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Among the FAQ I often get is what is an entrepreneur? Though, I get peppered with it, but this most widely recognized subject keeps running along the associated words: “How can I do what you do? How do I become an entrepreneur? Would you be able to suggest a way?”
Becoming An Entrepreneur in Nigeria
So I’ve found out that’s engaging in many conversations with people of all ages – ranging from 20-year-old to mid-career experts in late secondary school graduates to early retirees can help answer these questions.
Before I move ahead, I would like to explain to you who is an entrepreneur. An entrepreneur is a person who chooses to become its own boss, rather than working for anyone else. Entrepreneur ideas are to run a small business and assume all the risks and the prize of a given business venture, goods or services offered for sale. The entrepreneur is usually seen as a business pioneer and innovator of new ideas and business practices.
Now, if I am defining what entrepreneurship is, it’s just like being my own boss. There are many ways one can take to get there. I thought it may be helpful to explain the most common ones here, together with some open discussions on the pros and cons of each.
This is not a complete list, these are clearly my opinions. There is no right path, and your approach may be a mix of two or more amount of these approaches.
1. Start a Business in your Garage
How about we start this one first since it’s the center of the mythology of entrepreneurship. Inventing something unique with an incredible market potential could happen, but let’s be realistic, it’s uncommon among young people who’ve got the inspiration and the ability to follow dreams in Nigeria.
The country is a place for entrepreneurs and that plays a key role in the situation of the economy now. These are people who have what it takes and initiative necessary to take new ideas to market and settle on the right choices to make the idea beneficial. The reward for the risks taken is the benefits the entrepreneur could gain. Examples are linda ikeji blog and Nairaland that started small and grew to be among number one websites in Nigeria.
Pros: This is great if you’re one of those one-in-a-million people who truly has the talent for a new invention.
Cons: Most of us don’t have the talent for innovation. Even those of us who do often end up with products that is already in the market and find it hard searching for customers.
2. Join a current startup
I found out that this is the first instinct of most people attracted to the startup scene: Search for existing start-up in the market, funded startup, and hopefully work your way up to be among the top executives.
Pros: Assuming the start-up or company is either well-funded or already successful, you can earn a consistent salary and profits from the start-up. You meet the ups and downs of the startup culture, but without taking the entrepreneurial risk you can’t succeed in being an entrepreneur.
Also, if the company is already successful, and you are fortunate to receive stock options when you join, your investment opportunities may end up being worth something. So it can be a decent approach to take in the lines of new companies on another person’s nickel – assuming you get put in a position of responsibility.
Cons: The qualities of an entrepreneur differ and this tends to be an approved route to entrepreneurship– But, let’s be honest, if you’re still employers’ worker. If you do get stock options, you’ll likely be a low comparative ownership of the company. The founders would have taken the entrepreneurial risks, and if it turns into a huge success, they’re the ones who’ll stand to appreciate the reward.
3. Get venture capitalists to refer you
Network with financial investors and let them know that you’re searching for new start-ups that need talents.
Pros: Deal flow, connections and referrals work great. Venture capitalists tend to have a consistent taste for management and specialized talents for their portfolio companies – that is, the companies in which they’ve invested. Bear in mind, that every start-ups they have invested in, they maintain relationships with many others.
Cons: As with the previous approach we specified before, you’re considering of joining an existing startup, with the same conditions – you’re like a hired person taking in the entrepreneurial ropes on another person’s nickel.
4. Start a business backed by other investors
In case you’re the kind of experienced startup veteran VCs like to invest in, and you’ve got another business idea that has billion-dollar income potential, a proprietary solution, found where the VCs like to invest, and the stars are aligned… then your startup may be one of the less than 500 each year that raises a new fund from venture capitalists. Out of over a million new start-ups in Nigeria get funded every day. An example is Hotels.ng that received $1.2 Million recently and it was all over the news.
Pros: If you are successful in attracting financial backing from venture capitalists, they tend to make incredible board members and leaders, with other common Rolodexes and the willingness to work actively to help start-up succeed. In this way, you will not keep asking who is a successful entrepreneur.
Cons: Easier said than done: raising money can take many months if not years, and venture capitalists will often hold off on contributing to the company that has no proven product and a lot of paying customers – requiring you to find different ways of financing to speed your startup launch and growth.
Once they’ve invested, the venture capitalist investors and their representatives will viable control your board, and your company will be guided irreversibly toward a company sale or IPO. For example, Arik Airlines is recently considering an IPO in 2016
5. Do a tech exchange bargain
Living in the area of a notable city, I see a number of people launching new businesses based on University research – in fields extending from application software design to systems administration technology, medicinal devices to material science, drug discovery to clean-tech.
Pros: Interesting deal flow. Universities can be a place of world-class innovation. What’s more, unproven tech give-and-take created by the programmers, ready for patent promising evaluations and after that proactively looking for entrepreneurs interested in licensing those technologies for commercialization purposes.
