According to the National Bureau of Statistics, out of a working population of 78 million, only 14 million people have formal employment contracts. Interestingly, about 60% of employed people in Nigeria are self-employed.

These same statistics report that approximately 3 million people are unemployed. At first glance, this sounds like good news, but these statistics consider a person ‘employed’ if they work at least one hour per week. This includes wage workers, entrepreneurs,  and unpaid family workers. 

What this means is that, statistically, you’re more likely to open a provision store than find formal employment with a business administration degree. This might sound depressing, but financial independence is not dependent on a white-collar job. In fact, small enterprises make up 96% of all businesses and 84% of total employment. 

Unfortunately, not everybody can be the next Dangote; 50% of small businesses fail in their first year. Without the right knowledge, it is very easy for your empire to crash and burn. To understand why small businesses fail, we spoke to three business owners who shared mistakes they made when they started out.

“An Aesthetic Business Will Not Make You as Much Money as a ‘Dirty’ Business” — Nanbyen, Thrift Vendor

Why did you decide to start a business?

I started selling thrifted bags in 2018 while I was still in university. My parents weren’t well-to-do, and the money they gave me for my upkeep was nowhere near enough. I needed money badly, and the only way I could think of to get money was to start a business. 

I was interning as a microbiologist at a hospital at the time, and I would bring two or three bags every other week to sell to the nurses.  I wanted to help women feel and look good without breaking the bank. To me, a new Gucci bag and a secondhand Gucci bag are on the same level; one is just more expensive than the other. 

I went from two bags to six and started to sell to women beyond the hospital. I was basically hawking the bags. I took them everywhere and would market them to anyone willing to give me a listening ear. To learn more about the business, I would spend the day at my supplier’s shop, volunteering as an unpaid salesgirl and learning how he ran his business. Building such a good relationship with my supplier played a big part in the growth of my business. 

I learnt how to use social media early and started posting the bags online, in addition to selling them by word of mouth. At this point, I think 90% of my customers come from social media. 

About three years into the business, I’d saved enough from door-to-door sales to get a small store with a rug and a few bags in the corner. It might sound cliché, but consistency really is key. 

What challenges did you face when you started your business? 

Because I had so little capital, I was very careful with how I managed my business money. One of the problems I had was learning how to separate my business money from my personal upkeep allowance. I believe that a business is expected to feed the owner, pay her house rent and the rent for her store. If a business cannot make the yearly rent for a store in six months, the owner has no business opening a store. 

I’m a very big believer in social media, and in my opinion, almost any business (especially food and fashion) can be started out of a Facebook account. 

Many small businesses suffer from premature expansion, which often does more harm than good. In my experience, unless the business owners have wares that can no longer be stored at home, or the business has grown so much that its current workspace is too small, there’s no need to take a business off social media and into a physical space. 

Another mistake I see young women make is looking for aesthetic businesses. What people don’t realise is that the ‘dirty, stressful businesses’ — like selling goats, palm oil or doing laundry —  will make you more money.  You’d be surprised at how much people are willing to pay you to do the things they don’t want to do for themselves. That money can easily be yours if you’re willing to do away with shame and find a niche instead of selling something that twenty-five other women in your area already sell. 

Thrifting designer bags has brought me closer to influential women both inside and outside Nigeria that I wouldn’t have dreamed of meeting a few years ago. This ‘dirty business’ has brought women with armed escorts to my small store in Jos to buy bags. 

I have also learned that it is hard to be intentional about growing my business while still feeding myself from it. The only way to get my business to grow at the rate I want is to resist the urge to solve all of my personal problems. As much as I love wigs, I only own one. My friends gossip that I wear one wig everywhere, but when they need transport or capital for a new business, they come to me for loans. 

“You Must Be Prepared for Disappointment” — Ngozi, Restaurant Owner

Why did you decide to start a business?

If someone had told me a few years ago that I’d own a restaurant, I would have laughed at them. 

I grew up in a restaurant, and saw firsthand just how stressful it is to run a food business. As I grew older, my mum (the restaurant’s owner) started delegating most of the work to me. Back then, I was always angry because I was working out of a sense of duty for no pay. 

By the time I left university, I was convinced nothing on earth could make me start a food business. As a fresh graduate, I desperately wanted to work, but I married early. My marriage and children would not allow me to spend long hours at the office. 

I needed something flexible, so I decided to start a gold business. I would travel to Dubai, get gold at a cheap rate, then come back to sell it for profit. It didn’t work out because I married a military man, and we were moving from state to state every two years. Because of this, I didn’t stay long enough in any place to build a strong customer base. 

