25 Principles to Help Your Business Succeed in Nigeria
Ignore them at your peril
Starting a business in Nigeria is difficult, and so is running it. But you likely already knew that. So, why make it any harder? Many people rush into business and try to save money in the process. In their hurry they ignore many of these principles. And they have all either failed or suffered for it. You can avoid the same fate by applying the following ideas.
1. Division of Labour. This is exactly as it sounds: dividing labour. In practical terms, it means breaking up the process needed to reach a goal into different tasks. For example, a bakery might have someone mix and knead dough. Meanwhile, someone else bakes and packs, and a third sells or delivers to customers. This can make an operation more efficient and manageable.
Remember, division of labor should not multiply the work. So, don’t do in two steps what you can do well in one. But if you work alone, this may prove difficult. After all, you can only multitask so much. That’s where some equipment can help. A refrigerator, for instance, can allow a caterer to shop and prep perishable items once a week. This will leave her week open for cooking and delivery.
2. Economy of Scale. This is the cost benefit that comes from making or buying things in bulk. Granted, every budget is not equal. But you can still apply this principle with a low budget. This will mean planning your products around a few key inputs. The bakery mentioned earlier may need to keep their menu basic. That way they can buy key ingredients like flour, oil and milk in bulk.
Remember, if you’re starting out or on a tight budget, you don’t need a plethora of product offerings. Also, the few products you choose to offer should share most of their ingredients. Finally, use your time, equipment and labor to their full capacity. Doing this = you produce more with less time and money = more profits + lower prices.
3. Return on Investment. This is the gain or loss a given investment generates compared to its cost. Understanding and applying this concept can help you avoid frivolous expenses. For instance, a one-man cassava farm on a plot of land does not need a tractor. When, if ever, will that farmer sell enough cassava to recover the tractor’s expense?
Remember, such an evaluation will keep your business expenses in check. Ask yourself: “Is this business expense reasonable, given the current economic outlook? Will I use it to its fullest capacity? Can I maintain it as needed? Can I do without it?” Answer those questions with objectivity, not with wishful thinking.
4. Self-sufficiency. You are self-sufficient when you have everything you need. This include the materials, tools, and skills necessary to reach your goal. An example of this is a solar-powered cyber café whose owner can fix computers and solar panels. This woman will neither need to pay rent, buy fuel, nor hire a handyman. Her cost of operations will be lower than her rivals’.
Remember, You don’t have to pay for what you already have or can do yourself. But it may be hard to achieve full self-sufficiency. If so, you can opt for partial self-sufficiency. Say you can’t afford solar panels, or you don’t own your building. You can still learn how to operate and maintain your generator and computers. But your ultimate business goal should be full self-sufficiency.
5. Sustainability. A good way to look at this is by asking whether your processes can last. If you sell firewood or charcoal, how long can you keep buying or logging wood before it gets too scarce? Since your business depends on wood, the sustainable course would be to grow your own trees. Managing a secure woodland would give your business a measure of certainty.
Remember, agribusiness is more sustainable than foraging and hunting and fishing. Plus, sustainable practices can provide control and ensure the longevity of your business. If you want to build a business that will last, it has to be sustainable.
6. Scarcity and Choice. The relationship between scarcity and choice is an important one. Usually, the less available something is, the more people want or need it. Take, for example, PPEs during the initial stages of the pandemic. This tends to lead to price hikes as we saw. Yet, the reverse is also the case. Lobsters used to be so plentiful, that only poor people and prisoners ate them.
Remember, depending on circumstances, scarcity has no bearing on choice. It would hardly matter how scarce pigs are in a devout Muslim or Jewish community. So, a wise entrepreneur provides relevant new products and solutions for unsolved problems. Coming up with better solutions is another way use scarcity.
7. DIY. The old “if you want something done, do it yourself” cliché is timeless. Especially when doing business in Nigeria, you need to do most things yourself. This is not because of inadequate supply of capable people. Not at all. It is because of the risk of sabotage and fraud. Nigeria overflows with stories of relatives tasked with building houses that never materialize.
Remember, owning or starting a business in Nigeria is not what makes you a business person. Running it is. So, unless you can afford to lose it, don’t put your hard-earned money into another person’s hands. Neither friend, nor cousin, nor salesgirl, nor son will make you rich. There are outliers, but you wanna bet?
8. RRR (Reuse, Repurpose, Recycle). It’s amazing how much you can save, and even make, by doing this. Leftover food from a restaurant is far from trash, if you play your cards right. It can feed livestock or a biogas digester. In turn, waste from livestock and biogas digester can feed plants. In turn, biogas, plants and animals can return to the restaurant as fuel and ingredients.
Remember, the rags of one process can be the riches of another. So, avoid throwing away byproducts from your main business. Instead look for creative ways to reuse, repurpose, and recycle them. By adding value to waste, you won’t be wasting valuable resources.
