There are specific things you need to consider before you start and register a company online in Nigeria. Without putting these factors into consideration your business may not stand the test of time.
Starting a company takes more than having an idea, statistics show that 50 per cent of businesses don’t last 2 years before folding up.
There are indeed a lot of things that could make a business fold, but lack of adequate planning is the most prevalent among all.
Therefore, this post will attempt to show you the major things you need to put in place to start and register a company in Nigeria.
How to start a company in Nigeria
1. Have the right mindset
Most people tend to neglect this aspect of business, but in reality, having the right mindset is a necessary factor in growing a successful business.
The business world is for the strong-hearted because it involves lots of challenges that must be overcome.
There are times when you won’t make sales the way you desire, there are times when you will be rejected by people, and there are times when things won’t go the way you expect.
Do you have the heart to keep moving?
If you don’t have the right mindset, you will give up along the way, therefore, you need to evaluate and equip yourself with the right knowledge so you don’t give up along the line.
2. Conduct market research
Having a good idea is not enough to start a business, you need to perform market research to find out if the product or service you are offering is needed by people.
To also find out if people will be willing to pay for what you are offering.
There are two ways to conduct market research, first by using available data gotten from researchers and secondly by conducting it yourself.
Doing the market research yourself is more tedious but also more effective than using available data because you will interact directly with your target audience.
When you want to perform personal market research, you can use surveys and questionnaires to do so.
Some of the things to consider while doing your market are
1. Market size
Do you have a large target audience? Will you still be in business when you meet their needs?
Do they have the purchasing power to buy your goods or services?
Will locating your business in their location be favourable for your company?
How will you price your products or services?
Is there already a demand for the product or services you are offering?
6. Market saturation
Is the market saturated? Are there competitors already meeting the needs of your target audience with a similar product or service? How can you make your own unique?
3. Make a business plan
There’s a saying that “a fool with a plan will perform more than a genius without a plan”.
Planning is critical in business, you need to have a business plan to foresee how you are going to run the business.
Business plans are written for two purposes; it’s a roadmap that outlines the best possible way to run a business and to obtain grants or loans.
A business plan comprises of
- Executive summary
- Company description
- Market analysis
- Organisation and management
- Product or service
- Marketing and sales
- Funding request
- Financial projections
1. Executive summary
It is a brief description of what the business is all about, it should contain the company’s product or service, the leadership, location and financial project.
You should also tell your readers why their business will work and why they should invest in it.
2. Company description
You need to describe in detail the problem your company is solving, the organisation, the people you intend to serve and how you intend to go about it.
Write about your competitive advantage, how your company is unique, and put your best foot forward.
3. Market Analysis
Make research to find out what others are doing, how you can improve on it, what your target customers want and the best way to solve their problems.
4. Organization and management
Describe the type of business structure you want to adopt, whether sole proprietorship, partnership, a limited liability company or corporation.
Also, show the organogram of your organisation, and talk about the leaders and their talents and abilities.
5. Product or service
Write everything there is to write about your products or services, their uniqueness, how they will benefit customers and the product life cycle.
6. Marketing and sales
Use this section to explain how you plan to market the products to customers and also how you intend to retain them.
7. Funding request
If you are writing the business plan to get funds, you will use this session to explain the amount of money you will need and how you intend to use it
8. Financial projection
Provide a prospective financial outlook, the revenue you expect to get monthly, quarterly or yearly.
These are the factors you need to consider when making your business plan.
4. Decide your business structure
The business structure you decide to run with will determine the cost, tax, legal, regulatory and financial risk implications.
Therefore, you need to consider carefully the business structure you want to use to start your business or company in Nigeria.
The business structures in Nigeria are
- Sole proprietorship
- Public limited company
- Public company limited by guarantee
- Private limited company
- Private unlimited company
1. Sole Proprietorship
It is the simplest structure of business in Nigeria that involves only one person; that’s the founder of the business.
The founder of the business takes responsibility for everything in the business, both losses and gains.
The owner of the company can be sued when anything goes wrong. He or she isn’t separate from the business.
This business structure is easy to start, however, you will need to source funding yourself.
CAC doesn’t require sole proprietorship firms to publish their accounts.
