The road to becoming a successful business owner in Nigeria is not so cheerful (at least not at the beginning). There are many challenges associated with being an entrepreneur. Some of them are minor and easily overcome, while others you may just have to endure.
In this article, I will help you identify some of these challenges to prepare you as you embark on your journey into the world of entrepreneurship.
SMEs look to be the only savior for the Nigerian economy, therefore people are beginning to look into owning their own businesses than just sitting idle or waiting for white-collar jobs. Here are the top 5 challenges they contend with along the road:
This is arguably the biggest challenge for entrepreneurs, especially beginners. No matter what business idea you have or how wonderful it is, you still need money to get your business running. While entrepreneurs like Idris Kamoru (footwear designer/entrepreneur) struggle to capital for business expansion, it is more difficult for beginners to access funding than existing businesses. Here is the frustrating part:
As a beginner, you need money to get your business running but very few people are willing to invest money in an untested business. Your business must have run for a while to show it is practical and profitable. But to start the business in the first place, you need money. The cycle goes on…
The best way to raise money for your business startup is using your personal savings or goodwill from family/friends. While this is difficult, it is just common sense logic. If you have no financial commitment to your own business nobody would be willing to commit their money to your care.
I will also suggest you find people with like minds who would like to invest in the same business as you. Forming a cooperative with them will help you with the require capital to start-up your business. There are other channels for existing business to raise money like bank loans and angel investors.
2. POOR INFRASTRUCTURE
The state of infrastructure in Nigeria is just deplorable. Take electricity for instance. Most businesses require constant power supply but with the epileptic nature of electricity in Nigeria, most entrepreneurs will have to spend a lot of their money in buying and fueling generators. In fact, many businesses have closed shop or moved from Nigeria to other countries due to electricity issues.
Our major challenge was electricity. At times we would not get up to 4 hours of electricity in a day. But because power always came on at night, we introduced night shifts – Eze Chijioke
Another infrastructure lacking in Nigeria is effective means of transportation. The poor state of the roads and railways are a big challenge that Nigerian entrepreneurs contend with, making it difficult and expensive to move raw materials and final product.
This is one of those challenges entrepreneurs have to endure or at least work around. While we wait for the government to do their bit, business has to keep going somehow.
3. Government bottlenecks
Entrepreneurs sometimes have to wait 30 days to register their new business with the Corporate Affairs Commission (CAC). How about registering with NAFDAC, or accessing funding from the Bank of Industry (BOI)?
Some of these regulations and the way they are implemented just don’t make any sense. The government needs to take steps to encourage new businesses. With proper implementation of technology, business registration could be done in 48 hours, for example.
NAFDAC regulations frustrate so many businesses. Some of the entrepreneurs I reached out cannot expand their production outfit because they have applied and are still waiting (for over 8 weeks) for NAFDAC officials to visit and approve their product.
These are real challenges and they frustrate/discourage new businesses all the time. Again, business has to go on somehow while we wait for the government to do its part. It also helps for entrepreneurs to speak out, share their experiences and let the government know what challenges they face.
This challenge is mostly caused by the economic state of the country. Things are becoming very expensive and most Nigerians are trying desperately to save money, thereby cutting on their spending or spending more on basic necessities.
One solution to this challenge is to conduct effective market research and produce only what’s in demand. Here are some all time high-in-demand commodities you may want to start from.
Advertising can also help, but the greatest marketing strategy is the quality of the products or services you provide. If you provide high quality, word of mouth will spread and people will look for you.
5. CASH FLOW MANAGEMENT
Many entrepreneurs, especially the inexperienced ones, do not manage their finances properly. This is one of the reasons why some businesses start, run successfully for a while and eventually pack up with nothing to show.
Giving out too many credits to costumers will definitely affect your fund. Using fund from your business capital to pay personal bills is a poor management practice that spells doom for any business.
The solution is to plan to manage you cash effectively, do not give out too much credit, and limit diverting funds from your business to other unprofitable liabilities.
The challenges that are associated with being an entrepreneur in Nigeria are many. With determination and perseverance you can scale through them and achieve unimaginable heights of wealth.
Are you an entrepreneur? Share your experience with us. What are the challenges you face? Post your comments to let us know.