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5 Key Market Insights Before Launching Your SMEs In Nigeria

Emmanuel Nnaemeka

Value Research

    Small and medium-scale businesses contribute 60% to Nigeria’s GDP. However, over 70% of new SMEs do not make it to their third year due to inherent problems peculiar to Nigeria. Findings show that most businesses that collapse before their third year do so because of poor insights into the Nigerian terrain. Studies have shown that many entrepreneurs venture into the Nigerian market in a hurry without doing vital due diligence.
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This has accounted for the deaths of many startups and businesses in Nigeria. In this article, I discuss five pivotal market insights that can equip any new business for lasting growth and development. Before delving into the Nigerian market, the entrepreneur must understand if the environment he wants to set up his business is profitable or have the capabilities to welcome his business. This is all about understanding if there is a need for your product. It is unwise to sell ice to Eskimos. For example, some products are best suited for rural areas and those suited for urban. Hence, one of those things you must watch out for is the income level of the population you plan on reaching out to. For instance, it is counterproductive to start a fashion school or a makeup business in a rural area in Nigeria. The best areas suited for such businesses are urban centers in Lagos, Abuja, Enugu, Calabar, Awka, etc. Hence, you must understand the capability of your environment to buy your product. Finally, beyond the income level of the population, you must look at the religious and cultural biases of your environment so that you don’t provoke the sensibilities of the populace. For example, it is counterproductive to sell alcohol or pork meat in Muslim-dominated areas.  The second most important consideration the entrepreneur must take cognizance of is the available government regulations and policies that govern the kind of business you intend to start. For example, you can start up of food processing business or a drink production without first being certified by the National Agency for Food and Drugs Administration Control (NAFDAC) and the Standard Organization of Nigeria and other related bodies.
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Many businesses in Nigeria have shut down because of failure to meet the required regulations that govern their business type. This is why you invest in a company’s legal team before starting an operation.  Many businesses in Nigeria have packed up due to distance from existing markets. It is popular knowledge that no business thrives without revenues, and no revenues can come into a business if there is no market. However, apart from a market being available, proximity matters a lot. Successful SMEs do not stay far from the market. Staying far from the market is costly, especially in the area of logistics. This is why it is wiser to build your business in populated areas where most of your demography is found. This will save you time and money. Furthermore, it is important to have standby wholesalers and retailers who can help you cover the market. Having successful middlemen in your bag is the Midas touch that can grow your business. Therefore, ensure you have ready wholesalers and retailers that you are in touch with so that you can easily reach out to them when your goods are ready.  How to reach your ideal customers is another important insight you must consider before venturing into the marketplace. Many entrepreneurs make the mistake of publicizing their products and services to the wrong audience or in an audience where their ideal customers are scanty. There are some businesses whose audiences are largely offline. This ideal model of publicity and advertisement for this type of business is print media such as the use of newspaper ads, posters, signboards, and handbills. However, in our contemporary world, it is ideal to have both an offline and online presence. But you must determine where most of your audiences are, and reach out to them. For example, if you want to open a dry cleaning service, you will need to first reach out to your neighborhood through traditional media publicity by distributing fliers or mounting signboards. You might as well invest in social media ads too, especially Instagram, and Facebook.
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It is advisable for businesses in Nigeria to carry out a blend of both online and offline campaigns, because over 60% of Nigerians are either not connected to the internet or are not regular users of social media.   Pricing is pivotal to the growth of your business. It can make or mar your venture. Many new businesses use pricing as a way of penetrating the market. How do you go about pricing? The easiest to go about it is to look at the uniform price among sellers in your niche and offer a discount that does not hurt the business. However, ensure you have taken into consideration the cost of production. For instance, if within your niche, the average price of the product is 200 Naira, it is advisable to sell for 180 Naira to attract new customers. Over the period, you can revert to the average industry price. Finally, another marketing insight is the accessibility to raw materials. Just like proximity to market, you must put into consideration your ability to access raw materials easily, quickly, and cheaply, that is if you are into manufacturing. When access to raw materials is far from the production site, it is only a matter of time before you will shut down. You have to answer the question of how closer is the distribution of raw material. How much will it cost you to get raw materials? How frequent is the possible supply of raw materials?  Featured Image Source: Value Research
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