9. Research and Development. The world moves fast nowadays. Today’s cutting edge will be tomorrow’s relic. That’s a guarantee. So, as another cliché goes, adapt or die. Adapting to rapid change in a business landscape means innovation and experimentation. It means finding a better version of the goods and services you offer before your competitor. “Na so we dey do am,” and “Na so I learn am,” shouldn’t be the only way you ever do it.
Remember, the day you stop innovating is the day your business dies. It may not look like it, but wait until something better comes along. Superpowers and corporations understand this. That’s why there’s an arms race going on in Artificial Intelligence right now.
10. Brand Identity. The feelings your goods and services evoke in peoples minds is your brand. This has everything to do with the reputation of your business and its offerings. Meanwhile, your name, logo and other trademarks are identifiers which carry that reputation. You have a terrible brand if your food always makes people sick and your drinks are never cold.
Remember, it doesn’t matter how fancy your name and logo are, or how fitting your sewing is. If an equal competitor emerges and makes your customers feel better than you do, you’re done.
11. Value Proposition. This is the promise your business makes and the expectations it creates. Suppose you open a concrete block industry with a sign that reads, “Strong Blocks Here.” You are, in effect, proposing to the public that they will get strong blocks if they bought from you. What, then, would a buyer expect when they pay for your blocks? You guessed it.
Remember, your proposition or promise includes all you say and do. If you have a no-returns policy and refuse to show how strong your blocks are, customers will be cautious. So, be clear about your offering, and follow through. Your reputation is at stake.
12. Adaptability. Can your business withstand sudden change? Can it survive and thrive under uncertain conditions? Two yeses mean it is adaptable. Two nos, and you have work to do. My mother’s meat and catfish business was often plagued with uncertainty. Extended power outages and erratic market cycles sometimes called for urgent storage. She adapted by drying and smoking both as needed.
Remember, your plan B may not be ideal, but it is the next best thing. Have one in place, and then another. If you foresee a crisis, start putting potential solutions in place. Adjust your arrangements. Either postpone or prepone shopping to avoid ember month scarcity and price hikes. Have alternatives for all essential items.
13. Customer Service. As it sounds, this is how you or your business interacts with or serve customers. This can be in person, over the phone, and through a chat box or email. It encompasses your attitude, tone of voice, promptness, tidiness and more. Good customer service makes the customer feel appreciated, dignified, and satisfied.
Remember, customer service affects your brand. It’s not only about the one sale. If your performance is excellent, customers will sing your praises to the world. If it is terrible, customers will warn others to steer clear. If it is average, customers may not remember or talk about you. Good word of mouth is king in marketing. Strive for it.
14. Delayed Gratification. This is the exact opposite of get-rich-quick. No doubt, it requires patience and a long-term view of your business. For a while, you may need to reinvest most or all your profits, to grow your business. But the rewards can be worth the wait. An example of this is a poultry that made a million naira in profits within its first year. Gains were then used to build a hatchery.
Remember, the old adage promises the patient dog a large bone. So, instead of withdrawing your next business gains, be patient. See if you can repay debt, make needed repairs, or increase your capacity. You can speed up the growth of your business and future returns, if you are willing to wait.
15. Market Research. Starting a business anywhere can be like putting your hand in a hole. The more you know about that hole the better. Market research is akin to scoping the hole. You want to know the who, what, which, where, when, how, how much, and why of your market. Ask yourself: ‘What is my product/service? How do I produce or source it? Who are my customers? Where are they? etc.’
Remember, each business, location and circumstance is different. So the questions may vary. But, they need adequate answers. If you venture into business without asking the right questions, you might get stung.
16. Customer Acquisition. This is how you get new customers for your business. Advertising, free trials, giveaways, salespeople, and word of mouth are all common examples. Costs of attracting new customers can range from nothing to millions of naira. The irony is that the most effective method is the least expensive one: word of mouth. But, for a new business, it can be the slowest method too.
Remember, a strong brand, exciting offer and loyal customers go a long way. So, focus your efforts and resources on impressing and satisfying your first customers. Your grand opening is a good place to start. Do a press release, put up signs, or distribute some fliers beforehand. Then try to impress and please every customer after that. Boost your efforts with an ad or promo, once in a while.
17. Less is More. This may sound counterintuitive, but it isn’t. It’s the same idea as ‘the simpler the better.’ Beans and bread is a match made in heaven. Add sardines, eggs, avocados, mayonnaise, and coconut, and you’ve got yourself a disaster. See? Less is more. In business terms, too many choices can paralyze your customers, waste time, and cost more. Also, complex solutions are stressful.
Remember, offer few, simple products and solutions to your customers. This will save you time and money. You can gain experience faster, scale up quicker, and stress less. All because you focused your efforts and resources towards simpler offerings. This is evident when you buy or produce only a few things in bulk, versus tiny amounts of plenty things.
