According to a report by PricewaterhouseCoopers (PWC), in 2030, Nigeria will rank 22nd among the top 30 economies in the world. This places Nigeria in second place in Africa, after Egypt and before South Africa.
Nigeria was described in a recent World Economic Outlook by the International Monetary Fund (IMF) as one of the fastest-growing economies in Africa and the largest market because of its population.
With its growing middle class, Nigeria is strong for businesses.
As a Nigerian—whether in the diaspora or locally—or a foreigner, it is an achievement to invest in Nigeria’s growing economy.
In this article, we’ll provide helpful tips on how to start a business in Nigeria–from getting legalized as a foreign investor to marketing your business to applying for licenses and permits required by the government agencies that regulate most businesses.
Starting a business begins with making a choice. The choice you make is determined by the factors we will discuss briefly below.
Start with the Right Mindset
Having the right mindset is essential for anyone looking to pursue a business venture in Nigeria—or anywhere else. When starting out as an entrepreneur/business enthusiast, you must have clarity of thought and purpose; you need to decide what kind of business you want to be involved with, who your target market will be, and how much start-up capital they can invest.
Reasons for Starting a New Business
The reason for starting a new business is always peculiar to each individual. The bottom line is that you seek to serve your clients.
Specializing in a particular niche in the business world increases the trust that your customers, clients, and potential investors have in your knowledge of the business you run.
It also makes your business venture more explicit to interested parties. Knowing which types of businesses thrive in the Nigerian market is also important when deciding what kind of venture you want to pursue—you’ll need an idea that works within the culture and legal climate but also stands out amongst competitors.
Conduct a Self Assessment
Answering the following questions could help streamline your choices:
- What are the problems you can solve without breaking too much sweat?
- What are your interests?
- What is your target market?
- Are you willing to experiment with tools that could foster your business?
- How do you intend to fund your business?
- Are you willing to sacrifice profit-making at the budding stage? This is to attract clients and re-invest in the business to aid its growth.
- Who are your competitors in the business? How is your brand different from theirs? How do you stand out?
- What is your selling point?
Refine your Idea
You should regularly revisit the self-assessment questions and act on them. This gives you room to test your ideas, reassess your results, and refine your decisions. You can also get feedback from people around you.
Start with a lean plan
A lean plan is a process of continuous improvement that utilizes taking small steps, analyzing results, and making corrections when required. It follows the same trajectory as lean manufacturing. A lean plan is a small business plan only for internal use. It helps you as a business owner utilize all your resources optimally without wasting anything. An optimal lean plan has four important parts:
- Strategy: This should be a focused bullet list of what purpose your business serves. What you sell, how you sell it, who you sell it to.
- Tactics: This is how you carry out your business strategy. It includes marketing, pricing, product development, financing and so on.
- Forecasts: This involves tracking of your results and all necessary factors. You need to make a forecast of your sales, cash flow, and spending. This helps you to come to terms with the reality of the market and your assumptions, thereby enabling you to make adequate corrections for future planning.
You need to make a periodic commitment to review your plans because you need an adaptable plan that won’t restrict you. The business environment is always changing, so evolving will have to be your power tool.
To further assist you in your decision-making, you can check out our guide on investing in Nigeria and get expert business help on Counseal.
Research Your Competitors and Market
Evaluate your Target Audience
Market research helps you pinpoint the need for what you are offering and how to satisfy it. It also allows you to test your product before releasing it to reduce or eliminate losses. A good market research project will help you with these:
- Improving your decision making
- Identifying your target market and how to advertise to them
- Finding untapped opportunities in your business niche
- Staying ahead of competitors and on par with the latest business trends
- Discovering and learning investment strategies and industry-specific regulations any businesses operating successfully within your chosen business niche must adhere to.
By researching the economic climate and understanding what types of businesses in Nigeria are likely to succeed there (such as those related to agriculture or tech), would-be entrepreneurs from both inside and outside the country can ensure that their proposed enterprise stands a good chance of succeeding against its competition.
Make sure that your goals are realistic—remember that patience is key when establishing a successful business!
