How to Start Small Scale Business in Nigeria: The Step-by-Step Guide for 2021

Starting a small scale business in Nigeria today can be profitable if you get the steps right

In this article, you will learn

  • How, with little capital, you can start a business in Nigeria.
  • List of questions to know if you are ready for entrepreneurship.
  • Step-by-step methods to handle processes like business name registration and more.
  • The 3 stages of business every entrepreneur must pass through.
  • Answers to business questions you may have been searching for on Google or Wikipedia.

Before starting, let’s see the official definition of a small scale business in Nigeria.

What is a Small Business in Nigeria?

A small scale business in Nigeria is a business with a turnover of less than N100 million per year.

It is also defined as a business with less than 300 employees.

small-scale-business-nigeria-woman-counting-money-in-her-shop-2 How to Start Small Scale Business in Nigeria: The Step-by-Step Guide for 2021
Nigeria small businesswoman counting money in her shop

This definition sums up several institution definitions of SMEs, i.e. Central Bank, Fed. Ministry of Industry.

In Nigeria, small businesses are also referred to as SMEs – Small and Medium Enterprises.

Studies show that approx. 96% of Nigerian businesses are SMEs.

They contribute approx. 1% of GDP and support in areas of unemployment.

Nigeria offers lots of benefits to small business owners in areas like:

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

Let’s get to the step-by-step methods to starting a business in Nigeria.

infographics-on-how-to-start-a-profitable-small-scale-business-in-Nigeria-with-low-capital How to Start Small Scale Business in Nigeria: The Step-by-Step Guide for 2021

1. Examine Yourself If You Are a Good Fit

Starting a small scale business in Nigeria is not for everyone.

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

Beacause, there will be a time in your business when:

  • Everything once working will stop working.
  • Your best customers will leave you for your competitors.
  • Everything under your control will seem to go out of control.
  • Your bank account will turn and remain red for days or months.

The questions below will get you to know if you are fit for starting a small scale business in Nigeria.

  • What are your greatest strengths and weakness?
  • Do you have any experience with sales (even if it means selling sweets) before now?
  • Are you one who seeks attention and desires the pity of friends and family?
  • Will starting a small scale business in Nigeria fit in with your spouse and children?
  • Are you ready to work from home and alone with no salary, bonuses, allowances, and pensions?
  • Do you have the tenacity and discipline it takes to survive storming days of business loss?
  • How about the humble and focused spirit you need in days of great success?
  • Are you ready to stand up to your feet and rise again if your business fails?

It is necessary to become tough if you are to survive with a small scale business in Nigeria.

You might as well seek help from successful entrepreneurs around you. Also, reading biographies helps you with similar stories that inspire you.

2. Get a Purpose to Why You Are Starting

Many entrepreneurs in Nigeria open their small scale business for the wrong motives.

They end up screaming, “Business is Hard”. Of course, it ought to be. If it’s simple, everyone will do it.

When I ask newbie entrepreneurs, why they want to start a run a successful small business?

I hear things like, “I want to make money and own the good things in life.”

And I ask them, “Is this enough reason to spend the next 5-10 years of your life working day and night?”

If this is you, I want you to have a rethink on why you are starting.

I am not against the place of you making money in business, nor am I in any way here to discourage you.

My aim here is to help you see the hidden light of entrepreneurship in you.

Your WHY for starting a business is more important than your HOW. For it is your WHY (vision) that determines your HOW (methods).

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

As for me, most of the businesses I started in school failed because I had no purpose for them.

I was there to make quick cash to sustain expenses in school. And so ended up wasting my time, energy, and resources.

He Who has a WHY can bear with almost any HOW.

3. Identify Common Available 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.

Study shows that an average of 93% of small scale businesses dies in Nigeria for one or two reasons below:

  • Not solving problems
  • Not solving enough problems
  • Not solving the right problem
  • Solving the right problem in the wrong way
  • Solving the right problem to the wrong people
  • Solving wrong problems to the right people.

If you learn anything today, it should be this.

“Whether business or life, you are only relevant to the level of problems you are solving.” – Oluboba Ayodeji

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.

4. Validate Your List of Small Scale Business Ideas

Before starting a small scale business in Nigeria, it is wise to conduct market research.

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

Its goal is to help you find the best customers.

Market research is important if you are to start 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.

5. Choose the Best Business Idea

So, let move on to choosing the one idea best for to start with using the two guidelines below:


You can’t deliver well in a business you know nothing about, even if it has a promising market value.

I know you can always learn more about it later, but what concerns us most is NOW, not tomorrow nor next year.