When the gold business failed, I decided to open a gym in Lagos, but we had to move soon after it opened. I left the business in the care of a relative, but when I returned, I found it mismanaged and rundown. 

I’d been idle for some time when I heard that  Knorr was hosting its first-ever cooking competition. I decided to participate and, at the end of the competition, I was ranked among the top ten. That accomplishment made me realise that if my food was good enough to win a cooking contest, why then could I not sell it? 

What challenges did you face when you started your business? 

I opened an Instagram page and started a food delivery business in Lagos. I was genuinely happy to be employed again, and to my surprise, I actually enjoyed the work. 

As soon as the business took off, my husband was transferred to Abuja. At first, I didn’t want to move, but in the end, I chose my family over the business. As hard as the decision was, I felt like I could always start another business. The same could not be said about my family.   

Unfortunately, things started going downhill from there. Running a food delivery service in Abuja was hellish. Abuja was much bigger than Lagos; the dispatch riders were unreliable and unwilling to do business with a vendor without a physical location. At one point, I started doing the deliveries myself in my car. 

I didn’t include the cost of fueling my car when calculating profits because I felt like it would make the food expensive. To make things worse, my niche is Igbo delicacies, so I didn’t really have a menu. I made whatever my clients wanted to buy on a by-order basis. Even at its cheapest, traditional Igbo delicacies are more expensive than the average plate of jollof. 

For the first few months, I was running at a massive loss. As a small business owner, the wisest thing you can do when you have limited resources is to resist the urge to overstretch yourself. If I could start over, I would have created a standard menu and limited my business to a few locations. I also found it difficult to delegate tasks, and I would insist on doing everything myself, from market runs to the actual cooking. Because of this, I was always exhausted. 

My husband retired, and I opened physical locations twice, but both spaces were demolished. I came very close to quitting because I was so demoralised. 

To keep my business afloat, I added catering and food packs to my portfolio, and I started attending food festivals in my spare time. I think what saved my business was investing in building a strong brand image.

At the food festivals, I would serve food on wooden plates and instruct my servers to wear traditional attire. We would tell moonlight tales to the children of customers or teach them how to play traditional Igbo playground games. 

The heart of my business was my love for my culture. I wanted to share the authentic Igbo experience with everyone. It’s not enough to suddenly wake up and decide to start a random business for the hell of it. You must put enough thought into what problem you want to solve or what niche you want to fill by starting that business.  Having a clear brand idea and a vision will keep you from giving up when the journey gets hard. You must be prepared to be disappointed when you’re starting a new business. It can take months or even years to build a strong customer base. 

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“Mass Patronage Does Not Make a Successful Business” — Rodiya, Spice Seller

Why did you decide to start a business?

My mum is a trader who sells a few spices, amongst many other things. While I was in secondary school, I used to take some of her products to school and sell them to my classmates. 

During that period, I discovered that I had liver problems and was told by my doctors to stop eating MSG (popularly known as Maggi). My mum could only use crayfish and locust beans to season her food, and I hated it because I couldn’t stand bland food.  I struggled to eat until she started to cook with natural spices.

When I got to university, I realised that there were quite a few people like me who could not eat food with MSG. I wanted to help people like me and people who just want to eat healthier. 

The fact that I could also make money from it didn’t hurt. My father didn’t support me at first with the mentality that the only expenses he was responsible for were the ones directly related to my education. 

I really wanted to be financially independent and to be able to afford the things I wanted. 

What challenges did you face when you started your business? 

This is a very niche business, and most spice sellers don’t work out of homes with fancy packaging; they sell in plain containers in the middle of the main market. A lot of spice sellers are very secretive about their trade, and there are very few sellers willing to show you the ropes of the business. 

I wanted my business to be a lot more personalised than just selling ginger or garlic in bulk, so I had to rely on a lot of research, trial and error and the few people who were willing to share breadcrumbs of information. Even with all this information, I still made quite a few mistakes. The first few batches of all-spice mix that I made were very bitter. 

I wanted to make my products affordable without compromising on quality. Instead of working out a middle ground, I started pricing my products with the belief that if I sold at really low prices, people would buy more.  

It worked. I was making decent sales, but I was losing money because I was selling for far less than I spent on production. After almost running the business to the ground, I had to take a break to rearrange my business strategy. I learned the hard way that making many sales did not mean my business was thriving. A steady customer base is more beneficial than a lot of one-time customers. 

Also, nobody told me how hard and how important branding is for a business. I’ve had people come up to me asking for herbs to help with fibroids or erectile dysfunction because they are somehow convinced that I’m the Gen Z version of ‘Aisha alagbo’ (herb and concoction seller). I only learnt how to leverage social media later in my business. Every small business owner should learn how to use social media for branding early on, rather than later.