Entrepreneurship has played a critical role in the economic development of countries such as the United States where 60 % of new employment opportunities are created by small business enterprises. In Nigeria, it is becoming difficult for university graduates to get employment opportunities. Recent figures by the Education ministry showed that at least 70 % of university graduates and those from tertiary colleges are finding it hard to get employment upon graduation. With the high poverty levels and unemployment rate currently at 6% and growing, entrepreneurship is seen as the only key that will transform Nigeria into an economic powerhouse and help the country achieve its vision2020.
* High Business Failure Rate
Many talented individuals who get into entrepreneurship for the first time fail to make an impact because they lack the necessary skills and are often unprepared to face the challenges they encounter in their operations. Statistics show that the business failure rate in Nigeria for new businesses is between 75% and 90% in their first 10 years. For the case of dot com enterprises, only one in every 10 ventures makes it to the third year. This high rate of business failure can be reduced or eliminated if we take time and do a thorough research prior to going into business.
* Know the Right Business
The purpose and goal of every entrepreneur is all about being independent and providing competitive products or services that are not offered in the market. Even if those services are already being offered, as an entrepreneur, you should strive to offer that service in a better and efficient way compared to the already existing businesses. There are many questions that Nigerian entrepreneurs must answer when deciding which business to form. Should you turn your hobbies into moneymaking ventures? Buy existing businesses or start from scratch? Buy a Franchise and benefit from the franchisors well-known brand? Selecting the right business is a life changing decision one that has long-term effects and thus careful planning must be taken into account.
* Well-Suited Ventures
A large portion of Micro, Small and Medium Enterprises (MSMEs) are born out of passion. One costly mistake made by emerging entrepreneurs is that they tend to replicate what other established businesses are providing without first knowing what they are good at. Those entrepreneurs who do not have a clear passion or do not enjoy what they are doing are likely to give up when challenges start to arise. Even if entrepreneurs are certain about what they love or want to do, finding the appropriate business that fully utilizes their skills and abilities must be carefully considered. For instance, if one has a passion for art, there are wide varieties of businesses that they can choose. They can decide to be artists, open an art school or do restorations among other options. The essential key is for MSMEs to choose ventures they are well- suited for and that will fully utilize their abilities.
* Write Clear Personal Goals
All Nigerian entrepreneurs need more than just passion or talent if they want their businesses to succeed. One major reason that many small enterprises in Nigeria fail is because they lack clearly defined goals. For start up businesses, we should direct more effort towards short-term goals since new business ventures must always pass through a time of research and development before their long-term profitability can be predicted accurately. A businesses short-term goal should be between 6 to 12 months, while its long-term goals can be for a period of 2 to 5 years.
* Create a niche for the Business
Small and medium enterprises tend to copy each other and provide the same services offered by existing businesses. This has the effect of overcrowding the market and is the number one major reason why new ventures find it hard to survive. For emerging MSMEs to guarantee their survival, we have to develop policies capable of helping our entrepreneurs create a niche for themselves by offering products and services that are unique and that enable them to take advantage of the market. Studies done indicate that most businesses get 80 % of their sales from just 20 % of their clients. By clear identification of the target market, we can be able to direct most of their energy and time to customers who are important.
Though most of our entrepreneurs set up their own businesses from scratch, those who find it hard to build their own businesses can opt to buy already existing ones. Such entrepreneurs benefit from the already existing record of accomplishment of the company and not much time is spent on market research since the business already has a dependable customer base. The other alternative to business ownership can be franchising. Statistics indicate that more than 50% of retail sales in the United States are generated by franchise chains, which in total employ more than 7.1 million workers. This is seen as an indication of the potential of such businesses in Nigeria.
* Success of Franchises
Compared to other business models, a franchise has many benefits besides being cheaper to set up. A franchise has a good track record and is easier to set up since it has an existing business model, brand name and has established and working guidelines on how to run the business. In addition to all these benefits, the failure rate of franchises is lower compared to new businesses. For instance, the rate of failure of franchises is less than 5% making them more suitable for emerging entrepreneurs. Over the last couple of years, Nigeria has seen an increase in the number of franchises being set up mostly by South African investors in retail, food and environment sectors. This is a clear indication of the benefits that can be gained through franchising.
Nigeria’s ambition of being an industrialized country by the year 2020 can only be achieved with the help of the private sector. We need to diversify from our reliance on oil, which accounts for more than 65 % its budgetary revenues and more than 85% of foreign exchange earnings. For this to become a reality, our entrepreneurs need to have the necessary skills and knowledge needed to run successful businesses and transform Nigeria towards economic development.