Module 1-: Do you want to start an export company from home with no money? Or you need a sample export business plan template? If YES, then i advice you read on.
Anyone who told you that Nigeria lacks valuable minerals and agricultural resources probably knows nothing about the country. Nigeria is richly endowed with a wide range of resources. These include petroleum, which is the country’s major money-spinner, agricultural produce, solid minerals, charcoal, and lots more.
Starting an export business in Nigeria is one of the most lucrative business decisions you can make. The reason is because most export commodities are worth much more in the international market than they do in the local market. The business offers unlimited opportunities and ultimately unlimited profits.
Though you can make money selling any of these resources and commodities to the local market, you can make much more by selling to foreign countries where the commodities are of greater value. This explains why the export industry is one of the most lucrative business sectors in the country. If you are based in Nigeria and are looking to start a profitable business in the country, starting an export business is one of the best business decisions you can make.
It is impossible to cover everything about the export business in Nigeria within a single short post. However, this write up explains the steps involved in starting the business. Read on to understand the guidelines for starting a profitable and successful export business in Nigeria.
Table of Content
- Module 2-: Legal requirements for an export business in Nigeria
- Module 3-: How to make money in the export industry without exporting
- Module 4-: Characteristics of successful exporters in Nigeria
- Module 5-: How to find reputable product sourcing agents
- Module 6-: How to find foreign buyers online for your export product
- Module 7-: How to avoid being scammed as an exporter
- Module 8-: How the Nigerian Export Promotion Council can help you
- Module 9-: How to negotiate with prospective buyers as an exporter
Examples of Hot-in-Demand Non-Oil Products You Can Export from Nigeria and other African Countries
There are a lot of products in Nigeria that have huge demand in the global market. I made a comprehensive list of over 25 hottest non-oil products you can export from Nigeria and other African Countries. Some of them are:
Starting an Export Business from Home – Sample Business Plan Template
1. Learn about the market
The export market in Nigeria is so complex, you will fail if you take a plunge without having gathered enough knowledge and experience. So, before starting out you need to take your time to learn vital details about the export business such as licensing requirements, port procedures, product sourcing, working with foreign agents and distributors, locating profitable foreign markets, and so on.
In Nigeria, you will find many e-books on how to become a successful exporter. Ironically, most of these e-books are written by people who are not exporters themselves! You need to be wary of these.
The best way to learn about the export business is to contact a seasoned exporter with years of experience in the business and ask them to teach you all you need to know before kick starting your own business. Practical teaching in a face-to-face setting is best.
2. Figure out what products you will sell
In Nigeria, there are more-than-countable commodities and resources that can fetch you huge profits in the international market. But you will fail woefully if you try to sell too many items at once. So, you should focus on only one product from the start. As you gain more experience, you can expand your scope to include other products.
As a recommendation, start with products that you can easily make available in the required quantity whenever there is demand for it. Cassava, cashew nuts, bitter kola, cocoa, charcoal, and kola nuts are very good examples of products to start with.
3. Decide how you will source the products
After deciding which product you would like to export, you need to decide how you will source the product. Basically, you have two options: you can either produce the product yourself or buy from manufacturers or producers in wholesale quantities.
For a start, buying from someone else is the easier and cheaper option, as you might not be able to afford the cost of setting up and maintaining a production point. If you are going for this option, then you need to find suppliers or producers of the product. It is recommended that you have one or two ‘standby’ suppliers aside your main supplier, so you won’t have much worries if your main supplier suddenly runs out of stock.
4. Register your business
Legalizing your business is one of the most important steps towards starting any business in Nigeria—and the export business is no exception. You must register your export business with the Corporate Affairs Commission.
Aside giving you the legal permission to operate your export business, registering your business will boost your credibility. Before doing business with you, most foreign distributors will try to establish your credibility by requesting a certificate of incorporation and other documents showing that your business is legally registered in Nigeria.
5. Find your buyers
With the internet, export business has become easier than ever. You can find buyers for your products and seal trade deals right from the comfort of your room without necessarily holding a face-to-face meeting with the buyers. All you need to do is join trade websites, become an active member, and start sealing trade deals with interested buyers.
