How To Start A Small Scale Business In Nigeria With Low Capital

Do you want to start small scale business in Nigeria that moves fast while doing less in a quick time?

The Central Bank of Nigeria defines a small business as a business with 300 employees or fewer.

Or, a business with a turnover of less than N100 million per year.

Small businesses in Nigeria are also referred to as SMEs – Small and Medium Enterprises.

Knowing how to start a small scale business in Nigeria comes with lots of benefits:

• Untapped growth potential.
• Low starting cost and overheads,
• Business grants and funding
• A massive population of citizens you can sell to.

In this article, you will learn…

How To Start Small Scale Business In Nigeria With Low Capital

1. Examine Yourself

I discovered many entrepreneurs today begin with the wrong motives.

Most don’t have a WHY for starting a business online.

But it is your WHY that determines your HOW.

He Who has a WHY (purpose) can bear with any HOW (process).

If you must survive with small businesses in Nigeria, you must be tough at heart.

I wish I knew this earlier. It took years to understand.

There will be a time in your business when:

• Everything working will stop.
• Your best customers will leave.
• Things going out of control.

Entrepreneurship requires great discipline and trust in your ability to overcome obstacles.

How Do You Examine Yourself?

The questions below will help to know if you are fit for entrepreneurship in Nigeria.

• Can you identify your strengths and weakness?
• Do you have any experience with sales before now?
• Will starting small scale business fit in with your family?
• Are you ready to work with no allowances, nor pensions?
• Do you have the tenacity to survive storming days?
• How about a focused spirit in days of great success?

You can read biographies of successful entrepreneurs to get inspired.

Expert Advice on Starting Small Scale Business

Great companies starts because the founders want to change the world, not make fast buck.

Guy Kawasaki

2. Identify Problems

Before you start any small scale business in Nigeria, ask yourself, “What problem(s) do I want to solve?”

This is crucial to the success of your business.

Every successful entrepreneur today starts with solving a problem. I mean real important problems.

People don’t pay you for what you know. Never!

They pay you for what you do with what you know. – solving problems.

6 Reasons Why Starting Small Scale Business Can Go Wrong?

• The business is not solving problems at all.
• It is solving problems, but not enough to stand out.
• The business is not solving the right problem
• It is solving the right problem but in the wrong way
• The business is solving the right problem but to the wrong people
• It is solving wrong problems to the right people.

Forget the money, seek to identify as many problems as you can first.

These problems are what will form your first small scale business ideas list.

Now let’s get to see which of these business ideas on the list will bring you the pleasure and money you desire.

Expert Advice on Starting Small Scale Business

Whether in life or business, you are only relevant to the level of problems you are solving.

Oluboba Ayodeji

3. Conduct Market Research

Before you start a business, it is wise to conduct market research.

Market research is about finding out what customers need and determining how your business can fulfill this need.

Its goal is to help you find the best customers.

Market research is important to starting small scale business in Nigeria that will later become profitable.

One of the greatest copywriters, Gary Halbert, in a class, asked his students.

“What is the most important secret to success if I am to start a food business next street?”

• The first group said, The Price
• The second group said, The Taste
• The third group said, The Location.

Gary Halbert went further to unveil to them his secret to starting small scale business. And that is

A Starving Crowd.

I tell you, if there is no available hungry market for the problems you want to solve, you won’t go far.

But how do you know you have the right idea for a hungry market?

Use these three market validation points to check:

• Competitors: Are there any successful small businesses in Nigeria doing the same thing?

There is no pride in trying to be the first to do a particular business. You know what happens to those kids that submit first in exams hall.

• Use: Do people need your products daily, weekly, monthly? If they need it once, then it’s a bad idea.

That’s because you will always spend more money in search of new customers.

• Uniqueness: Can you identify one way you would stand apart from others?

Everyone loves what is new – even you. No matter how little it is.

If you meet at least two of these criteria, then you are good to go.

Expert Advice on Starting Small Scale Business

Your most unhappy customers are your greatest source of learning.

Bill gates

4. Name Your Business

Start a small scale business, choosing a name you will be proud of in the coming years.

Now that you have decided what small business ideas are best for you, you must choose a name.

This is very important and something you need to be thoughtful about.

Because the name you choose tells who you are, what makes you different, and how people will perceive you.

While it is possible to change your business name later, you don’t want to lose your long-built branding. Choose wisely

My dad retired as a civil servant, which made him eligible for pensions from the government.

But after his retirement, it became a thing of struggle to get his money.

While at this point of the article, I heard him speaking to a friend on the phone. He said:

“This company (TrustFund Pension) has been making it difficult for me to get my money (pension). And the reason why I chose them was because of their name, TrustFund. I thoughts they were TrustWorthy.”

