Starting a Business in Nigeria: From Idea to First Customer

Before you pay ₦1 to CAC, validate your idea.

The "Japa" Factor:
Are you solving a problem for people leaving or people staying?
- Example: A service helping people move money to Canada (High demand). A luxury spa in a low-income area (Low demand).

Market Research (The Nigerian Way):
Don't just do online surveys. Go to the market. Talk to real people.
- Ask: "How much do you currently pay for this solution?"
- Test: Try to sell the product before you build it. If 10 people transfer money to you, you have a business.

Registration makes you legal. It builds trust.

1. Business Name (BN):
- Best for: Sole proprietors, freelancers, small shops.
- Cost: Cheaper (Approx ₦20k - ₦30k if you do it yourself).
- Pros: Easy to register.
- Cons: You and the business are the same entity. If the business owes money, they can seize your personal car.

2. Limited Liability Company (LTD):
- Best for: Startups, Tech companies, businesses seeking funding.
- Cost: Higher (Approx ₦50k+).
- Pros: Separate legal entity. Investors only invest in LTDs.
- Note: Minimum Share Capital is now ₦1 Million (on paper, you don't pay this to CAC, but you declare it).

You cannot run a corporate account without a Tax Identification Number (TIN).

TIN Generation:
Nowadays, your TIN is often generated automatically when you register with CAC. Check the JTB (Joint Tax Board) website to search for it.

VAT (Value Added Tax):
- Currently 7.5%.
- You are a collector for the government. If you sell a shoe for ₦10,000, you should charge ₦10,750 and remit the ₦750 to FIRS.

Tax Clearance Certificate (TCC):
You will need this for government contracts. Apply early.

Mixing personal and business funds is the #1 reason small businesses fail to scale.

Requirements:
- CAC Certificate (BN or RC Number).
- TIN.
- SCUML (Special Control Unit Against Money Laundering) certificate (for some sectors like Real Estate, Jewelry, etc.).
- 2 Referees (Current Account holders).

Digital Banks (Moniepoint, Kuda, Opay, Brass):
Often faster to set up than traditional banks and have better apps.

Money is the blood of business.

1. Bootstrapping:
Using your own savings.
- Pros: You keep 100% equity. You answer to no one.
- Cons: Growth might be slow.

2. Grants (Free Money):
Nigeria has many grant opportunities if you look.
- Tony Elumelu Foundation (TEF): $5,000 seed capital. Application opens January 1st every year.
- LSETF (Lagos State Employment Trust Fund): Low-interest loans for Lagos residents.
- Orange Corners: Incubation and funding.