Starting a business in any part of the world is a daunting task. Growing the business is another kettle of fish, but sustaining a business is the most notorious journey to embark on.
The challenges vary and are in different degrees – from raising capital, sustaining steady growth to breaking even, and then scaling. Some are stuck in a stage while some come tumbling down from their uplevel – most small and medium scale businesses hardly recover from a huge financial loss.
Now, assuming the coronavirus pandemic did not come into the equation, doing business in Nigeria is a new grade of migraine. The challenges are gigantic yet the opportunities abound. Nigeria is one of the world’s leading business locations on the African continent, and the catch is largely its over 200 million population and the abundance of economically-viable natural resources. But the ease of doing business in the country is an illusion at best.
In 2016, out of 189 countries, Nigeria was ranked 169th in the World Bank’s Ease of Doing Business Report. An unverified statistic also states that 80% of new businesses and startups in Nigeria fail within the first three years.
Apart from the infrastructural deficit and leadership deficiency in the country, the scarcity of integrity among the people also stifles the ease of doing business in Nigeria. Everybody is in a race to milk you dry of your capital and profit – the employees, the thoughtless government policies, corrupt government officials, the banks, even family members involved in the business are constantly looking for a way to undercut you – the list is long.
In a nutshell, the odds are stacked against you unless you learn the workings of the business terrain in the country, especially from the ones who have been burnt.
However, in the spirit of fairness, this is not a reflection of ALL Nigerians. As you would imagine, there is still a ton of people of integrity, who are patriotic and passionate about changing the negative perception of Nigeria.
The story of a Nigerian businessman – Basil Okpara – is full of classic lessons of how NOT to do business in Nigeria and a guide for African entrepreneurs.
In a Twitter series he shared, he talked about how he made avoidable mistakes that drowned his promising brand. He got the vision right, he got the product right and the market was favourable until the business sailed into troubled waters.
So what went wrong?
Okpara narrates: “In 2008 April, I registered my first company Bazz Global Concept Ltd, got my first product Bazz Tomatoes registered with NAFDAC and secured my trademark. The product was produced in the Southern city of Italy called Salerno. NAFDAC remarked that the product was one of the best.
I secured an office, warehouse, vehicles for distribution, staff and distributors in Lagos mainly in Trade Fair and Ebutte Ero markets. (It’s very important in recruiting staff to make sure you recruit entrepreneurs who are committed to achieving the set goals and objectives).
Do not employ staff who are only interested in getting their salaries or because they are related to you. That’s a huge mistake. You are not in biz to satisfy family members especially those who feel entitled to your money and perceived success.
The first mistake was entrusting a brother who was not committed to the success of the business. You can love and care for your people from afar but focus on those who are not just competent but passionately committed to the success of your vision.
The business started successfully in August 2008 when our first shipment of 5 20ft containers of tin tomatoes arrived. We sold all of them within 2 months and also did massive market storms in different markets in Lagos which was successful.
We embarked on a round of radio adverts and jingles which at the time was not necessary. It was a waste of resources. In doing business, ensure that you are frugal with your money and only invest in things that will increase your sales and profits.
Explore avenues where you could achieve sales and profits without unnecessary expenses. Research and focus of minimizing expenses and increasing profits. We had a warehouse which we could use as office so we didn’t need the office space we rented.(A mistake you should avoid).
Anyway, business was good and we added another product to our brand, Bazz Safety Matches which was also a huge success in the market. I actually sent someone to India to tidy up negotiations and start importing.
Now, this may sound like a great idea but the mistake was that we should have consolidated before expanding to other products as this was only gonna make our budget and funds tight. One good thing was that we had separate bank accounts for them and kept the funds separated.
Now, when doing business in Nigeria, ensure you have a lawyer who you should retain or if you can’t afford to retain one, always consult a lawyer before taking any major decisions. The benefits of having a lawyer can never be over-estimated…
So many businesses fail because they do not have legal guidance. Money spent consulting a lawyer or lawyers is never wasted. And make sure every agreement is well documented and filed. NEVER BE CONTENTED WITH VERBAL AGREEMENT…
Read the rest of the story in the latest edition of our magazine here: Find it on page 54&55.