You can conduct primary research yourself or hire a professional to do it for you. It involves going to your target market to conduct interviews or surveys, as the case may be. This type of research is personal and helps you get first-hand opinions.
Secondary market research involves collecting existing data that was gathered by someone else. It is also known as desk research. Sources of secondary research include the internet, agency reports, libraries, competitor data, and website analytics.
Conduct a SWOT Analysis
SWOT stands for Strength, Weaknesses, Opportunities, and Threats. A SWOT analysis arms you with a solid strategy to grow your small business.
The strengths and weaknesses analysis is carried out within your company, while the opportunities and threats are things going on outside your company in the outer world.
The process of business planning includes a SWOT analysis. It will help you develop a strategy so that you start off on the right foot and know the direction in which you plan to go.
Finally, doing enough market research allows you, as a new business owner, to identify gaps in existing markets and opportunities that you can seize to gain a competitive edge over other established players in your chosen sector or industry.
Best Places to Start a Business in Nigeria
One of the important considerations for your business is location. You will need to consider the following:
- Population Density
- Level of Security
- Local business laws
- Infrastructural development
- GDP and per capita income.
In Nigeria, the following cities are considered business friendly:
- Port Harcourt
- Benin city
Write Your Business Plan
A Road Map For Your Business
A business plan serves as a road map to help you at each stage of your business, from the start to the actual management. It helps you detail all important aspects of how your business will function. Creating a sound business plan should be one of your first priorities. A well-thought-out business plan will help organize and clarify how to market your business. It also clarifies the financial, and operational needs of your business venture.
You Have a Head Start with Your Lean Plan
If you have a lean plan in place, as discussed above, you already have a bare bone summary of a business plan. What you have to do now is make the plan more detailed and add an executive summary.
What Goes Into a Formal Business Plan?
A business plan primarily does these things:
- Helps with establishing your plans for your business
- Identify and attract the required talent to grow your small business
- Highlight your financial strategy for the business. This include:
- Sources of capital
- How to generate revenue
- How to keep track of costs associated with running the business
- An affordable budget outlining all spending needs until you reach the breakeven point you desire. You should always consider all relevant taxes that are due to be paid periodically.
- Attract funding from potential investors.
- Identify the risks associated with operating your type of business venture in Nigeria.
You cannot go wrong with a good business plan. You can start by creating a free business plan in minutes.
Choose Your Business Structure
As you start out, the business structure you choose will influence your legal, financial, and operational obligations.
You should choose a legal structure that is most suitable for your business needs. We will shortly discuss three (3) legal structures in Nigeria:
- Business name
- Limited Liability Company
- Incorporated Trustees/Company limited by guarantee
This is a name or title under which a person, or other legal entity, trades. You are required to register your business name within 28 days of commencing your business. Choosing to register as a business name is a preferred choice for some entrepreneurs who are small business owners because of its affordability and simplicity of management. Registering as a business name also protects the name from being registered as a corporate name in Nigeria.
Limited Liability Company
This is a preferred choice for many because of the legal personality it gives to the business. It has a more structured administration than a business name, and the simplicity of its management depends on the size of the company. You can choose to register as a small company or a large company, depending on the amount of share capital that is registered. A small company works best for small businesses just starting out to reduce the legal obligations.
An Incorporated trustee is formed by a group of people (called trustees) who have a common goal. This legal structure is best suited for non-profit organizations, particularly for the following purposes:
- Social Development;
- any charitable purpose.
The requirements for setting up the best business structure in Nigeria are specific to your chosen business structure. There are more details on the legal structures and their requirements here.
Find the best business structure for your business in Nigeria with this free Quiz
Register Your Business
Registration with CAC is an unavoidable step in giving your business in Nigeria a legal structure.
This includes both foreign and local ventures, regardless of whether they are limited liability companies or small business enterprises (registered as business names or small companies), as well as partnerships and sole proprietorships. Aside from being officially recognized through this institution, entrepreneurs may also access resources and tax credits available only to CAC-registered companies.
You can do your registration online. See our complete guide on how to register with the CAC.