Cons: Most of what you’ll see are what venture capitalist refers to as ‘science ventures’ – that is, unproven technologies that are not yet prepared for commercial application. Often, you’ll see that university technologies are a solution looking for an issue to solve.
So, if you go this path, be ready to put in a lot of work on the starting stage customer connections and maybe SBIR/STTR government grants to get the product prepared for prime-time. Also, be mindful that negotiating a licensing deal with the tech transfer office may consist of three parts: up-front payments, royalties on future sales, plus potential equity in your startup. Be careful when you seek for grants and government loans to fund your start-ups.
6. Productize your consulting skill
In case you’re similar to most specialists I know – whether your talent is in lean supply chain or sales management, online marketing or healthcare services, IT consulting – you can charge for your services by the hour or by the job or task completed.
As an option, consider whether there’s an approach to productize your expertise. For example, you can give a continuous coaching about blogging, multi-client services in return for an email subscription to your blog.
Do you have those talents required by many people, that worth putting out there in a public or reports that you can create in a tweaked manner for every client? It’s time to think about the characteristics of an entrepreneur and make use of your brains instead of asking for entrepreneurship education.
Pros: This is the basic “plan of action” of “write once, sell many.” If you can pull this off, it can help dial down the counseling treadmill of just charging by the hour and always chasing billings. Revenues turns out to be more predictable.
Cons: You’ll have to put a lot of sweat everyday keeping in mind the end goal is to make the kind of intellectual property that many customers will be willing to pay for. At that point, you’ll have to proactively sell to clients that value your recommendation.
7. Start a “tech-enabled” business
It’s getting more moderate to launch an online or mobile application based business: resources from design and hosting to administrative and logistics backing are presently available at lower rates, and often with a few clicks you can start your online business. The concept of entrepreneurs in Nigeria is simple and easy for you to enter into the market.
Pros: Low barriers to entry – it’s simple and cheap for you to enter the business sector.
Cons: Low barriers to entry – it’s simple and cheap for your rivals to enter the business sector.
8. Buy an existing business /website.
Search for already existing business with a strong-based customers and steady income. Network through local CPAs, lawyers and other service providers in your area can surface business for sale with bushed proprietors who are willing to sell at any offer. For example, entrepreneur magazine/website like fast company gives you clues about the types of entrepreneurial out there and what takes to be in the game of entrepreneurship.
Pros: If you find a business where you can possibly expand the business market or improve working efficiencies, you can severely improve the income of the business in a short time. Moreover, if it is cash related business with a strong cash-flow working history, bank financing should be available.
Cons: Finding financing requires a significant amount of time and can be tricky. Small business loans tend to require personal guarantees. You have to truly do your due diligence to know where all the skeletons are hidden – and still, at the end of the day you may encounter horrible experiences after the deal closes.
9. Buy a franchise
For those of you who are retail-oriented, there are many open doors in the franchise business – going from fast casual restaurant ideas to mobile phone stores, from indoor playground area ideas to vintage clothing stores. For instance, MTN Nigeria offers franchise to sell the printed phone cards.
Pros: Established business concept with pre-organized branding, business idea, product, supply chain, functions of entrepreneur training, and so on.
Cons: Franchisors will charge you a beginning franchise fee, in addition to a percentage rate of your sale. You’ll need to live within the thin boundaries of the franchise contract, which may include rules governing everything from store area with a need to buy supplies from the franchisor. Finding financing takes time and can be difficult; and small business loans from banks tend to require different promises.
10. Open an independent store
Yes, shoppers do still buy things through other means other than Amazon, EBay and Shoprite retailers. Do you have a niche as a main target where you live? Start a small scale business to understand the meaning of entrepreneur, and of course the qualities of a good entrepreneur. The definition of entrepreneur lies on your business idea and how serious you’ll take the entrepreneurship skills you have – successful entrepreneurs smile every day. Example is Warren buffer
Pros: Business management and becoming part in your community are necessary. Interact face to face with your customers every day for business development.
Cons: Do this at your own risk. Businesses like Shoprite, Amazon, EBay and Walmart are already established businesses with great products in many categories. That said, trying to compete with them is like throwing a bag of salt in ocean. These giant retailers are not among the small business ideas you can choose from.
It appears to be growth areas for independent retailers that work, according to the Institute for Local Self-Reliance, including clothing stores, fabric and sewing stores, office supply and stationery stores, pet supply stores, and claim to renown food stores, for example, bakeries and greengrocers.
11. Open an independent restaurant
For many people, opening their own, uniquely customized restaurant or bar in places like Lagos, Nigeria and Abuja is a life’s dream.
Pros: When it works, there’s nothing better. You’ll meet a lot of fascinating people on your way, such as those with a lucrative business ideas and small business strategies.
Cons: You’ll work 12-18 hours a day, 6 to 7 days a week. Customers can be terrible and you’re helpless before an anonymous review on sites like Yelp. Workers turnover is high. The benefits are terribly thin, with the exception of those from alcohol sales. Also, you’re prone to failure: according to “a Cornell study, a quarter of all restaurants fail or change directions within the first year of opening, and about 60 percent within three years”.