6. Exhibit your products
Trade fairs and missions provide great opportunities for exporters to showcase their products. As your export business grows, you will need to attend more of these events to create awareness about your export products. You have bright chances of meeting with potential buyers and sealing additional lucrative trade deals.
How to Finance Your Export Business in Nigeria
When you are planning to start your own export business in Nigeria, there are many things you need to put in place. You need to register your business and obtain certain licenses and permits issued by the Nigerian government. You need to fulfill all legal requirements imposed by the government of your foreign target market. You need to have a deep understanding of the export market and how the business works. And you need to adequately plan everything about your business: export commodities, target foreign markets, connections, startup costs, and so on.
However, one major factor that stops most aspiring exporters in Nigeria from kick-starting their export business is funding. The cost of starting and running an export business in Nigeria is far more than what most people can afford—though this varies depending on the products to be sold and the foreign markets targeted.
If lack of funding is the only challenge preventing you from starting out, here are proven tips on how to finance your export business and get it off the ground:
When you are sourcing for funds for your export business, don’t overlook any possible source. And this is not the time to be an introvert, either. Approach members of your family as well as your friends who you think can afford to lend or give you all or some of the money you need.
The advantage of seeking startup funds from your close ones is that there is little or no protocol or formality involved. And trust won’t be an issue, since they have known you for years. Chances are that they will be willing to help you if they have the money—unless you have done something really bad in the past.
So, approach that rich uncle of yours or contact that your good friend. Schedule a meeting with them, and go with a copy of your business plan to show that you are really serious about starting the business. If you are able to get funding from a friend or relative, be sure to clarify if it’s a gift or a loan.
Angel investors are wealthy individuals and serial entrepreneurs who are willing to invest in business opportunities with huge profit potential. In return for the funds that they invest in your business, angel investors will take a share of your business, hoping to get back their investment with time alongside huge profits.
You can use the web or your connections to locate and contact angel investors in your locality who might be willing to invest in your export business. Once you are able to get in touch with an angel investor, schedule a meeting with them during which you present your business plan.
However, you must bear in mind that angel investors are only willing to invest in promising business ideas and opportunities. So, you need to prove beyond all levels of doubt that your export business will turn out profitable.
Venture capitalists are limited liability companies that are looking to invest in lucrative business opportunities. A fund manager invests the funds on behalf of investors who contribute money to the venture capital fund.
Like angel investors, venture capitalists also seek to take some shares in your business in return for the funds they invested. And they will be looking to get back their money by implementing an exit strategy between five to ten years after your business launches.
To find venture capitalists in Nigeria, check a physical business directory or an online business directory such as Vconnect or Nigeria Galleria. You must bear in mind, however, that Venture Capitalists seeks to take more control of your business than angel investors do. So, if you are not willing to trade your power to make decisions on your business for anything, then this option is not for you.
Another common way to finance your export business in Nigeria is to take loans from banks and other loan-issuing institutions. Although getting a loan might be difficult if you’re new to the business or do not have connections with influential individuals. But it’s not impossible, provided you have a convincingly promising business idea. If you have no luck with the high profile banks, the microfinance banks will more likely fund your business.
However, note that you will need a valuable property as collateral for securing a loan. And you will pay a fixed amount as monthly interest on the loan. There you have them! If you have a promising export business idea, but have no funds to get started, you just learned four realistic ways to get funding here in Nigeria.
10 Challenges to Expect When Starting an Export Business in Nigeria
Whoever told you that starting and running and export business in Nigeria is easy definitely knows little or nothing about the business. As with any other business, the export business in Nigeria has its fair share of challenges. And to succeed as an exporter in Nigeria, you need to know these challenges as well as the strategies for overcoming them.
In this section, I will explain ten of the commonest challenges that you will most likely face when starting out in the Nigerian export market.
I. Lack of access to quality information
Your interest in the export business must have been fueled by some information you got about it, no doubt. But chances are that you still need to learn a lot about the business. Unfortunately, most of the resources available on the internet are not tailored to the export business in Nigeria. Yet, most of the seasoned and successful Nigerian exporters who can teach you all you need to succeed in the Nigerian export market will hardly have the time for that. So, you will most likely start out with a trial-and-error approach.
