How to choose the right business as a Nigerian student
Imagine this, you saw a post on 30 business ideas for Nigerian students in the university on kita’s blog and then you decide to start one after much thought. You called a few friends and found out if they think selling chinchin is a good idea. They give you positive replies and you feel the idea makes so much sense so you get on with it. You feel that you have a lot of friends in the department and they will definitely patronize you.
You spend the last of your savings in the market buying flour, oil and other materials to kick start your new chinchin business. You fry the first batch pack them up and take them to school for sales. You sell out the first batch completely and you felt like you are making progress and gain forgetting that you sold to some people on credit.
You fry another batch the next day and you take it to your department. You were able to sell about five with people promising to patronize you the next day and some buying on credit again.
You realize your sales are declining and people are not really buying your chinchin anymore. You give up on your dream of becoming the best chinchin seller on campus after realizing you are not making as much money as you put in your business. You realize your friends are not even paying you for the chinchin they only keep promising. When you ask them they say is it not just hundred naira. Your friend even goes ahead to tell you that they are only managing the chinchin and it is as hard as a rock and not as sweet as the one sold in the kiosk beside your department.
Most times, the picture I painted above is what happens to most small start ups. You think of an idea, the world seems supportive at first, the world becomes less supportive and then the world takes away it’s support and leaves you cold. It’s the cold reality in the business world.
Reality is different from fantasies. It’s okay to fantasize about your dream of becoming a millionaire through your small start up however it’s not okay to fantasize how much sales you will make in your head. I’m not saying you can’t aim. What I’m saying is you shouldn’t think its going to happen the way it is in your fantasies.
Let’s talk about the situation I asked you to imagine. We will start from the point where you chose a business from the 30 business ideas for Nigerian students to try. But what you won’t be imagining is you asking your friends and thinking it’s automatically a good idea. Instead you will be taking the following things into consideration before taking the chinchins to school.
12 things to consider before choosing a business as a Nigerian student.
1) Nature of the business:
Before you start up a business, you must first understand that businesses have different natures which means that the outcomes would also be different. So you shouldn’t expect that business A would give the same outcome has business B.
A) Service business:
This business involves you providing services to people. You do things for them which they don’t have time to do or they don’t know how to do. Examples are hairdressing, sewing, painting. Most people into service businesses first learn their skills from professionals in that field. The most capital needed would be spent on learning the skill and buying equipments or materials.
If you would be going into a service business then you must be sure that you can deliver whatever the customer wants to them and more. Service business thrives on trust and reputation. Well all businesses thrive on trust and reputation. Anyways, your customers must trust that you can provide the services they need.
You would probably never forget that tailor that destroyed your outing clothe or the fashion designer that didn’t make your dress in time for an anticipated event. It’s certain that you may never recommend anyone to sew from that tailor. Like I said service business thrives on trust and your ability to deliver.
B) Merchandising business:
Simply put, this is a business where you buy and sell. You don’t make what you sell, you just buy from the manufacturers and sell to customers. The products may be imported or made in Nigeria. It includes buying and selling provisions, clothes, shoes,bags,books and many more items.
Merchandising business is thriving more on social media. I see adverts everywhere from WhatsApp to Facebook to Twitter. I’m not complaining but… Uhm. Well for merchandising business to grow as a student, you have to start small. You must be sure that you have customers who would buy those items and your advertising game must be strong. I will get to that later.
The capital here depends on how much you are willing to start with and what products you intend to buy. These days people pre-order stuff and it makes things easier. You buy with their money,transport with their money and make your gains.
You could make losses too if something were too happen to your goods or people do not like the products.
C) Manufacturing business:
This is the category in which the chinchin falls in. If you are making your product from scratch then you are into manufacturing. Depending on the product,manufacturing business tends to take more time. As a student you might not have that time but we will talk about this later.
In manufacturing business you must be sure that people are into the product at the very least or that it’s solving a problem. Yeah,yeah, every business has to solve a problem.
2) Formation of the business:
When I say formation I mean the ownership of the business.I will just go straight to the business,literally.
A) Sole proprietorship:
This is a type of business which is owned by you and for your benefit alone. Yup, all the profits are yours buta the downside is that if ever you incur debts it’s yours alone to bear.
Most students run this type of business, they run solo.
Its okay to go solo for merchandizing business but for manufacturing business it might be too much work depending on the work load. Choosing to go solo depends on the kind of service business you are into. An MC can go solo but an event planner might need to partner with a few people.
Partnership is of two different types. I will discuss the one that’s beneficial to students more. We have the general and the limited partnership.
For general partnership, you and your partner(s) put in your property, money, labour and so on in the business. You are both responsible for whatever debts you incur weather you invest the same amount into the business or not. There is no need for formal agreements or any sort of contract. A verbal agreement is enough. Most students who partner use this method.
Limited partnership on the other hand required formal agreements between the owners. You and your partner will file for a certificate of partnership. You might need a lawyer for that. Limited partnership allows you to limit the liability or debts according to your investment or ownership in the business.