2. Public limited company
This business structure is more transparent than a sole proprietorship because the company is required to publish its performance and financial records yearly.
It is suited for larger corporations. The minimum number of people starting it is seven with allocated shares of at least N500, 000.
Another thing is that the company must have a branch location or franchise outlet in Nigeria.
3. Public company limited by guarantee
Public company limited by guarantee are solely for charitable organizations. The share capital of such companies can be unlimited, but the liability of their shareholders is minimal.
The companies don’t trade on the public stock exchange because their aim is not to make a profit but to achieve their specific objectives.
4. Private limited company
It is a separate legal entity established by a minimum of two people. A minimum of 2 partners above the age of 18 are required along with minimum capital investment to start a business.
The company must have a physical location in Nigeria and the allotted share capital shouldn’t be less than N10, 000.
5. Private unlimited company
The private unlimited company shares similar features with the private limited company, the only difference is the difference in authorised share capital and liability guidelines.
A partnership occurs when two or more parties come together to start a business to make a profit. The partners share the profit and losses depending on the money invested into the business.
The partners do not exceed 20 people and they are the source of capital invested in the business.
A partnership is easy to set up but has some disadvantages. For example, the demise of one partner could lead to the death of the business.
Another thing is that there could be disagreement among partners which could also affect the business.
These are the business structures in Nigeria that you could use to start your company in Nigeria. Starting a company will require you to have a good team and also to put a lot of structures on the ground to facilitate the company.
5. Choose your team
The people in your team matter because you cannot do everything on your own, therefore, you will need the help of other competent hands.
Unless you are starting a sole proprietorship, you will need to hire passionate, hardworking and experienced professionals in the necessary positions in your company.
The team you choose will or hire will play a significant role in determining if your company will meet its goals or not.
6. Source for funding
Money is an important part of a business that cannot be neglected, you need money to run a successful business.
Therefore, you need to look for ways to get money to start your company in Nigeria. Some of the ways to get funding are
- Family and friends
You can save money that you can use to start your business. You can save a certain amount of money for a period that can help you start your business or company.
Using your money is the easiest source of funding because you won’t have to go around pitching or making applications for money.
If the business doesn’t succeed as you planned you won’t be in debt since you used your money to start the company.
The downside to this type of funding is that it takes time and you may not be able to save ample money to start.
2. Family and Friends
If you are fortunate to have rich family and friends, you can reach out to them with your business plan or idea to invest in.
They may decide to partner with you, lend you the money or support you. The option you decide to accept depends on you and how you intend to run your company.
There are lots of commercial and microfinance banks you can get loans from to fund your company.
In recent times, there has been an increase in loan apps in Nigeria. Some of these loan apps offer hundreds of thousands of naira that would be refunded back within a period.
The Nigerian Government has created a program to help youths in the nation gain access to funds at a low-interest rate.
The initiative called Nigerian Youth intervention fund ( NYIF ) aims to give loans to 500,000 youths annually between 2020 and 2023.
Their loan offers range from N250, 000 to N50, 000,000 for individual and group applications. The working capital loan is set at 1 year and term loans are set at 3 years with a single-digit interest rate of 5%.
Finally, you can get loans from commercial banks in Nigeria, most times they prefer to loan to an existing business and their interest is high.
You can put your hands on them and go for the one that favours you more.
There are Angel investors and venture capitalists that can invest in your company to make it grow.
Your business plan has to be well structured and convincing enough to be able to get any of the aforementioned investors to put money into your business.
When venture capitalist invests in your business, they will either get a share or have an active role in your company. It becomes necessary for you to consider the pros and cons.
You can get grants from charity organizations, foundations, NGOs and the like.
Most of them will require that you submit documents, due diligence and an excellent business plan.
Your business must look viable for them to give you grants because such opportunities are always competitive. Therefore, you have to outperform other competitors.
7. Choose a location for your company in Nigeria
The location of your business is another important factor you will need to consider while starting your company.
You need to ask questions like, Which location is closer to the raw materials that your company needs? What are the laws governing the state, Local government and community of the prospective business location?