II. Lack of startup funds
The amount of money you will need to start you export business depends on many factors including the type of products you want to export and your target foreign market. However, even if you’re exporting cheap commodities to countries that are inexpensive to break into, you will still need a decent amount of money as startup capital. Remember, you will need funds for business registration, obtaining licenses and permits, purchasing export commodity, visiting target market (if necessary), and so on.
III. Difficulty in finding reliable foreign agents
It goes without saying that you will need to sell your products in another country with the aid of a distributor or agent in that country. That is, the distributor or agent will be the link between you and the consumers of your products in that country. Finding agents or distributors that are credible and reliable could be a daunting task. Many new exporters have fallen victim to fraudsters who disguise as agents and distributors. So, you need to really take your time to carefully find out about any agent before working with them.
IV. Unplanned extra costs
Even after you have planned adequately before starting your export business, you will most likely need more funds than you earmarked. This is due to the ever-changing nature of most foreign markets. For example, new importation policies in your target foreign market might require the payment of certain fees, which you never planned as part of your budget. Such extra costs could significantly reduce your profit.
V. Rejection of products in foreign market
In many countries, there are specific safety standards that must be met by imported products. This means you need to modify your products to meet the standards of your target foreign market. For example, if you import electrical gadgets with a voltage rating of 220V to a country where the standard voltage rating is 110V, you will have your products rejected—for obvious reasons. This can lead to huge losses.
VI. Financial risk
When dealing with a foreign market, you will most likely use payment collection methods that are more time-consuming and more complicated than those you will use for a domestic market. Worse, these payment methods are not perfectly secure; as there are chances you could lose your money to fraud. So, you must carefully weigh the financial risk involved before starting an export business.
VII. Lack of enough market information
Many Nigerian exporters rely on incomplete information about foreign markets, and this leaves many badly burned in the end. For example, assume you got information that certain electrical appliances are selling like wild in Colombia, and you quickly jumped at the opportunity by exporting the appliances to that country. Unfortunately, you sent appliances with a main voltage rating of 220V because your source didn’t state that Colombia uses 110V appliances. You can guess what the outcome would be.
VIII. Slow transportation
When you are starting out as an exporter, you will most likely settle for cheaper means of transport. But unfortunately, most of these cheap options are quite slow. This becomes a big deal if you are exporting perishable products such as fresh vegetable or fruits that need to get to the target market in a fresh state. To ensure timely delivery of such products, you need to pay huge costs for faster transport options.
IX. Problems of packaging
When you are just starting out as a Nigerian exporter, chances are you will get your packaging wrong for a few times before getting it right. This means some of your export products will either be spoiled or damaged before they get to the target market. When this happen, you will incur loses proportionate with the number of volume of damaged products.
X. Lost shipments
There are times when exporters lose their goods in-transit. Although it rarely happens, it usually results in huge losses. A good way to check this is to always track where your products are. But a better way is to purchase an insurance policy that will provide coverage for your business in the event of a lost shipment.
9 Mistakes to Avoid When Starting an Export Business in Nigeria
While starting an export business in Nigeria could be your best business decision ever, it can also be your worst nightmare. With the huge profit potential of the business comes huge risks and pitfalls that could cripple anyone who is not wary of them. Unfortunately, most casualties are the new exporters who are just starting out.
So, before starting your export business in Nigeria, you need to know what to do to boost your chances of success and what you must avoid. Here are five common mistakes you should avoid when you are just starting out as an exporter in Nigeria:
A. Not understand the export business
As with any other business, starting an export business requires lots of learning and research. You need to really understand how everything works in the business. To achieve this, you may need to contact seasoned and successful exporters who have deep understanding of the Nigerian and foreign markets.
Now, beware of some so-called Nigerian “gurus” who sell e-books and try to teach people how to start an export business, but are not exporters themselves. Your ideal mentors are those who have really achieved huge success as exporters and can teach you the real, practical aspects of the business.
If you plunge into the export business without adequate information and knowledge, you will most likely fail, and you will quit much sooner than you can imagine.
B. Not targeting foreign markets that are promising
To earn maximum profits from your export products or commodities, you need to sell them in a country where they are in huge demand. While it could be tempting to send your products to any just country that you can establish connections in, selling them to a market that is hungry for them and has low competition is the smartest way to make maximum profits.
