Top 10 Challenges Facing Startups Business In Nigeria

As most Nigerian startups are achieving some success, some are also facing problems within
the industry that derives them from reaching their full potentials. The Challenges facing startups business in Nigeria are many, but few
entrepreneurs are tackling the issues and redrawing the lines of the future through a
good business model they create and the value they provide.

The common reason most tech startups in Nigeria are not yet successful is their approach to the problems they face. Most are responsive in taking actions and also defensive in getting things done or
approaching customers.

The best way to take the lead in such environment like Nigeria is to be proactive in actions and aggressive in
getting things done. It’s a kind of CRM that many entrepreneurs in Nigeria don’t
understand or put into practice. They focus more on the business model than how to
execute or get that business model to work for them and thus, they find their company facing lots of challenges because of low cash flow
and other variant things.

The problems could be solved if entrepreneurs can get the right people to work for them or if they can increase their knowledge on business
principles and inspire their employees to give their best to meet the goal of the
organization.

Some of the major problems
facing entrepreneur’s business in Nigeria are as follows;

8 major challenges facing startup business in
Nigeria

1. Unprofitable business model
Most startups in Nigeria lacks the will to make profit on their own as they rely on duplicating
some western tech startups idea that have been valued for much money but makes little
profit. Their ability to copy the copes of these western startups only ends in a clear phase that they could see as those companies will
not expose the main secret of their success.
So In Nigeria, the entrepreneurs building these  businesses, tends to lack the strategies on
how to make such business earn profits in this part of the world. The reason can be traced to lack of critical infrastructure that is not yet in
place and others maybe lack of customers’ preferences as the European approach to
buying goods and services is different from an African view considering the low purchasing
power and starvation of credible information in Africa.

2. Online payment solutions
There is still a big fear among middle class earners in Nigeria over the idea of exposing
their bank details or debit card information to these startups in Nigeria. Because of a potential hack or unauthorized withdrawal of their money, many Nigerians like to play it
safe or even safer. This is one of the major challenges facing the e-commerce startups in
Nigeria as Konga and Jumia has adopted cash on delivery system but even at that, it
affects their profit range. While some targeted e-commerce website like Supermartng, Gloo
and Printivo are trying to make people to trust their brand by only allowing payment online.
Konga has also adopted a strategy by launching of Kongapay, an online payment
system that the consumer can trust and will hold the costumers fund till goods are
delivered by the merchants at customers’ satisfaction. Regardless of that, online
payment solutions are still a challenge facing most startups in Nigeria.

3. Difficulties with accounting
Credible accounting is a serious problem among startups in Nigeria because of the lack  of accounting knowledge from most entrepreneurs. They lack skills in accounting and fail to keep up with numbers in their early
stage of business and it affects their business.

In business, numbers is very important from the very moment you start your business.
Ability to keep up with numbers and understand how these numbers work will shape the way you manage your money. I
have talked to many entrepreneurs in Nigeria
who are yet to understand what is asset, liability etc. And this is a challenge to some of
them because when you have no knowledge about such, you may not even know if the
person you hired is doing the right thing.

4. Logistics
Logistics is still a huge challenge among
startups as there is little credible logistics
companies which can deliver goods to customers timely. Most customers of e-
commerce startups end up receiving their goods in 6 days or more for their order. And
some of the goods maybe faulty at arrival due to the way it was carried along by the
logistics company. This challenge is costing many startup businesses a huge amount of money yearly. It’s is unlike western countries
where there is a functional postal service and
private companies that deliver goods within hours to their destinations. Nigeria
entrepreneurs are expected to find a new strategy on how customers can get their
goods timely and securely.

5. Funding
Funding is a big problem with startups in Nigeria as most startups don’t even have a
well detailed business plan.

They tend to think that bank is responsible for financing their
business but “Wale Tinubu” in a Nigeria economic summit stated that “Any small
business here must know that banks are not designed to fund startups.

What is required is more private equity investors”. This is very
true when it comes to funding startups. They should focus on raising money through the
sales of equities that concentrating all their
effort on Nigeria bank loans.

6. Investors and valuation
Financing is intense notwithstanding when you
have seed investor’s interest. Selecting the right investors and getting the right valuation
are extra troubles for startups in Nigeria.
Knowing how to negotiate with potential investors is a challenge in Nigeria startups as most foreign investors tends to lower the valuation and potentials of the Nigeria startup for their own gains.

7. Poor management team
The assembling of poor teams in the early days of the business may lead to the failure of that business if critical actions are not taken.
Many Nigerian entrepreneurs employ close friends or family members who lack the
credibility or skills to manage and operate a given branch of business. And thus, they are
full of excuses rather than solutions and this
will definitely lead to the startup, losing money and customers. Poor management
team is a like big sickness to any business because they can’t fix any issue effectively as communication is not effective and thus production will lower while there are other
challenges of managers not motivating their subordinates.

8. Marketing plan
Marketing strategy is likewise vital for any business. When you have an unmistakable
thought regarding your objective business sector and your opposition, you can allot a
financial plan for publicizing and advancing your business and choose which medium to
promote through. You can likewise choose your item estimating through target market examination. This is where most Nigeria startups don’t get it. They don’t understand the objective and the target market of their
marketing campaign and at most times, they over spend doing such. I think the best reasonable arrangement is to
either employ an agent that can help them plan how to reach to their target audience or find a staff that can help accelerating their business at a distinct pace.

9. Adding talent
This is a broad perspective as it can often be misunderstood by people. It is a way of hiring
talented people who can help your business achieve its objectives. Hiring the right people is a tough challenge for startup business because sometimes most talented people with huge experience will demand high pay and a
startup may not be suitable with such a demand. Getting the right people at the right
place is a tough challenge that is facing startup business and they should look inwards
to hire those with skills and let their human resource department handle the other aspect.

10. Innovation
Nigerian entrepreneurs are usually aligned to the work culture and they don’t conceive
brand new ideas. Managers and employees avoid change and oppose whatever
progressions that occur in the organization.
The best thing to do is to be interested in advancement. At the point when bringing a
change, guarantee that every one of your workers are readied for it. Talk about it with
them in a meeting, let them know that it is so vital to be creative, make them see how
helpful it will be as its a big challenge in Nigeria startups.
Many of them follow one particular form of
business for years without any critical advancement into their product or service.

As a Nigerian entrepreneur entering into any business, it is essential that you educate
yourself about the business, do a lot of market research and evaluate the industry as you
may lose a lot of money if you fail to do the right things. It is also important that you have
ample knowledge about your competitors, your target market, current trends, advertising and marketing techniques as well as financial
know-how.

Now is your turn to have your commendation
or suggestion below as comment.