Today, we’ll be discussing “How to start a business in Nigeria with little capital”.
I found out that a lot of people ask this question when making plans to venture into a new business or start a new stream of income or just diversify their investments.
Whatever motivated you to click this page, I can assure you that you will learn about profitable business ideas that you can start right now in Nigeria and be successful.
How to start a business in Nigeria with little capital
1. Get ready to do business
The first thing you need to do to start a business in Nigeria is to ask yourself this very important question, “Am I ready to put in the effort, time, and energy needed to start a business”?
This is because it’s one thing to start a business and it’s another thing to grow a business and turn it into a successful company. So, choose for yourself, do you want your business to remain a one-man business or a successful million-dollar company?
Tell you what, a lot of people in Nigeria start a business as an escape from the demands of being an employee. They feel that being an employee is too stressful, too servitude, too demanding, too… this and to that.
So, they opt for entrepreneurship – which in their minds is the easy way out. They dream of living large: flapping their laptops open on a cool beach on a sunny day to refresh their bank account and smile as they see the millions flooding their balance.
Now, welcome back to reality. In the real world, starting and growing a successful business is the hardest, most time-consuming, most demanding, toughest, and riskiest thing to ever do.
In fact, working for another person who pays your salary monthly is far easier than being in charge of your own fate as the owner of your business.
So, to succeed, you need to be ready to give the needed time, energy, passion, effort, money, focus, and all that is required to grow your business. There is no shortcut to success in business, it’s pure raw hard work and determination.
2. Provide a solution to a problem
Once you’ve answered the first question about your readiness to put in the effort to start and grow a profitable business in Nigeria, you need to then ask yourself the next question, “what problem do I want to solve”?
To answer this question, you don’t need to rack your brain too much. Just pay attention to the people around you and your surroundings.
What is the pain point that people have? What do people seriously suffer for? What product or services exists but can be improved upon or done differently to solve people’s problem? Will people be willing to pay for these products and services I want to render?
These questions are important because launching a business idea that you got from your dream that sounds so nice may not necessarily work. You’ve got to be solving an important problem!
The mistake many people make in Nigeria is that they just look around for businesses that seem to be making-money or fast-selling and then copy and paste. At last, their business crashes because there are just too many people juggling for the few people who need the services in the first place.
So, will you want to play smart or play fast? I’ll advise that you play smart and fast. Find a problem that exists, make sure people are desperate for a way out of it, and then plug in your solution. Then you can start a lucrative business idea from that point.
3. Carry out a market research
Once you’ve identified a lucrative business idea to start (a solution that people will be willing to pay for) with little capital, then you got to make some research to see the numbers for your business. By numbers, I mean how large the market is.
The market is everything. Take for instance, if you figured out a fantastic business idea, let’s say selling anti-aging solutions for women above 70+ in the very urban parts of Lagos. Let’s say your total optionable market is about 500 people at large.
Now, how easy would it be for you to grow that business and scale it with just 500 or fewer customers. Now, compare that to a business with hundreds of thousands or millions of markets.
Now, while you may want to niche down and focus on a specific market segment, the numbers matter because that would account for your cash-flow. And remember, your cash-flow is the life-blood of your business.
So, carrying out market research would help you know your figures. How many people need your solution; how many people would want to buy it, how many people can afford it, how many people would have the purchasing power to buy your product.
Who are these people; where do they live, are they male or female, middle-class, educated or not, etc.?
Once you’ve figured out these facts and figures from your market research, you would have found the answers to some of the most pertinent questions about how to start a lucrative business in Nigeria for yourself.
How to start a business in Nigeria with little capital
4. Test your product or services
Just before you put any amount of investment in your business – small capital or large, please make sure you test your product or services with some potential customers or clients.
Once you’ve figured out the 3 points I mentioned previously above, you may want to create a prototype of your product or services so you could test it with a typical potential customer that you plan to sell the product or services.
Let’s take for example someone who wants to go into the business of selling home-made nutrition-filled animal foods.