While it might set you back a little financially, registering your business in Nigeria will save you headaches down the road with paying taxes or protecting yourself legally if fraud is present. It will also give you more credibility when you market your business.
Pick your Business Location
What to Look for in a Physical Location
Picking a business location in Nigeria is critical for any entrepreneur looking to launch a successful venture. When considering where you want your business in Nigeria to be based, it’s important to understand the government regulations, tax requirements, and labour laws specific to that location that may affect your start-up.
However, certain states also have specialized resources available specifically for businesses, such as Lagos State, which offers funding programs, while other areas like Abuja are known as “ start-up hotspots,” with connectivity advantages such as fast internet services and an environment that caters more towards innovation. Therefore, understanding both public infrastructure capabilities and local support systems is essential when choosing where to open a business office. Your business location also plays an important role when you market your business as people will be more drawn to a place with easy access.
Things to consider when developing a retail location
You will need to factor in the expenses associated with your chosen locations; things like the overall cost of living, housing rental prices, access to quality healthcare services, and educational opportunities for employees all need to be considered when making your budget plan.
These costs can vary significantly from state-to-state so doing a thorough research can go a long way in helping choose an affordable yet beneficial location for launching or expanding a new retail location – especially since there are many rural villages throughout Nigeria that offer cheaper real estate pricing and potential new customer demographics worth exploring further.
The website of an online business is just as crucial as the actual location of a physical business, so you should treat it with the same level of consideration as you would when looking for a location and a lease.
When considering how you will build your website, consider the available payment platforms. A good decision you can make for your online business is to hire a website developer.
Your web host is also an important consideration. You can have an excellent website, but it will be no good if your host has too much downtime or if the speed of browsing your site is too slow.
You should consider consulting other online business owners who can provide invaluable information about a web host’s reliability.
A good website also fosters the success of marketing your business through online platforms.
Fund Your Business
Funding a business in Nigeria is the most important step toward getting started and growing. Without adequate funds, it will be nearly impossible for an entrepreneur to succeed.
There are several approaches to getting investments to fund your business. You can either self-fund the capital you need, partner with established local businesses, get grants and loans from the government, financial institutions, or international organisations, or pitch to potential investors (angel investors, venture capitalists, or private investors).
You can also enter contests to win seed money through various NGO programs. However, it’s important to understand that all forms of financing come with different terms and conditions, so entrepreneurs should do their due diligence prior to committing any funds. Read more on how to raise money for a start-up in Nigeria here.
Because of strict regulations preventing foreign investors from buying companies outright, many entrepreneurs choose equity financing or debt funding obtained via local financial institutions, such as commercial banks or development finance institutions.
The Nigerian government has a myriad of loan and grant opportunities for entrepreneurs and small scale business owners. You can take a glance at the opportunities here for some untapped Federal Government loans and here for business grants in Nigeria.
Open a Business Bank Account
Banking services are paramount to the smooth running of the financial obligations of a business in Nigeria. It makes it easy for you to keep track of the finances of your business. It will also help you raise funds through other means besides your pocket. You will have better access to bank loans through the businesss account and other forms of investment.
You would need to choose a local bank of your choice and open a business account to enjoy the benefits that come with this.
Understand Actual and Estimated Figures
It’s also essential that you track finances both internally (basic bookkeeping) and through budget forecasting to prevent any overspending, which needs consistent updating by qualified personnel who can advise on investment decisions when required.
Your business plan comes into play when sourcing funds for your business. A comprehensive business plan must have clear objectives for success in terms of profits and growth targets within respective industry contexts, so potential funders understand how you will wisely invest their money. It also helps with calculating the actual growth of your business.
Furthermore, partnerships with established corporations often involve joint ventures between the start-up company and larger firms where they exchange resources, leading to mutual benefit—if successful, both parties will share various opportunities for making businesses in Nigeria more visible internationally. Get 1-on-1 expert advice on Counseal.
Apply for licences and permits
Besides being registered with the Corporate Affairs Commission, certain businesses in Nigeria may need licences and permits from other governmental organisations in order to operate. Depending on where your business in Nigeria will be based and what kind of services it offers, finding out which permits are applicable may require some digging around; however, all applications can usually be done online through official websites.