How do you figure out the most promising foreign market? You can do this by simply by conducting structured research. This entails short listing countries where you think your products will sell well in, and then carefully researching the market in each country before making a decision. If you export your products to a foreign market that does not want them, you will record very little profits—if any at all—or even huge losses.
C. Trying to enter too many markets at once
Many new Nigerian exporters are often tempted into targeting multiple foreign markets at once. This is a huge mistake that leaves most of them badly burned because they get to spend more money, time, and resources than they can afford.
Even if you can afford the cost of sending your products to multiple markets at once, take your time to study all the aspects of the export business before doing such. When starting out, always stick with one foreign market at a time. After you have gained enough experience and know-how, you can then start focusing on multiple foreign markets.
D. Not carefully finding foreign agents or distributors
Another common problem that many new Nigerian exporters face is the inability to find a good agent or distributor in their target foreign market. Some of them fall into the hands of greedy distributors that leave them with very little or even no profit. Worse, some fall into the hands of fraudsters who disappear into thin air after receiving their products.
Though chances are slim that you can find the perfect agent or distributor on your first trip, with carefully conducted research, you will be able to find good ones that you will be happy working with. So, when choosing your export partners, choose with care. Make sure to invest ample time and effort to locate and secure the commitment of really good agents, distributors, customs brokers, and other agents in your country.
E. Not visiting your target market
Many Nigerian exporters send their commodities to foreign markets without having a feel of those markets themselves. Though you can still achieve success without necessarily visiting your target market, the only way to really appreciate a new country and its people as well as understand its market is by visiting.
Aside that you will be able to perceive the demand for your product, you will also be able to meet with distributors face-to-face. Such face-to-face meetings will reduce your chances of landing in the hands of the wrong distributors (you never know the guy at the other end of your emails or phone calls).
F. Not understanding foreign product regulations and preferences
Countries all over the world have varying regulations and policies regarding products that are acceptable into their local markets. Unfortunately, however, many Nigerian newbie exporters neglect to find out and understand these regulations and modify their products accordingly. This usually leads to rejection of products by foreign product regulatory agencies, which ultimately results in huge losses for the exporter.
To become a successful exporter, you need to modify your products and packaging to suit the preferences of your target market, even if it means completely redesigning your domestic approach. In addition, ensure that your business methodologies are both legally compliant and culturally acceptable in your foreign market.
G. Reliance on inadequate relationships
In the rush to start making huge profits, some newbie exporters hurry through the process of choosing foreign distributors and agents. But they later pay the price the hard way when their budding export business becomes a tangled mess of distributions worries, shady transactions, and marketing breakdowns.
So, before you begin exporting, take your time to verify the credibility of any foreign partners you will be working with. Before going ahead to deal with them, be sure that they are reliable and capable of delivering what they promise.
H. Lacking a coherent international marketing plan
In certain aspects, selling to an international market is just similar to selling to a domestic market. Your products won’t find their way into your target market unless you have taken the time to put together and implement a marketing plan. Doing this for a foreign market is trickier and more complex, but it must be done.
Whether your products will enjoy massive patronage in your target foreign market or not depends on your marketing efforts. So, if you want to realize huge profits from your exports, you need to market like wild. Don’t leave this to foreign distributors.
I. Having money as primary motivation
There are no doubts over the huge profitability of the export business in Nigeria. But then, going into the business with the sole aim of raking some quick profits is a recipe for failure. When starting out, you need to focus on a lot of aspects to get your business firm on the ground. These include building connections with foreign partners, finding profitable products to export, prospecting for lucrative foreign markets, and so on.
So, you need to focus on growing your business. That should be your primary aim. The more focused and determined you are, the more successful you will become, and the more money you will make. If you are able to avoid these nine mistakes, then you will be on your way to joining the league of successful exporters in Nigeria.
Latest posts by Ajaero Tony Martins (see all)
- A Sample Music Venue Business Plan Template - February 2, 2020
- A Sample Indoor Shrimp Farming Business Plan Template - February 2, 2020
- How Long You Have to Buy Insurance After Buying a Used Car - January 29, 2020