3 Challenges of starting up a business in Nigeria

3 Challenges of starting up a business in Nigeria

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

the country.

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:

Sometimes the

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.