Businesses in Nigeria that You Need a Permit/Licence for
- Waste management business: This permit is obtained from state authorities, the requirements differ from state to state.
- Food permit: This applies to restaurant business.
- Good Hygiene Practice (GHP) licence: It is issued by NAFDAC to companies that intend to sell food in commercial quantities.
- Nigerian Electrical Regulatory Commission (NERC) Licence is issued by NERC to power and electricity companies.
- Oil and Gas
- Oil and Gas Industry service Permit (OGISP)
- Offshore safety permit
- Oil mining licence
- Oil prospecting licence
- Oil and Gas Industry service Permit (OGISP)
- Financial Technology (FinTech) Service Companies
- Super licence
- Standard licence
- Basic licence
- Money Lending permits
- Private University licence
- Private Polytechnic licence
- Export and Import licence
- Freight forwarding licence
- Signage Permits
- Alcohol/Liquor licence
- Nigerian Communications Commission licence for telecommunication companies.
- Nigerian Broadcasting Commission (NBC) licence for TV and radio stations
- National Agency for Food and Drug Administration and Control (NAFDAC) permit for processed food, cosmetics, drugs, drug products, medical device, and water.
- Private Security business licence
- Mining licence for solid materials
- National Environmental Standards and Regulation Agency (NESREA) license
- Air quality permits
- Waste and Toxic substance permit
- Used Electrical and Electronic Equipment permit
- Biodiversity Conservation Permit
- Eco-Guard Certification
Of course, securing a business licence alone isn’t enough. You must make sure to meet certain regulatory requirements regularly, such as filing up-to-date financial reports or renewing particular yearly certificates/licences. Failure to do so exposes one’s company to the risk of shutdown, among other unpleasant outcomes.
However, if taken seriously, getting these documents is an important step towards running a legal business enterprise in Nigeria. This is something definitely worth striving for given the country’s unique African vibrancy coupled with the immense economic potential! You can get on-demand expert advice on Counseal.
Get the Right Business Tools
The next important thing is to invest in the right business tools that will meet your business needs.
Getting the right business tools is essential when starting a business in Nigeria. There are many regulations and formalities to adhere to in setting up a company in the country, making it important for entrepreneurs to understand what is required of them before applying for licenses and permits.
From getting your business legalized as a foreign investor and registering with federal regulatory agencies, getting work visas or opening bank accounts, having the right tools can save time, money, and resources that you can better allocate elsewhere. With easy access to training portals like Udemy, you can gain knowledge while saving huge amounts normally spent on higher education fees.
Today’s digital environment allows access to various pieces of software, such as invoicing systems or accounting programs, that make handling paperwork easier, so business owners have more time for other tasks within their companies.
Using cloud-based SaaS solutions like Microsoft Dynamics 365 will help you automate some business processes; this saves on administrative costs while remaining accurate on all compliance issues, which are of the utmost importance when you’re dealing with Nigerian government entities or banks where financial documentation must be up-to-date at all times.
Free 500+ tools for small business in Nigeria
Market your Business
The benefit of marketing your business is that it engages consumers and helps them decide whether to purchase your goods or services.
There are many ways that businesses in Nigeria can market their products or services ; some ideas include traditional methods such as print advertisements, radio spots, and television commercials but also more modern approaches like online campaigns through websites and social media platforms.
A marketing strategy, which is a component of your business plan, also aids in generating and maintaining demand, relevance, reputation, competitiveness, etc.
Depending on your particular needs, paid-for ads may be necessary for greater scale awareness; however, there are plenty of other free ways to get the word out about a business as well.
For example, using an SEO (search engine optimization) strategy allows for organic search visibility, which can cause increased website traffic at no initial cost. This method takes time, but with diligence, the desired results will eventually manifest.
Developing strategic business partnerships with those who have access to multiple channels, both local and international, could speed up process start-up times while still allowing a brand to remain focused within its own business niche or geographical region.
