Entrepreneurship has played a critical role in the economic development of countries like the United States, where 60% of new job opportunities are created by small business enterprises. In Nigeria, it is becoming difficult for college graduates to get employment opportunities. Recent figures from the Ministry of Education showed that at least 70% of university and college graduates find it difficult to find employment after graduation. With high levels of poverty and the unemployment rate currently at 6% and growing, entrepreneurship is seen as the only key that will transform Nigeria into an economic powerhouse and help the country achieve its 2020 vision.
* High business failure rate
Many talented people getting into entrepreneurship for the first time fail to make an impact because they lack the necessary skills and are often unprepared for the challenges they face in their operations. Statistics show that the business failure rate in Nigeria for new businesses is between 75% and 90% in the first 10 years. In the case of dot-com companies, only one in 10 companies reaches the third year. This high rate of business failure can be reduced or eliminated if we take the time and do extensive research before starting the business.
* Know the right business
The purpose and objective of every entrepreneur is to be independent and offer competitive products or services that are not offered in the market. Even if those services are already being offered, as an entrepreneur, you should strive to offer that service in a better and more efficient way compared to already existing businesses. There are many questions Nigerian entrepreneurs need to answer when deciding what business to form. Should you turn your hobbies into lucrative businesses? Buy existing businesses or start from scratch? Buy a franchise and benefit from the franchisor’s well-known brand? Selecting the right business is a life-changing decision with long-term effects and therefore careful planning must be taken into account.
* Well-adapted companies
Much of the Micro, Small and Medium Enterprises (MSMEs) are born of passion. A costly mistake emerging entrepreneurs make is that they tend to replicate what other established companies offer without first knowing what they are good at. Those entrepreneurs who do not have a clear passion or do not enjoy what they are doing are likely to give up when challenges start to arise. Even if entrepreneurs are sure of what they love or want to do, careful consideration should be given to finding the right business that fully utilizes their skills and abilities. For example, if you have a passion for art, there are a wide variety of businesses you can choose from. They can decide to be artists, open an art school or do restorations among other options. The essential key is for MSMEs to choose businesses that they are a good fit for and that make the most of their capabilities.
* Write clear personal goals
All Nigerian entrepreneurs need more than just passion or talent if they want their businesses to succeed. One of the main reasons why many small businesses in Nigeria fail is that they lack clearly defined goals. For businesses just starting out, we need to direct more efforts toward short-term goals, as new businesses always need to go through a period of research and development before their long-term profitability can be accurately predicted. A company’s short-term goal should be 6 to 12 months, while its long-term goals may be for a period of 2 to 5 years.
* Create a niche for the Business
Small and medium-sized businesses tend to copy each other and provide the same services that existing businesses offer. This has the effect of saturating the market and is the number one reason why new businesses find it difficult to survive. For emerging MSMEs to guarantee their survival, we have to develop policies capable of helping our entrepreneurs create a niche, offering them unique products and services that allow them to take advantage of the market. Studies conducted indicate that most companies get 80% of their sales from just 20% of their customers. By clearly identifying the target market, we can direct the majority of your energy and time to the customers that matter.
Although most of our entrepreneurs set up their own businesses from scratch, those who find it difficult to build their own businesses may choose to buy existing ones. Such entrepreneurs benefit from the company’s already existing track record of achievement and not much time is spent on market research, as the company already has a dependent customer base. The other alternative to business ownership may be franchising. Statistics indicate that more than 50% of retail sales in the United States are generated by franchise chains, which in total employ more than 7.1 million workers. This is considered an indication of the potential of this type of business in Nigeria.
* Franchise Success
Compared to other business models, a franchise has many benefits other than being cheaper to set up. A franchise has a good track record and is easier to establish as it has an existing business model, brand, and established and operational guidelines on how to run the business. In addition to all these benefits, the failure rate of franchises is lower compared to new businesses. For example, the failure rate for franchises is less than 5%, making them more suitable for emerging entrepreneurs. In recent years, Nigeria has seen an increase in the number of franchises created mainly by South African investors in the retail, food and environmental sectors. This is a clear indication of the benefits that can be obtained through franchising.
Nigeria’s ambition to be an industrialized country by the year 2020 can only be achieved with the help of the private sector. We need to diversify our dependence on oil, which represents more than 65% of its budget revenues and more than 85% of foreign exchange earnings. For this to become a reality, our entrepreneurs must have the necessary skills and knowledge to run successful businesses and transform Nigeria towards economic development.