Partnerships are great cause as they say two good heads are better than one. You get more capital, more effort and more ideas. Isn’t that amazing? It would only be amazing if your partner is business oriented, wise and proactive. Don’t choose a partner with your emotions. Choose with your brains. P.s choose someone you can trust because if your partner decides to leave then you are on your own.
A business is more than buying and selling, it has several parts. For any business to grow, all the parts must be monitored. With partnerships, you can monitor all sides without feeling exhausted. Which means you might have to partner with someone when starting the chinchin business. While you improve the taste of the chinchins, your partner might be working on marketing strategies and advertising plans.
Here separate entities are considered as a legal entity. Whatever profits comes in is for the corporation and they are taxed. When they are shared by the owners, they are taxed again. If you ask me, it’s not for students. Not unless you have a very big idea. Maybe something greater than Facebook or Twitter.
P.s it’s super expensive to set up and maintain.
D) limited liability company:
It is a combination of both limited and partnership and cooperation. My candid advise is that you stick with partnerships and sole proprietorship.
3) Your passion:
You should never start a business because you think you can make money from it alone. Instead you should turn your passion into a business. Most people jump at business opportunities without second thoughts on if it’s something they are passionate about. Money is a good motivation but without making money for a long period the motivation to keep running the business might die.
Back to the chinchin business, did you choose to start it because you love cooking or because you think it’s the easiest way for you to make money. If your business is something you are passionate about, you will keep working on making it better even if no one is cheering for you at the sideline.
With passion you see a future and you work towards it till you attain your aim. What do you love doing? What can you do for free without giving up? For me, its writing.
P.s money is important. Don’t just go for passion, make sure it gives you money.
4)Time and attention:
Considering the fact that you are a student, time is an important factor you should consider. You need to be sure whatever business you are into will give you enough time to study and also attend classes. So you won’t be neglecting your education at the expense of your grades.
If the business is one that might consume your time, you can brainstorm on ways to balance things up. Owning a shop in the university might not be a good idea because of the amount of time you would have to put into it.
5) The capital:
It’s much better to save up money to start a business. I have heard instances where students would divert their school fees into businesses and would end up damaged on both ends.
Save towards your business and continue planning other parts of the business while you save for it. A business starts before it is launched.
You can go into partnerships with other business oriented people. Don’t start a business with someone just because they have money. Some students are rich in money but not in financial intelligence and they can easily crumble down whatever you build.
6)Take note of competition:
Remember the chinchin business where your friend complained that a competitor’s chinchin is better. It’s a must for you to study your competition. You just know their weaknesses and improve on it. If their chinchin is soft and crunchy, find a way to make yours better.
You must study your competition’s strengths and weaknesses so you can improve on both their strength and weakness. This makes you better. If you have four, five people selling the same chinchin, think about how you can surpass them and make customers love your chin chin more.
Make sure the business is one in which you can compete in successful. Some business are so competitive and overpopulated that it would be nearly impossible to make head way. The truth however is if you can find a way to be better than your competition, you will stand out.
You would have to find out as much as you can about the business both online and in real life. Talk to different people and read different articles about people who have ventured into the same business. Find out their mistakes and learn from it. Be prepared for whatever challenges you might face.
The better the research, the better your chances of making the right decisions.
8) Sales platform:
Would you be selling online or in person. It’s important for your business to be online in this digital age. Coupled with that is the need for you to keep advertising and convincing people to patronize you.
Before you can convince anyone, you yourself must be convinced that the product is very important.
You would have to decide on the channel of delivery of your goods. There are several delivery platforms but it would be good if you study each of them and decide logically on which one is the best.
You must also put the cost of delivery into consideration when choosing your method. You must try to cut costs but at the same time provide great service.
Business is all about making right decisions and learning from wrong ones.
10) Profit time frame:
You must have an idea of how long it will take you to start making profit. This is not a fantasy situation. You must have done this through your research. Don’t be sentimental about it. This is important to help you focus and not lose your cool during the process of growing the business.
You must understand not all businesses are the same. They have different time frames for profit.
11) Your target customers:
It is important that you choose a niche, an area in which you choose to operate. Your niche could be your University. You must study your customers and know what they want or what they need and sell your service or product to them.
You cant target everyone as a whole. You must start from your immediate environment and then expand to more people. Trying to target the whole world will leave you frustrated. But if you target a specific range of people within your niche and work towards giving them the best, you will surely get ahead.
Meanwhile having target customers helps you work on marketing strategies to advertise efficiently.
12) Advantages and limits of the business you choose:
After you are done researching the business, take down a sheet of paper and write down the advantages and the limits of the business. Weigh both sides and see if it’s worth it.
Ideas are cheap, execution is the most important. The problem most students have is that they jump into business without first doing their research. Taking risks is good but the risks must be claculated. Going into a business without first doing a clear analysis is like being chased by a dog and jumping into a river filled with crocodiles without knowing.
Going through this process will definitely prepare you for whatever business you plan on going into. Choosing the right business is only one of those hurdles one must cross in the journey of entrepreneurship.
I really hope that you found this article helpful. Please leave a comment if you have any questions or contributions. Good luck in your journey to becoming a great entrepreneur.