Finally, creating both digital and physical presentations/promotional materials provides further opportunities. Physical promotions could mean engaging customers personally at events across Nigeria as a fast way of generating leads that might turn into long-term clients/buyers depending on the quality of the product offered and the value for money spent regarding the end solution provided by your organisation.
Grow your Business
Build a team
Having strong communication channels internally also ensures smooth operations; you should hire efficient human resources should you decide not to do everything alone! In addition, hiring local professionals becomes necessary, especially if you need translation services or any cultural interpretation, such as negotiating contracts, long-term partnerships, etc.
A good business plan will help you identify the talents you need in your team. This includes research and legal, which you could outsource. After building a comfortable workforce, work on empowering your team. One of the most important benefits of empowering your team is that you increase employee motivation. Well-motivated and involved employees will communicate and collaborate better. This will aid the growth of your business.
An effective strategy for growth often involves forming partnerships with other local entrepreneurs who may have different strengths that balance out any gaps in knowledge or expertise (such as limitations in marketing know-how or network contacts required to make sales).
Leveraging these relationships will enable you to create a much-needed foundation for long-term scalability without sacrificing quality along the way.
You should also wear many hats while running a small business: customer service representative, strategist, and expert on industry trends. That’s why being well informed about growing markets and services’ inner working processes is crucial.
Never underestimate the power of networking. Developing lasting, mutually beneficial working relationships is key to keeping momentum and building a surefire path to achieving economic prosperity and opening ventures.
These tips are the most important and basic for taking the bold step of starting a business in Nigeria. It indeed takes determination, dedication to jump-start your journey as a successful entrepreneur, which is why we encourage outsourcing where possible.
Our team is readily available to support you through the process of starting your business in Nigeria.
Frequently Asked Questions (FAQs)
How can I start a business in Nigeria with no money?
Sell your time and services. With little or no money at all, you can start by leveraging your skill set to help other people and charge a fee for it. Business services you can offer include virtual assistance, freelance writing, cleaning, and personal shopping, among others.
What type of business should I start at home?
- Dropshipping business
- Online teaching classes
- Offer online services
- Make and sell handcrafted goods
- Sell home-cooked meals or food treats online
- Offer laundry services
- Personal shopping business
- Buy bulk goods and sell in an online store
- Make vlogs on YouTube or other social media networks
What business in Nigeria can I start with with no skills?
- Dropshipping business
- Affiliate marketing
- Social media influencing
- Buying and selling home essentials
What business in Nigeria can I start with 20k as a student?
- Clothes or Shoes Thrift business
- POS/Data subscription services
- Printing services
- Tutorial classes
- Student essential raw food business
- Hair care business
What are the most successful small businesses in Nigeria?
- Food business
- Real estate business
- Laundry/Cleaning services
- Dropshipping business
- Delivery business
What business in Nigeria can I start with 100k as a student in Nigeria?
- Mini importation business
- Popcorn business
- Drinks/snacks business
- Ebook publishing
- Selling of clothes and accessories
What kind of business in Nigeria makes the most money?
- Blogging and SEO
- Agriculture business
- Gym and Fitness
- Pure water production
- Transportation business
- Delivery agency
- Real estate business
- Beauty care
What type of business in Nigeria can a lady do?
- Thrift business
- Skin care business
- Food vending
- Ebook publishing
How can a woman become powerful in business?
Confidence is a very essential feature of successful business, no matter your gender. Self doubt is natural, but you should not let it overwhelm you. If you portray confidence in your interactions, people will believe that you are confident. To enhance your confidence as an entrepreneur, you should:
- Always make use of the opportunities around you
- Believe in your skills and abilities
- Believe in your abilities to juggle business and family
- Stay in touch with emerging trends
- Let your passion fuel you
- Take care of yourself
Which online business in Nigeria is best for beginners?
- Online teaching/tutorials
- Content writing
- Virtual assistant
- Affiliate marketing
- Buying and selling on online marketplaces
- Ebook publishing
What is the most profitable online business in Nigeria?
- Affiliate marketing
- Sell your products online
- Sell your skills and services
- Dropshipping business
- Freelance writing