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  We won’t paint things with a false brush: the year 2023 has been torrid for a majority of businesses in Nigeria. The uncertainties of the electioneering season, cash scarcity, petrol subsidy removal, inflation, and the devaluation of the naira have battered many. Add the numerous challenges unique to individual industries and commercial establishments, and the picture we have is an economy that’s been teetering on the edge.
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As we collectively heave a sigh of relief at the tapering out of a difficult period, it’s wise that we stop to reflect on what the past 11 or so months have taught us about doing business in these parts. In line with that, here are 10 business lessons about building and running enterprises in Nigeria that we’ve picked up this year.

Being Agile and Flexible is a Good Idea

There’s no telling what political events, policy changes, or economic shockwaves could hit tomorrow. But what you can do is be in the position to quickly adapt to it when it comes. That will mean building an organization that’s light on its feet, has a crisis management framework, and is staffed with people who can fit into roles at the snap of a finger (or nearly as quickly). This has to be a top priority.

Having a Financial Buffer is Just as Good

Saving up several months’ worth of expenses has always been the best practice. And this year has shown us why. With inflation driving up costs and sales shrinking, nominal and real value earnings have fallen sharply for a lot of businesses. Unless they’ve kept something aside for the rainy day, they will have suffered from the resulting absence of funds they need to operate daily.

Scale Smartly

Several startups came into 2023 fresh from scaling their operations. The funding landscape for ventures in Africa had been fairly generous, so there was some hope that investors would continue to support growth efforts into the future. Unfortunately, that optimism was unfounded, as the inflow of investor cash slowed significantly this year; startups have had to retreat from whole markets and lay off staff. Here’s the lesson: only scale when your business’s fundamentals and that of your target market say it’s alright to do so.

Sell to an International Audience, if Possible

This makes extra sense if yours is a business that doesn’t require you to set up a physical presence in international markets. Earning in foreign currency is something you should be considering quite closely at this time, as the naira is currently not a stable store of value. Depending on the nature of your enterprise, you could do this with a website that has an internationally functional payment gateway, and/or a reliable logistics/exports partner (where this is required).

Valuations Don’t Equal Financial Stability

One fallout of the slowing investments for startups is that many of these ventures have had their valuations cut down by a lot. This sort of thing doesn’t bode well for the businesses affected. If you’ve been aiming for unicorn status for your startup, now’s probably a good time to rethink your priorities.
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Focus on Profitability

This is the obvious answer to the question which would follow from our previous lesson: what to do if you aren’t gunning for unicorn status? Profitability is simply a more realistic (and perhaps healthier) goal. With this as your main target, you’ll be more likely to stay grounded in the fundamentals and avoid all the pitfalls that come with poorly calibrated valuations.

Leaner is Better

We’re continuing our emphasis on prudence. When times get tough, you’ll want to make sure every naira gets you its worth and more. Achieving greater efficiency starts with cutting unnecessary costs (and maybe not-so-necessary costs). Look into your books for possible expense leakages, ask questions of your departments, and come up with ways to do more with less at your business.

Look Beyond the Big Numbers

Several commercial organizations operating in Nigeria have had a rude awakening in the past couple of years: a population of 200 million doesn’t equal a huge market—at least not for certain kinds of products. Nigeria doesn’t have a large middle class, so consumption beyond the basics isn’t that great. Have this in mind when you’re making things for the local market or trying to sell to Nigerians.

In Nigeria, Affordability is (Almost) Everything

We have seen something else play out in 2023: as popular brands hiked their prices, cheaper alternatives emerged to take their share of the market. Lesson: brand loyalty in Nigeria is largely subject to pricing realities, so do what you can to keep your product affordable. Even if this requires chipping a couple of grams or pieces off of a pack.

Sell Smart, and they will Come

Remember Hilda Baci and her record-breaking cookathon? That was a smart marketing tactic. What you may not have heard is that she’s made tens of millions of naira from cooking classes ever since. In one instance, she’s reported to have charged ₦35,000 per attendee for a class—and, in the end, there were more than 2,000 registered participants. You do the math. Now, what if you had a marketing tactic as smart as Hilda’s?
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Final Words

As the year 2023 comes to an end, entrepreneurs must think about the many things it has taught them. We have distilled many of those lessons into a few points here. Hopefully, they’ll be a guide for you as you gear up for a better year ahead. Featured Image Source: Forbes
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This article was first published on 12th December 2023


Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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