Another question you need to ask is the cost of land purchase or rent. These questions and many more are things you need to put into consideration when starting a company in Nigeria.
8. Register your company online in Nigeria
Your company needs to meet all the legal requirements of Corporate Affairs Commission CAC in Nigeria for it to be recognised.
You will need to submit some documents and pay a certain amount of money for the registration. Details will be discussed later in this post.
9. Brand your company
Branding has to do with how companies perceive your company. You need to position your company in such a way that when people hear your company name and see its logo, product or website, they will have a certain perception.
For example, when you hear of apple products, what comes to your mind? Luxury and opulence right? What about Tecno products? Cheap and affordable right?
Both iPhones and Tecno have their target audience and are doing well in meeting their needs.
Some of the things you can do to brand your business are
- Design a company logo
- Design a website
- Be consistent
1 . Design a company logo
Your company needs a logo that differentiates it from others, it should represent what your business is all about.
Let people recognise your company by mere seeing it. Remember the apple logo?
2. Design your company website
In this digital age, if you want your business to grow you will need to take it online and one of which is by designing a website.
A well-designed and SEO-optimized website can lead to an increase in sales.
You can use PPC, social media, and SEO to lead people to a landing or squeeze page where you convert them from just leads to customers.
Digital marketing is a strategy that has proven to be effective, so you also need to apply it to your company.
When you want to design your company website, you will need to buy hosting and domain online and also hire a website designer or use a website builder like OLITT to design the website by yourself.
Hosting is the space you are given on the internet to keep your files so they can be retrieved anything there’s a need for them, while domain on the hand is the identity of your website on the internet.
3. Be consistent
Whatever service or product you are offering should be consistent in quality and problem-solving methods.
Don’t become inconsistent, producing quality products one day and producing substandard ones another day; will kill the business.
Make sure you are consistent in solving people’s problems excellently and uniquely.
How to register your Company online in Nigeria
The registration process in Nigeria is governed by the Corporate Affairs Commission (CAC). The process is explained below
1. Search for your company name
You need to verify if the name you want to give to your company is available. The name you have in mind may be already in use by another company.
However, some words are not accepted by CAC, like holdings, council, and Government.
So the first step is to search for the availability of your company name, if it’s not available you will have to look for another one.
You should have more than one name, so you can fall back on the second name if the first one is not available. You will perform this search under the public search section.
2. Choose your business structure and reserve your company name
If your desired company name is available, you will need to reserve it. But before doing that you are to select the business structure.
Remember we talked about business structure earlier in this post? Sole proprietorship, private limited company, and public limited company are some of the business structures you need to pick from.
After requesting a reservation, you will have to wait for 24 hours to receive a notification from CAC. If it has been reserved, you will receive an email with a name availability code.
3. Register your company
Registering your company will require you to give the information of your company directors and shareholders, you must input personal data such as name, date of birth, gender, phone number, and means of identification.
Also, you need to specify the percentage of shares each person has.
You need to also fill in company information and finally, you will pay for registration and stamp duty fees. The fees vary depending on the business structure and company size.
When you have successfully registered your company, you will be given the following documents
- Memorandum and Articles of Association (MEMART) of the company
- Incorporation certificate containing the company’s TIN ( Tax identification number )
- Application for registration status
How to start and register your company online in Nigeria
Starting a company in Nigeria will require you to take the steps explained in this post. There are still more factors you need to put into consideration, however, you already have the necessary information to start and register your company in Nigeria.
The registration process with CAC can be done completely online, just visit www.cac.gov.ng to get started. All things being equal, the registration process shouldn’t take more than two weeks.
If you don’t have a full understanding of the terms and conditions you can seek the expertise of a corporate lawyer.
Business persons and entrepreneurs face a lot of challenges in building their companies. Only those that are willing to put in the work, to learn, relearn and unlearn have succeeded in the business terrain.
You need to have the right mindset and be willing to give it all it takes to successfully start a company in Nigeria.
Finally, when you start your company, don’t forget that we are in a digital world and you will need to take your business online by creating a website and employing digital marketing strategies online.
Doing so will boost your business sales because many Nigerians can be found online.
Don’t delay, start your company as soon as you can, take that bold step today.