5 startup tips for Nigerian Entrepreneurs

Building a startup in Nigeria has never been more tasking and capital intensive than it is today. According to the Doing Business 2017 World Bank report, Nigeria is one of the worst places in the world to do business. Nigeria ranked 169 out of the 190 economies evaluated on the basis of ease of doing business.

With governmental bodies warped in corruption, inflation levels reaching record highs and an ongoing economic recession, successfully building a startup in Nigeria will require a change of focus from the negatives around you to what can be done in spite of these negatives. If you have decided to make this change of focus, here are 5 startup tips to help you:

 

(1)  Use resources within your reach.

The first part of starting a business is coming up with the business idea. To make sure your idea is sustainable, it is important that it is based on resources within your reach i.e. skills you possess, subjects you are passionate about and/or goods that you can easily/affordably acquire.

For instance, if you studied logistics or have any experience in supply chain management, you can capitalize on your skillset and experience to start a business in delivery of goods.

 

(2)   Make sure there is demand for your business idea

About 42% of startups fail because of lack of market demand, these startups failed because the founders created a model of the world that did not correspond to reality, and worked based on that. Before investing a kobo in your business idea, you need to ask yourself:  Who wants this right now?  Am I satisfying a need or solving a problem?

If you can't answer these questions, then your business idea is probably not going to be successful and you need to go back to step 1. When starting a business, you can either provide something that a large number of people want a small amount of, or something that a small number of people want a large amount of. Choose the latter, nearly all good startup ideas are of that type.

 

(3)   Develop a Business Model Canvas

A Business Model Canvas provides an interactive layout for you to map out your business assumptions and then test these assumptions in reality on a continuous basis; this is a practical way to review strengths and weaknesses, and improve your idea. A Business Model Canvas has nine sections:

  • Customer Segments: Who are your customers?
  • Value Propositions: What is compelling about your business idea? What need are you satisfying? What problem are you solving?
  • Channels: How is your business idea promoted, sold & delivered and Why?
  • Customer Relationships: How do you interact with your customers? How do you maintain the relationship?
  • Revenue Streams: How does your idea earn money from your value propositions?
  • Key Activities: What strategic activities must take place for your business idea to work?
  • Key Resources: What unique assets and resources must the business idea have to run effectively?
  • Key Partnerships: Who are your key partners and suppliers? What activities will they be performing and when?
  • Cost Structure: What is the total cost to run your business?

 

 

 

Starting with a business model canvas instead of a typical business plan will help you focus on testing and modifying your business assumptions, instead of focusing on justifying the assumptions. A business model canvas is the first step in perfecting the business while a business plan is a more detailed finished document to act as a tool to raise external funding.

A business model canvas puts you in the mindset that you are just getting started, you are moving through a building process and change is welcome.  For more information on developing your business model canvas, Click here for a short video or here for a comprehensive explanation on the transition from business model canvas to business plan.

 

(4)   Bootstrap your startup

Seed capital represents one of the biggest challenges that you will face in Nigeria. The ideal way to commence a startup is through bootstrapping i.e. starting with little capital and no funding from outside sources. Bootstrapping usually requires a long term saving plan and a lot of sacrifice. 

Your aim as a startup should be to pool enough funds from your savings to launch a Minimum Viable Product and focus on providing customer satisfaction. This approach will increase the likelihood of building a profitable business because if you can prove that your business idea is feasible, you will have an easier time pitching it to potential investors for expansion.

If you must go through external financing (through loans or offering equity), you need a concrete business plan highlighting exactly how and when the investor will get their money back. Starting your business with a loan is generally not advisable, there are too many uncertainties when starting a business to include the certainty of having to pay back a loan. It is more advisable to offer equity albeit as little equity as possible.

 

(5)   Launch an initial version of your idea and be ready for challenges

Planning and modelling out your startup is always a good idea, but don’t get stuck planning for too long. If you are providing a service, start on a small-scale and look to expand. If you are providing a product, create a Minimum Viable Product and present it to your target audience as quickly as you can. 

The aim at this stage is to approach your customers and get feedback on how effectively your business model is satisfying their needs. You need to be flexible and open-minded enough to pivot if and when you discover that your initial business model is wrong. Repeat these tests and continuously modify your business model canvas until you have nailed your approach and can now focus on executing a validated business model. There are no million naira ideas, just million naira execution.

A lot of startups fail because the starters get discouraged, bored or distracted and decide to move on to other things. These represent typical challenges in Nigeria and at times, you might feel like running your business is not worth all the effort, but it is imperative that you maintain focus.

Being passionate and genuinely interested in your business idea will go a long way to help you maintain your focus and power through most obstacles you will face along the way. Your startup will not fail if you have a good business model and you don't quit. It is not going to be easy, but it will be worth it. Goodluck.

 

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2 Responses

  1. Fola 2 years ago

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