Nigeria has been described as one of the most economically turbulent places in the world. To start a small business in Nigeria, you need a lot of resources and factors to be in place. You may have an amazing “billion dollar” business idea; but due to unfavorable and economically unfriendly circumstances, that business idea may not turn out to become a global entity. Below are 5 of the most distressing problems faced by small business owners in Nigeria.
ACCESS TO NEEDED CAPITAL TO START AND RUN THE BUSINESS SMOOTHLY
The greatest discouragement any entrepreneur can face is the inability to fully execute his intended business plan due to insufficient funds. This could have been a minor issue if there was access to funds and capital from external bodies and the government; but this is not the case. As a result of this, little compromises will be made in terms of staff strength, packaging, branding and publicity, raw materials used in production, quality of equipments ordered, etc. The aftermath of this is a sense of under achievement felt by the business owner.
INSUFFICIENT POWER SUPPLY
This indirectly bounces back on the problem of poor financing. The cost of starting and running a small business in Nigeria could be reduced greatly, in the presence of constant power supply. This is because 90% of small businesses in Nigeria are run on alternative energy sources and this increases their running costs by over 70%. This has caused many small businesses in Nigeria to loose their market and eventually fold up because the business owner could not afford to run the business on standby generators (due to the nature of the business). Although some small businesses can survive on low power consumption prior to any meaningful growth and expansion, others that have to do with preservation of goods and products in extremely cold conditions are less fortunate. It is estimated that Nigeria looses about $500 million annually due to lack of sufficient power supply.
UNFAVORABLE POLICIES AND REGULATIONS
Although one of the lowest in the world, the system of taxing employed in Nigeria for small businesses remains unfavorable. This is because, aside from the taxes imposed on small businesses (corporate income tax), other regulatory bodies such as SON, CPC, EFCC, NAFDAC, CAC, and other environmental protection agencies come up with exorbitant and highly unreasonable laws and demands that will weaken and eventually cripple the growth of the business. There are also a lot of unnecessary company registration and identity approval bottlenecks that need to be removed from the regulatory agencies in the system (e.g. How long it takes to open a corporate account, and number of documents and information required to do so; all of which can be simplified).
POOR ONLINE PRESENCE
It’s very surprising that, in this era of social media networking, including all the wonders it has proven to be capable of creating, many small businesses in Nigeria still have zero online presence. According to statistics, there are approximately 1.9 billion users of the Internet using at least 1 of the social media networks today. Making use of such an enormous platform can expose the business to access to empowerment instruments such as funding, raw materials, technological equipment and the most advanced business strategies and technologies.
LACK OF REQUIRED MARKETING SKILLS
This is the most important aspect of the business because it determines the continuity of the business. The sole purpose of starting any business, and it’s ultimate goal is to make sales (which lead to making profits). Making repetitive sales must be the target of every business manager. What drives sales for any business enterprise is possessing excellent marketing skills. This is made easier by identifying the prevailing market trends and more importantly, being able to predict future market patterns.
It is obvious that setting up a small business in Nigeria and growing it to maturity is an endeavor that demands hard work, commitment and tenacity, there are still many entrepreneurs with good success stories that serve as pointers to the fact the Nigerian economic market is still green.