According to the latest World Bank annual ratings, Nigeria ranked 131 among 190 economies in the ease of doing business. This data shows that doing business in Nigeria is hard, and for you to survive the next two years, there are things you must put in place and factors that will contribute to the survival of your business.
In this post, you will learn about the factors that will drag you down and how to overcome them and be profitable.
Before we delve into the heart of the matter, I want you to understand that being an entrepreneur is not a necessity. Being an employee is normal as long as your basic needs are met, and you find joy in what you do. If you lack motivation before starting a business, then this entrepreneurial journey isn’t for you. You need to have a business mindset to be able to start and survive.
To start a business, you must have conducted a feasibility study. Remember, the goal is to increase profits and minimize expenditures.
NIGERIAN FACTORS
To minimize revenue loss, there are certain things you must ensure are in place.
POWER: If your business requires a constant power supply, relying on an electricity distribution company is not advisable. An alternative is a generator set, but that comes with its own set of challenges. With the high cost of fuel, you would end up spending a significant amount, eating into your profits.
The best option is to go solar; invest in a solar inverter system that will power your business and supplement it with electricity from the distribution company (NEPA). Alternatively, with a high-capacity inverter, you can go completely off the grid.
Although solar systems are expensive in Nigeria today, they are worth every dime, provided you purchase a good-quality inverter and batteries. Check out our Solar Inverter Buying Guide article.
SECURITY: Regardless of where your business is located, you must address security issues to prevent both external and internal theft.
BOOKKEEPING: One way to tackle internal theft is by keeping inventory digitally. This involves using software to record your stocks and all transactions. The importance of good bookkeeping cannot be overstated.
CCTV CAMERA: Ensure the installation of CCTV cameras to record incidents of both internal and external theft. There are many untrustworthy employees out there. It’s difficult to find enthusiastic and loyal staff in this part of the world, so you must implement all necessary measures to curb behaviors that could lead to revenue loss.
This is because many businesses are generating good profits, but internal theft has brought them to their knees.
MAXIMIZING PROFIT
Since the goal is to minimize expenditure and maximize profit, you must be cunning.
You need to be wise enough to adapt quickly to changes. It’s important to do what others aren’t doing in order to stay afloat.
Here are some ways to maximize profit:
STAFFING: Only hire the personnel you need. Why hire 50 when 35 can get the job done? Why hire more when you can automate tasks with computer programs and save costs? Instead of hiring a full-time employee for certain tasks, consider hiring a freelancer who will work for half the salary and get the work done. Learning to outsource is cost-effective.
PRODUCT PRICING: By default, you can either increase the price of a product while maintaining its quality or keep the price the same while reducing the quality. Personally, I prefer increasing the price while maintaining the quality, but in a struggling economy like Nigeria, you have to make more adjustments and be smart about it.
The same product can have two variants: one with an increased price and good quality, and another with a reduced price and lower quality, like regular Bailey (Irish cream) and Baileys Delight (a budget option).
This method gives your customers options to choose from, allowing you to retain both categories of people who love your brand.
Another approach is to introduce smaller-sized versions of your product, such as sachet alcoholic drinks. Many products are now available in sachets due to the purchasing power of the people.
INNOVATION: Always look for ways to reduce costs and maximize profit. Keep innovating and keep enjoying the financial benefits. Find better and cheaper ways to achieve the same results. Never stop learning…
RESEARCH: If you source raw materials, always look for new and cost-effective suppliers. If your current supplier sells at 1 naira, search for alternatives where you can obtain the same quality at 80 kobos (0.80 naira). This way, you can reduce costs and maximize profit.
To be continued…
