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Business Challenges Faced By Entrepreneurs In Nigeria

Business Challenges

Currently, one cannot make a thorough assessment of the startup space in Nigeria without looking first at how entrepreneurship and business challenges have evolved in the country over the years.

The first generation of entrepreneurs was farmers and traders who followed the simple rule of ‘start small and grow big’. This generation started with personal loans. They also had other assets, such as land, which got their enterprises going in short time frames. They did not have many business challenges.

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Start Your Business in 30 Days Even If You Don't Have An Idea
Start Your Business in 30 Days Even If You Don’t Have An Idea

A good number of them had great character and I will say that the level of trust in their time was exceptionally high. It was not out of place to see traders acquire goods on credit from wholesale distributors or manufacturing companies and pay after such goods have been sold. Times were good for these entrepreneurs and they had collective prosperity because of lack of the many business challenges faced today.

Fast forward a few decades and the landscape has changed significantly. We have a generation of entrepreneurs who, through the passage of time, have lost the virtues that extolled the first generation of entrepreneurs; virtues such as persistence, perseverance, and hard work. This is the root cause of all the business challenges we face today.

This generation brings to the table their own uniqueness and peculiar values. They are ambitious, driven, motivated, and determined to succeed almost at any cost. At any cost. This could be a problem by itself. It is not hard to find this entrepreneur, straight out of university, already trying his or her hands on a business venture or after 3-7 years in the corporate world, either due to redundancy or plain tiredness with management and its funny practices, deciding to do his “own thing”.

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People are of the opinion that some are born great. Others argue that greatness is thrust on some people. Another good number argues that one grows into greatness. The same goes for entrepreneurship. Some stumble on it. For others, it is a conscious decision. Some people decide to be entrepreneurs for lack of options, while others need to make “side money” to buffer escalating expenses.

The space is filled with men and women, young and old who, regardless of how they got into this space, all have a desire to see their enterprises grow and succeed.

For the purpose of this discussion, we will assume startup refers to new businesses. But for definitive purposes, a startup is a new business, usually less than 2 years old that has the capacity to scale rapidly either in revenue, influence, or product or service adoption. It has a geometric rate of progression and user or revenue lines would show steep rises when plotted. Some businesses are better suited to be startups than others, especially those playing in the technology space. A long-established business has an arithmetic rate of progression. It would also grow but would not be expected to grow 100% every quarter, for instance.

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Startups today are faced with business challenges like funding challenges needed to push forward. The biggest challenge of all is for the entrepreneur. People do not invest in businesses, they invest in people. So the challenge starts with the entrepreneur making sure he is investment worthy and ready.

It is important to note that for anyone to invest in you, the first question that would be asked is: how much of your personal fund is in this already? If you don’t have your skin in the game by pouring a significant amount of funds into the venture, no one will back you up.

Besides having your money in the business, you must have a business plan document. Many would say things change quickly; a business plan soon becomes obsolete but I tell you that half a plan is better than no plan at all.  With a thought out business plan, you are better equipped to understand some of the business challenges that may come up.

A business plan is a dynamic document and should be adjusted with current realities. Not having a documented business plan does huge disservice to you in your capacity to raise funds as an entrepreneur.

Another word for funding is CAPITAL  and 8 out of 10 entrepreneurs will tell you capital is what limits them from achieving their business goals. According to dictionary.com, capital means “the wealth, whether money or other property, owned or employed in the business”.

Dear entrepreneur, capital is not limited to money. Capital includes relationships you can leverage, other assets you possess, including intangibles such as knowledge and determination.

If your business is operational, keep your books, know your numbers, know how much you need and for what purposes. As an entrepreneur, going solo at your business may limit your ability to attract funding.

Lenders and angel investors prefer investing in teams, where more than one person bears the responsibility of moving the business forward.

In addition to preferably getting a co-founder, ensure you have structures and procedures in place. I understand that at the beginning nothing is defined and everybody does anything and everything to get the job done. Ensure you document your processes based on how you think it would be were it a successful company. You don’t do these things when you are successful, you do them to become successful.

Go from idea to starting your business in 30 days
Go from idea to starting your business in 30 days

Nigeria now more than at any other time in her history has start-up funds available. These funds can be sourced from the government, her different agencies, corporate bodies, and non-profits. There seems to be a hurried frenzy to put money in the hands of Nigerian entrepreneurs who are credible and have viable businesses.

The CBN in December 2015 amended its policy and made allowances for startups (even startups yet to commence operations) to access part of the N220 Billion Micro and Small and Medium Enterprise Development Fund (MSMEDF) at a single-digit interest rate using your Bank Verification Number as collateral. This is one of several genuine efforts to help startups access funding. There are grant competitions pitching in too. Examples are Tony Elumelu Entrepreneurship Program (TEP), Total Start-Up, etc. Bank of Industry and Bank of Agriculture are also some government institutions that give specialized loans at reduced interest rates.

Can the processes for obtaining funds through these channels be made less tedious? It can. Yes, the documentation required can be less. Yes, the time and energy spent can be reduced. I agree with you. But no one promised it was going to be smooth sailing and no one promised you won’t feel like running away on some days. The one thing that is guaranteed and attested to by those who have surmounted these obstacles is that it will be worth it in the end.

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