Now you see how a business name can influence customers’ choices.

How to Choose the Best Name for Your Small Scale Business?

• Stay away from a location-based name: It makes it difficult to set up outside your location. E.g. Abuja Logistics Company

• Avoid cliché names: While they sound great, they don’t convey a business-like image. E.g. One Stop Food Joint, Freshwater Limited.

• Choose a business name with no English Meaning: It makes it easy to expand to other products in the future. E.g. Refavu

• Use Tag line/Slogan in Marketing: It makes it easy for customers to understand what you do. E.g. Delivered before 6 am.

• Avoid words that depict smallness: Someday, you will grow better than your current. E.g. Shop, Stores

• Get Closer to A than Z: This helps when a popular blogger decides to list businesses in the country. E.g. Andtab not Zandtab

• Use your name: If the business revolves around you and has no plan to sell the business in the future. E.g. Oluboba Digital Marketing Agency.

Expert Advice on Starting Small Scale Business

You may start small but don’t stay small.

Bernard Kelvin

5. Register Your Business with CAC Nigeria.

I found out of the easiest way to find out if your business name is available for free is to search the internet.

Type the name as it is on your web browser and check out if there is any

• There is a mention of the name in its exact spelling.

• Existing Facebook, Twitter, or LinkedIn page with the name.

• Website created with the domain name to make money online.

This helps you know the availability of your domain name and social media username.

Also, to check for the availability of your business name, go to the official CAC website.

Take your time to make all the searches you can

Corporate Affairs Commission is in charge of business registration in Nigeria.

So if there is an existing business using your choice of name, please stay out of it.

What to Know Before Registering Your Business

• Ensure the name create the right image for your customers.

• Choose a name that builds trust and credibility.

• Check for the domain name and see if it is available.

• Don’t use the word, “Corporation” in your business name until you finish with the legal structure part of it.

• Choose a name that is memorable, available, and allows your business to grow.

You can then go on with your registration with CAC.

Expert Advice on Starting Small Scale Business

Make mistakes faster.

Andrew Grove, Intel Co-founder

Need help with your small scale business name registration? Contact me at Hello@Oluboba.com

6. Starting Small Scale Business Needs Good Location

Some businesses need you to have a location to sell from, especially when you have staff to work with.

Imagine you own a food business; it wouldn’t be nice to allow all sorts of people to come into your private home to eat.

Instead, you can cook at home and sell at a prominent location.

You save the cost of paying for rent, electricity, water, insurance, security, and more.

As a small-scale business owner, consider having a home office and showroom elsewhere.

How to Choose the Best Location when Starting Small Scale Business

• Ensure it is the best location for your customers type. Some businesses seem to sell more in a competitive location, while others cannot.

• Don’t fall victim to agents selling you larger properties, so they earn a high commission.

• Go with a copy of the housing agreement, so you read and understand better the law governing the place.

• If you are to share a building with someone, you need to be sure who you are sharing with.

• Pay the lowest amount of rent period (3 Months, 6 Months) acceptable. Because you may discover later, that the place is not conducive for your business.

Be sure you know all you need to before you settle on a location to start your own small-scale business.

Expert Advice on Starting Small Scale Business

Price is what you pay. Value is what you get.

Warren Buffet, Berkshire Hathaway Chairman

7. Create a Business Identity

Opening a bank account makes it easy to start a small scale business in Nigeria.

Please, this is not a must, as your business will still do well in its early stage with your personal account or cash at hand.

But sooner or later, you will need a business bank account.

And since you have registered your name, it takes nothing to open one at your preferred bank.

Why You Should Open a Business Account

• A business account takes away transaction limitations you may have with personal accounts.

• It builds trust and credibility when customers see your bank details in your invoice.

• It makes it easy to audit your cash flow to know if you are positive or negative with money.

• A business account protects your personal identity since it doesn’t share your information.

• It simplifies your tax-paying process and earns you more relationship-building with banks.

Understand, not all banks in Nigeria are business banks. What most can do is to open a business account. So be wise in choosing your bank.

Another way to create a business identity is to have a separate phone line for business.

This is vital. It helps you differentiate your personal life from business.

When the phone rings, you know it’s time for business.

Other ways to create your business identity are as follows:

• Have a graphic designer design your logo

• Get business cards as they serve as a reminder of you and your business to whoever has it.

In creating your business identity, do well and keep it simple and short.

Expert Advice on Starting Small Scale Business

The value of an idea lies in the using of it.

Thomas Edison, General Electric Co-founder

8. Get a Business Plan

Writing a business plan for your small scale business may look stressful or not needed.

But trust me, whether you think you need it or not, a business is a great tool to have at hand.

A plan is not only for your potential investor but also for your own functioning.

Don’t make the mistake of running your business operations by heart.

