being a businessman means being a good
manager of finances. This is the main reason why many
businesses start, run for a while, and fail. The solution is
to manage cash effectively by limiting diverting funds
from the business to the unprofitable liabilities.