Because their animal food may have some unique components or spices, they need to make samples for their potential customers – people who are into animal farming- so that they could see if it’s a good fit and a product that they would be willing to purchase.
In fact, you may test and see how much they would be willing to pay for your animal food so that this will guide your pricing strategy when you eventually hit the market.
With the result of your product testing, you can come back to the drawing board and make some adjustments or new decisions entirely. You may decide to reduce some items or add some or even start a new product entirely, it all depends on the response you get.
Make sure you test your product with not just one potential customer or one segment of your customers but test your products across different categories of potential users so that you can get an objective and wide-range of responses that would inform your decisions.
Taking this vital step in starting a business with little capital will save you of promotional wastes and even wastage of money, time, and resources.
5. Write a business plan
Writing your business plan is another vital step when starting a business in Nigeria with little capital. Unfortunately, many entrepreneurs underplay the importance of writing a business plan, thinking they do not need a business plan to start a business that will make them money. Some would even say, “na business plan go bring customers to my business?” lol.
I want to believe that you are not of the people with this limiting mindset.
There are two types of business owners, those who are into buying and selling and want to remain to do that and those who want to grow successful and sustainable million-dollar businesses. Now, make your choice.
If you have settled for the latter, then we can continue this discussion, if not, you can leave this page now, because anything else I would be saying will not make sense to you. For you who want to create a successful, sustainable business that would outlive you, you need to create a business plan.
Writing a business plan for most people who want to start a business in Nigeria sounds ambiguous and scary and technically. But in reality, it’s nothing like that.
A business plan like the name implies is a plan of what you want to do with your business, how you want to do it, and the goals you want to achieve with your business, simple!
A business plan gives you a sense of order, purpose, and direction. It guides you and other team members in the business in carrying out the day-to-day activities of the business, nothing more, nothing less.
I know a lot of people like you find it challenging to come up with a business plan, so, I have put together a business plan writing guide that can help you in putting together a simple, easy and short business plan for your business here. At worse, you would contract it out to an expert while directing them on what should be where.
6. Register your business
As they say, it’s safer to err on the side of caution. If you want to start a business in Nigeria and you want anyone to take you seriously either an investor or customers or even employees and team members, then you have to register your business.
There are many benefits that come from registering your business. One of the benefits is that your business can stand on its own as a legal entity.
When your business is also registered, you can be sure that your business name is protected and the business can use the exact name as their registered name.
Another advantage of registering your business is that it allows you to access some benefits for your business. For example, when trying to process loans, you may be required to submit certain documents including your CAC details. If you cannot produce it, you may forfeit such opportunities.
Let me also tell you that registering your business in Nigeria doesn’t have to cost you an arm and leg. A lot of business owners in Nigeria intending to register their businesses assume it’s expensive to do so. It’s not. I can assure you that you can afford the fees, and you should register your business.
This simple guide on how to register your business in Nigeria will help teach you how to register your business and your business would have been registered in a matter of days.
How to start a business in Nigeria with little capital
7. Fund your business
Over 80% of small and medium enterprises in Nigeria close up in the first one-year. In the united states, only 20% of businesses die in their first year. If you ask those business owners of the 80% of businesses that failed why their businesses failed, most of them will give one answer – funding.
Funding is very important to the growth of a business. You need that working capital in the first few years of the business lifespan to stabilize the business, fund costs, and just keep the business afloat.
Many who want to start a business in Nigeria with little capital do not have any tangible amount to start a business.
Some may want to start a business in Nigeria with 20,000-naira, 5,000 naira or even 500,000k. Yeah, you can start a business with 20k or 50k or even more but how do you keep the business afloat without touching the profits that ought to be set aside from other expenses?
How do you pay for office/shop rent, pay staff/team, pay other bills without touching the capital for the business? Many businesses fail because business capital is diverted into other things that shouldn’t’.
When you consider all these, you will see the need to get funding for your business in order to grow without risking closing up.
And when I talk about funding your business, don’t get me wrong, I am not saying you should get a loan from the bank, NO! There are many ways to get funding for businesses these days and you would be surprised that you can fund your business through these means.