Two owners can make the same mistake in the same type of business.

The one with deep knowledge of the business will always navigate his way out, all things being equal.

Rate each idea on a scale of 1-5 according to your knowledge of them.

The small scale business idea with the highest rating wins.

Remember to be sincere with your rating.


Will you enjoy doing this business? Are you ready to sacrifice to see your business idea succeed?

I am asking because you will spend most of your time resources on the business, especially in the early days.

And for a business you are not passionate about, you won’t go that far before you call it a quit.

The way you are passionate about whom you choose as a life partner, the same you should be with a business idea.

We can proceed to name if you have chosen the best small scale business idea from the list to start with.

6. Name Your Business

Now that you have decided what small business ideas you want, you must choose a business name.

When it comes to choosing a name for a business, it’s 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.

How do you decide the best name for your small scale business?

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

  • 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.

7. Research Business Name Availability

I found out of the easiest way to found 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.

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 search you can

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

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

The only right you have when it comes to choosing a business name is on a name no one has registered.

Before you register your business name, take note of the following:

  • 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 it is available.
  • Only register a name you will be happy to use in the next 10 years.
  • 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.

8. Choose a Location to Sell From

I know it will surprise you to see this. Oluboba, who promotes work from home, telling you to choose a business location.

I chose and will always prefer when you work from home.

Yet, 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 persons 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 rents, electricity, water, insurance, security, and more.

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

The following guidelines will help:

  • Ensure it is the best location for your customers’ type. Some businesses seem to sell more in a competitive location, while others cannot.
  • Have careful thoughts about the location before you settle down.
  • 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, 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 small scale business.

9. Create a Business Identity

One way to create a business identity is by having a bank account for your small scale business.

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.

For the following reason, I want you to 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
  • Design and print out a letterhead with your details on it.
  • Get business cards as they serve as a reminder of you and your business to whom ever has it.

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

10. 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.

Below are the necessary components that make up a great 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.

11. Plan Your Marketing

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

How was I able to do that? Here they are:

Unique Selling Proposition:

What benefits do you offer that none of your competitors does?

This is what set you aside from the crowd. It is the strength you have over every other person in the business.

Your USP should be clear and brief in one sentence or phrase.

Ex for Spotile: New customers in 7 days or less.

Note: Your USP is not your advertising/marketing slogan. Develop your USP first, then marketing pitch later.

Targeted Market/Audience

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

Consider the following in choosing your preferred customers:

  • 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 serves hungry people 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.

It is time to decide what medium you want to pass your message.

You may use a billboard, banner or television.

But in all, marketing online gives more return on investment than any other medium out there.

12. 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.

Does your business need a website?

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 update of your business.

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

People come to the website to shop 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

7 Small Scale Business Ideas You Can Start From Home

  • Cleaning Business
  • Day Care Business
  • Fashion Business
  • Tutorial Business
  • Catering Business
  • Poultry Business
  • Online Business

Starting a Cleaning Business

A cleaning service is a small scale business you can start in Nigeria today with little capital.

It requires nothing than your willingness and motivation to keep a place clean.

You can start a cleaning business without buying anything. As the client can help with the tools you need.

Reasons why you should start a cleaning business:

  • It provides instant payment. You do the work and you get paid instantly.
  • There is no initial starting capital.
  • You can delegate and never have to do the cleaning yourself.
  • It is a business you can start and run from home with no need for an office.
  • You can clean in private homes or commercial offices.

Starting a Day Care Business

With more women with children returning to work, the demand for quality day care in on the rise.

Not everyone would love to go into this business as it is risky and demanding.

But if you love to play with children and ready to deliver quality service, then the child care business is for you.

Things to consider before you start a child care business:

  • You must put children first in your dealings, so they feel safe and warm with you.
  • You must be ready to build a trusted relationship with the parents of the children you care for.
  • Be composed, organized and keep to time, else you lose having a parent recommend you.
  • You need toys and equipment to keep the children engaged. Most parent will provide that.
  • You need to know and comply with the laws in charge of child care in the Nigeria.

Starting a Fashion Business

There is no doubt, fashion is in vogue with new styles and trends popping out each day.

If you know how to sow, make shoes or bags, then you can start this small scale business at home.

The advantages of starting a fashion business;

  • It comes with low startup cost and overheads.
  • You can add the addition service of training people who wants to learn your crafts.
  • You will often get customers as people like to introduce who made their wears.

Starting a Tutorial Business

With parents wanting their children to meet up with the international standard of learning, be sure you have a ready market for this.

This is one of the small scale businesses I started in my early twenties as a way to earn side income. Then, I taught JAMB and WAEC students.