18. Nepotism Begets Ruin. Nepotism is when you base your business decisions on close personal ties. You hire your illiterate, inexperienced brother as manager of your company. Or you lend money to your friend without collateral. Your brother mismanages your staff, customers and money. And your friend defaults on her loan. You end up ruining your business and personal relationships.
Remember, you will reap what you sow into your business. Incompetent, dishonest and lazy family members won’t change because you hired them. Also, jobless friends with only a dream can’t repay a loan. So, always pick better qualified candidates over family and friends. Your business will thank you for it.
19. Diminishing Returns. This is the shrinking benefit each extra input provides. Take farming for example. After a point, adding extra fertilizer to the soil will make no noticeable difference. In time, it will make no difference at all. And if you keep adding more, it may even have negative results.
Remember, each process, product and business has an ideal set of inputs. Find your sweet spot and stick to it. Make sure any deviation from it is deliberate and worthwhile. If more or pricier inputs won’t boost the usual result, omit them.
20. Pennywise, Pound Foolish. Saving money in your business is a noble end. In fact, it’s the next best thing, after making money. But being too stingy can harm your business. Underpaying employees may lead to grumpiness, poor performance, sabotage and theft. Also, cheap materials and rushed processes lead to substandard products. Any of the above results will affect your customers.
Remember, excellent materials + ample time + happy, qualified workers = excellent products + superb service. In return, you get satisfied customers, more sales, and premium prices. But, if you skimp on these essentials, your business will suffer. Also, quality tools and infrastructure will save you time, tears and money.
21. Opportunity Before Dreams. Everyone can’t be doctors and lawyers. Someone has to feed society, make clothes, and build our houses. Granted, you or your child could still pursue law and medicine. But dreams need more than ambition alone. They may also need money, talent, passion, and a future employer or clients. If you have all the above, kudos! If not, do something else.
Remember, treat higher education like training for a future business. If everybody is doing it, you should likely head the other way. Less competition gives you an invaluable edge. And if you’re sure that university is not for you, you have other options. You can learn an in-demand skill. Convert university tuition to apprenticeship fees, land, and necessary tools of your trade. Pursue your dreams later.
22. Family Business. What does LEGO, Chanel and the makers of Raid have in common? They’re all family businesses. That’s right. And they’ve been around awhile. The idea here is that the whole family plays a part in running the business, not only the father or mother. Then, the business gets passed down to the children, and grandchildren. Each generation builds on the results of the last.
Remember, it’s easier to keep a ball rolling than to get it rolling. The same goes with running a business. Imagine how much a company can grow in a few generations. So, from a young age involve your kids in your business processes. Teach them the essentials. When they come of age, they will be experts at running and managing it. Don’t waste a decent business because you got old, sick or died.
23. Entrepreneurship. This goes beyond funding, owning, or running a business. Entrepreneurship involves creating value and solving problems. Entrepreneurs improve on the existing products and solutions, or create whole new ones. This is much more dynamic than traditional buying and selling. Entrepreneurs are always looking for ways to improve or upend the status quo.
Remember, entrepreneurs go against the norm. They know what needs to change, they find a way to change it, and then they change it. They innovate and improvise, while others wait for a savior. They learn everything about their business and field from scratch. If all you do is pay people and give instructions, you are hardly an entrepreneur. Have teams, not employees. And work with them!
24. Start Small. There’s a reason why small pots of rice taste better than huge ones. Especially for new cooks, small is manageable. It is truer in business. When you start small, likely from scratch, you face smaller risks. This lets you experiment with more confidence, and track your progress. If you fail, you can learn from your mistakes and try again. When you perfect it, you can then scale up.
Remember, every new business is a risky experiment. And statistics show that they’re more likely to fail than succeed. So, how do you want your mistakes and failures to end? If you start small, mistakes and failures are invaluable. They teach you what not to do. But if you start big, mistakes can be crippling, if not fatal. It’s why babies learn to crawl and then walk and then run, while they are still tiny.
25. Keep Records. For the Nigerian business, this is important. Records can include business receipts, ledgers, ownership and property documents, agreements and contracts. But there are other often-overlooked records that are also essential. These include recipes and processes, itineraries, ideas, supplier info, and customer details. Times change, people change. Records usually don’t.
Remember, business and uncertainty go hand in hand. Thorough records help in many ways. They can provide proof of ownership, track your expenses, and list debtors/creditors. Records also afford your business consistency and continuity. You achieve this by passing on signature recipes and processes to your successors. The goal is to hedge your business against unforeseen future events.
These are some of the basic ideas to have in your toolkit when starting a business. Especially in Nigeria, many misconceptions plague businesses. Look at your current or potential strategies and see how they compare with these tips. Don’t mind tweaking it as necessary to fit your business. The benefits may surprise you.
Thanks for reading all the way through. If I missed anything or you have some questions, please feel free to leave a comment below. To get more business ideas and info like this, please subscribe for free or visit Biz Column.