You need a plan that serves as a road map from where you are to where you want to be.

What Components Make Up a Business Plan?

• Executive Summary:

As the name implies, is the entire summary of the whole plan.

I encourage you to write it last even though it comes first in a business plan.

• Business Description:

This is where you describe who you are, what you want to do, and your target markets.

You can describe your product features also.

• Market Analysis:

This is where you explain results from your market research.

Analyze your competitors here explaining what you know their greatest success factors are.

You want to make sure you update your business plan regularly.

• Resources:

What are your financial needs in starting your small scale business in Nigeria?

Explain how you intend to spend each Naira you get from the business?

• Pricing Plan:

Explain how much you want to sell your product or offer your service.

Here is a good place to explain how you plan to be profitable.

• Team Management:

Explain what skills you need to make your business successful.

Also, describe the role of each team member you hope to hire.

• Milestones:

This section is to check your current business progress.

You explain here things you have done and those you intend to do.

Expert Advice on Starting Small Scale Business

Chase the vision, not the money, the money will end up following you.

Tony Hsieh, Zappos CEO

9. Plan Your Marketing

A common problem in starting small scale business in Nigeria is how to promote your products.

I once helped a client of mine got 175 people calling her per day. That is what I call strategic marketing.

Marketing online gives more return on investment than any other medium out there.

How to Plan Your Business Marketing

Unique Selling Proposition:

It should be clear and brief.

Ex: New customers in 7 days or less.

Targeted Market/Audience:

You cannot sell to everyone. So, choose your most important customers and forget the others.

Consider the following when choosing:

• Age and Gender,

• Occupation and income level,

• Location and Educational Level

• Interest and Hobbies.

 If you struggle to identify your targeted customers, it means you are on too many projects.

Ex. A small scale food business serving civil servants in the area.

Message and Medium

Now it is time to turn your USP into a marketing message. How?

Use the AIDA Copywriting Techniques.

Attention: Hook your audience with a short, striking statement.

Ex. Cure Stubborn Infections in 24 hours

Interest: Stress the problem a little more here

Ex. Many of us have infections we wish were never there. And these infections are eating us up day by day.

Desire: Flame their needs by presenting an attractive solution.

Ex. Today, we have over 1000 people who testified of how ABC helped cured their infections.

Action: Tell them what to do here

Ex. Order Now and be among the first 50 people to get free delivery.

Expert Advice on Starting Small Scale Business

Get big quietly, so you don’t tip off potential competitors.

Chris Dixon, Investor

10. Move Your Small Business Online

Small business entrepreneurs have a lot to gain from the use of the internet.

The following are some benefits of moving your business online:

• It breaks geographical barriers, thereby promoting your business all over Nigeria and beyond.

• It allows customers to access you faster and easier any day, anytime.

• You spend less on administration costs and salary payments.

Yet, most small scale business still fails to maximize the full benefits of the internet.

What Website Do You Need?

If all communication with your small scale business happens one on one, then a website might not be for you.

But if you do need a website, you will need one of these two or both.

• Corporate Website: This type of website explains who you are and what you do. It goes further to showcase your team and all you want a visitor to see.

The blog side allows you to educate people about your industry and share updates on your business.

• Ecommerce Website: This type of website allows you to showcase your products or services.

People come to the website to shop for what they want and pay for it.

In moving your business online, understand you need the following:

• A fast-loading website

• Quality SEO-optimized content

• Effective social media marketing campaign

Expert Advice on Starting Small Scale Business

Always look for the fool in the deal. If you don’t find one, it’s you.

Mark Cuban, Entrepreneur

If you need help on how to move your small scale business online, contact me here

FAQs on Starting Small Business in Nigeria

Steps to Starting Small Scale Business In Nigeria

When searching on Google or Wikipedia, you are bound to find hundreds of articles on steps to starting small scale business in Nigeria.

That’s why I cut the list down to make it easier to start.

Ideas are essentials to starting, so feel free to from this list of the best business ideas.

Here is a quick recap of our steps:

1. Examine Yourself – Get a purpose to why you want to start a small scale business.

2. Identify Problems – Start solving the right problem for the right people in the right way.

3. Conduct Market Research – Get to know what your customers need and how you can help provide it.

4. Name Your Business – Choose a name you will be proud of in the coming years.

5. Register Your Business – Do this with CAC to protect every legal right.

6. Choose a Location – Consider having a home office and a showroom elsewhere.

7. Create a Business Identity – Get a business account, ID card, letterheads, and more.

8. Get a Business Plan – A plan is not only for your potential investor but also for your own functioning.

9. Plan Your Marketing – Your USP should be clear and brief in one sentence or phrase.

10. Move Your Small Business Online – It allows customers to access you faster and easier any day, anytime.