It is a profitable business if you know how to get your way around the students.

What you should know before you start a tutorial business:

  • Get a good knowledge of how much other tutorial businesses charge.
  • The student will never come to meet you. You go meet them and tell them what you do.
  • Give percentage bonus to those in the community if they get you new students.
  • Recruit experienced tutors and match them with students.

Starting a Catering Business

Rather than starting a restaurant business, you can opt in for the catering business.

Catering services is something you can run from your home at your comfort.

What you should know about starting a catering business;

  • Start from your home or look for somewhere cheap.
  • Reach out to friends and families about your new business.
  • Go to banks and offices and inform them about supplying cakes for their next meetings.
  • Display pictures of your works regularly on social media.

Starting a Poultry Business

Farm and poultry is a profitable small scale business you can start at home.

More people are complaining of the harmful effect of red meats. So, they are substituting for eggs and white meat (chickens).

If you carry out your business operations well, you can succeed quick.

What you should know about the poultry business;

  • You need be knowledgeable about the birds you want to rear.
  • An understanding of the marketing aspect of the business will set you aside from competitors.
  • Nothing is a waste in the poultry business. From feeds, eggs to fowl drops, you can sell them all.

Starting an Online Business

The internet boom has created many business opportunities to everyone.

It has levelled the playing field, allowing small business owners to compete with large businesses.

And no one could have benefit most from this than those who choose to start early.

Is it too late to start? No! Nothing is late with the internet.

What you should know about starting an online business?

  • You can start and run your online business from anywhere in the world.
  • All you need to start an online business is your laptop and internet access.
  • Make your website personal, so you build trust with customers in a quick time.
  • If you are buying a domain name, get the .com of it.
  • When it is time to start your website, choose a good hosting provider.

The Three Stages of Small Scale Business

The Starting Stage

These are early moments in your business where your aim is to sell your first product.

All your focus at this stage should be to deliver value and make a profit. Nothing less, nothing more.

If you don’t act fast enough here, you will soon run out of initial and working capital.

And you know what that means? Possible end of the business.

The Surviving Stage

At this stage, you already have existing customers who have tried your products once or twice.

But since they are yet to become loyal, you promote your products or services more to get new customers.

Your greatest strength at this stage will be your customers’ trust in you to deliver great works on time.

This will most likely be your second to the third year if you run your small scale business in Nigeria. I call this the growing stage.

The Scaling Stage

This was the stage you dreamt of when you were thinking of how you want your business to be in the nearest future.

At this level, you are already delegating or outsourcing business operations to people.

This is where you enjoy the blessings of Small Work, Big Money.

Because any little effort you put into business gets you massive results in a quick time.

FAQs on Starting Small Business in Nigeria

Do I need a degree to start a business?

No! You don’t need a degree to start a business. You don’t even need to attend any business school or any formal business training to succeed in business.

In starting small scale business, do I need huge capital?

You need money to start a small scale business, but not as huge as you are made to believe. You can always start small and expands as you grow.

If I start small scale business today, how long does it take to succeed?

Your success is dependent on you, as there is no specific year it takes for you to succeed. Some entrepreneurs today became successful in 6 months, 12 months, 3 years, 5 years and more.

Do I need to leave my job to start a small business?

No! You can be working and still start and run a small scale business. However, if you want to become successful in a quick time, it requires you to devote your entire time to building. This means leaving your job.

In starting a business, must my business name be the same with business idea?

No! Your business name does not have to describe what your products or services you offer. Amazon, Apple, Google, Jumia, and Spotile are all great examples of successful companies with a name different from their business offerings.

What business can I start with 50000 Naira to 200k?

Cleaning, tutorial, pet, online are all businesses you can start with 20k, 50k, and 100k. What is more important is that you start your own business.

Is 60 too old to start a business?

No, 60 is not too old to start small scale business, neither is 14 too young. I have seen men above 60 starts a business and did perfectly. Your age is not a barrier.

Must I start small scale business?

Business is not for everyone. It can be a difficult road that seems unending. If you are ready to face the disappointment and rejections on the path to success, then go with starting a small scale business.

What business can I start with 10k in Nigeria?

Hairstylist and cleaning service are examples of businesses you can start with 10k or even 5000 in Nigeria.

How to Start a Business In Nigeria: The Conclusion

In starting a business in Nigeria, understand you will make mistakes as every other entrepreneur before you.

The most important is you act fast to correct these mistakes and ensure you don’t repeat them.

I wish you the best as you start and run your own profitable small scale business in Nigeria.