Question

Mr Abdullahi Chidi Olayemi a young entrepreneur has just identified a new business
opportunity in Nigeria. List the necessary steps he should take and explain practically
how He should go about them.

Answer 1

He should take the following steps for starting a new business in Nigeria:

1. Market research and check feasibility of the potential business

He should begin by conducting market research. The research should study the people in Nigeria and their behavior towards the new business opportunity. Their buying behavior and demand pattern should be analyzed. The market research would help to check if it is feasible to start that particular business in this region.

2. Environmental Analysis

He should study the business environment factors such as economic, political-legal, social-cultural and technological factors. He can conduct a PESTLE analysis to examine the environment. Such an analysis would help him to forecast the probable opportunities and threats in conducting business in Nigeria. For example, he would get to know the economic status, the status of living, traditions, and culture followed, technologies used, laws made by the government, etc. in Nigeria.

3. Estimating the overall cost and risk

Then, he must estimate the cost of setting up and launching the business in Nigeria. He must also consider the probable risks associated with the business. The risk may arise due to high uncertainty, high level of competition, unstable government, etc. If the business is highly risky and it would not provide efficient returns then it is not advisable to go for that business.

4. Business plan

Now, he must formulate a business plan which clearly defines visions, mission, goals, and objectives of the business. It would define the meaning and purpose of his business and the activities to be undertaken. It would also define the financial, production, operation, and marketing plans.

5. Determining the type of ownership and organization structure

He can go for a company, partnership, sole proprietorship, or any other form of ownership for his business. The nature and size of his business would help him decide about the type of ownership. Then, he has to decide about the organization structure. It can be divisional, functional, centralized, or decentralized. Again, this would be determined as per the nature and size of the business.

6. Procuring funds for the business

After preparing a detailed business plan, he must consider the sources from where he would procure the funds. He may raise the money through equity share capital, preference share capital, debentures, a loan from a commercial bank, a loan from a local moneylender or friends and relatives, etc. He should estimate the cost of raising the money from each source and the subsequent risk associated. He can also go for a mix of both debt and equity.

7. Hiring human resource

He must estimate the requirement of human resources for the effective achievement of his business organization’s objectives. He should recruit the right person for the right job. For this, he can use external sources of recruitment only since he is launching a new business.

8. Registering the business and fulfilling the required formalities

After all the necessary steps have been completed. He has to register the business and fulfill all the necessary formalities and documentatioons such as taxation procedures and other legal proceedings.

9. Launching the business and continuous monitoring

After the business has been registered and all the legal requirements have been fulfilled, he can launch the business. He must continuously monitor and control his business to ensure that all the activities are being performed as per the objectives of the organization.