These 8 surefire ways to raise money for your business in Nigeria will is all you need to raise funds for your business.
8. Build a team
So, you think you are so knowledgeable and skilled at your business and you can single-handedly handle every aspect of it without needing anyone’s input? Even if you are a superman, you still need a team to grow faster.
By getting a team I don’t mean you need to hire 5 people or ten when starting your business, you may just have a co-founder or an employee with whom you work together.
However, if you can’t afford to get anyone on your team, for now, try and get them as soon as possible and make sure you specify their roles in the paper while it’s you who does all the work for now.
Having a team – no matter how small – allows you to concentrate on the most important aspect of the business – making money. The money-making aspect of your business may be writing out proposals to prospects or writing sales copy, etc., and these activities must be prioritized.
When you focus on every detail of your business from replying to emails to posting on social media, then, you won’t be able to put in the needed energy in the life-blood of your business, your cash-flow.
And that’s why you need to have other people focusing on different aspects of the business so that everyone can be productive and the business can move forward.
9. Become a strong salesperson
If you want to start a business in Nigeria with little capital, there is one skill required of you, it’s called sales skill. You need to have sales skills because selling is at the core of your business, of any business. You need to sell your products or services to make money.
You need to make money to keep the cash-flow running and you need the cash flow to keep your business running. So, selling is at the center of your business, no matter what your product or services are in.
As the owner of your business, no one should be able to sell your product or services more than you. Even though you may have salespeople, you should be the one spearheading that department, because you are the chief sales officer of your company.
If the business makes a huge volume of sales and large enough margin to guarantee a profit, then it will rob well on the business, if not, it will equally affect every aspect of the business too.
So, this is why you need to be on top of sales of your business, it’s the most important aspect, cos that’s why you are in business – to make money, among other things. Otherwise, you’ll be a charity.
10. Invest in the marketing & sales of your business
You can have a fantastically amazing product for all I care but you don’t tell anyone about it and see what will happen.
When starting a business in Nigeria, you need to get the word out there about your product or services, especially when you’ve ticked all the boxes in the points above. When you have an amazing product, let people know about it, market it.
Marketing your business will definitely have financial implications as you need money to effectively market take your message to the length and breadth of where your customers are. However, don’t wait till you have lots of money, start using whatever means you have to get the word out about your business.
Use word of mouth, customer testimonials, mini-influencer marketing, digital marketing, etc. And when you can afford the budget, then go for other equally effective promotions for your business and then see results multiple folds. No, that’s how to grow your new small business in Nigeria.
As usual, if there is anything I left out in this article, let me know in the comment session. Also, let me know if there is any step you feel entrepreneurs should take when starting a business in Nigeria that I did not mention.
Do well by following us on our YouTube channel, we have awesome content there and also social media platforms too. Feel free to let me know on the YouTube channel if there is any topic you want me to discuss.
Other frequently asked questions about how to start a business in Nigeria with little capital are:
What business can I do in Nigeria with little capital?
There are a lot of businesses to start with little capital in Nigeria. Some of them are: production and sales of hand sanitizers, start sub-dealership of Kiksolyn Herbal tonic, mini importation business, daycare services, laundry services, Interior Décor, raw foodstuff sales, cooking and delivery, weight loss consultancy. Etc.
What business can I start with little or no capital?
These are some of the businesses you can start with little or no capital in Nigeria. They are Sales of honey/palm oil and other naturals, Production and sales of bedsheets/ pillowcase, Sales of skincare products, General Cleaning – Homes and Offices, General Cleaning – Fumigation, Ice cream, and healthy yogurt production.
What business can I start with 20,000 naira?
These are some of the businesses you can start with 20,000 in Nigeria. They are Sales of honey/palm oil and other naturals, Production and sales of bedsheets/ pillowcase, Sales of skincare products, General Cleaning – Homes and Offices, General Cleaning – Fumigation, Ice cream, and healthy yogurt production.