Effective steps to start an online Business today in Nigeria
Owning a business this days is like a dream come through especially as things dont really seem easy economy wise in Nigeria, taking a business steps ahead with giving it an online presence is a much more faster way to even sell products and services faster as you can work from anywhere, set your own hours and make a living on the Internet as most business owners are doing.
Online businesses can also have extremely low startup costs, making them a perfect option for new entrepreneurs without a lot of cash.
Here’s a step-by-step guide on how to start an online business.
Step 1: Choose a Business Structure
When you start a business, you must decide whether you will operate as a sole owner, limited liability company or corporation.
- Sole trader
This is the simplest form of enterprise, it as it does not require registration, though the sole trader may wish to register the business name to exclude other businesses from trading by the same name.
It is the type of business in which the owner of the enterprise is exposed to the greatest personal risk, because the sole trader is personally responsible for all aspects of the business and has unlimited liability to all debts and legal actions.
The sole trader may also find it difficult to attract outside investment or partners, which can hinder the expansion of the business. The sole trader may also find it difficult to attract business as the sole trader does not file accounts or records with the Corporate Affairs Commission (CAC), giving a lack of business transparency, and making it impossible for potential customers to verify the background of the business via an official third party.
- Private Limited Company (Ltd)
A private limited company is a legal entity in it own right, separate from those who own it, the share holders. The limited liability and simplicity of running the private limited company makes it the most common of registered business in Nigeria. As a shareholder of a private limited company, the shareholders personal possessions remain separate (unless they are secured against the business for borrowing), and the shareholders risk is reduced to only the money they have invested in the company and any shares the shareholder holds which has not be paid for.
Limited liability companies are also considered prestigious by other companies and the general public due to its legitimate nature and the way important information is recorded at the Corporate Affairs Commission. Anyone wishing to do businesses with a limited liability company can verify who is connected to the company and also the financial status of the company by paying the Corporate Affairs Commission a small fee. The level of transparency is very beneficial in terms of build public confidence in the company.
The private limited liability company have very few restrictions which makes the simple but yet flexible solution for many businesses.
The very minimum requirements are:
- The company must have a registered office in Nigeria
- The company name must not be exactly identical to any other company name currently held in the registry of the Corporate Affairs Commission
- At least twenty five percent of the authorised shares must be allotted at incorporation
- At least two people above the age of 18 must subscribe to the memorandum and articles of association.
- The total number of members in a private limited company must not exceed 50, not including those who are bona fide in the employment of the company
- The authorised share capital shall not be less than 10,000
- Public Limited Company
A public limited company differs from the private version in that it is able to sell its shares to the public and may be quoted in the stock exchange. A public company must have at least 500,000 authorised share capital and the subscribers must take up at least twenty five percent of the authorised share capital. The cost of running a public limited company is reasonably higher than that of a private limited liability company. It is therefore better suited for large organisations.
- Guarantee Company (not for profit)
In simple terms a guarantee company is not for profit and is the type mostly formed by charitable organisations. A guarantee company does not have share capital, and the members do not own the company, the do not receive any profits and have no claim to the company’s assets. All income generated is used to cover operating costs and to achieve the objectives of the company
Step 2: Decide Where to Form Your Business
For most businesses they are formed at the states they are located, such businesses can still transact business dealings outside their locations, especially for businesses that are online and connected to other loations.
Step 3: Choose a Name
It’s worth taking some time to choose a unique name for your online business. A unique name:
- Helps you market your business
- Minimizes the chance that a similarly named business will accuse you of trademark infringement
- Increases the chance that you will be able to get a domain name that matches your business name just incase you wish to have a website someday.
Once you have a name in mind, you can conduct a Google search to see if any similarly named businesses come up and also if you have interest to register such a business with CAC Nigeria then you will need also to perform checks
Step 4: Get a Domain Name (Optional)
As soon as you decide on a name, register a domain name for your business. The domain name is your Internet address, typically ending in “.com.” You can check your proposed domain name’s availability by typing it into the address bar of your Internet browser and seeing if an existing website appears.
Many companies offer domain name registration, you simply set up an account, identify the name you want to register and pay an annual fee.
But this days such cost are usually taken off the shoulders of business owners with the use of business marketplaces such as konectbiz where you can advertise products and services all for FREE at your own comfort.
Also social media platforms such as facebook and instagram have even made it possible for businesses to advertise their products and services that focuses on a defined audience. For FREE you can just make friends and tell them about your business as you chat, so a challenge to all those who just spend hours chatting, try to start a business this year 2019 and convert your friends to business partners and customers.
Step 5: Understanding your finances
All businesses are sustained based on financial commitments, its very important, you undertand your business niche and focus on strategies to get the best out of your business such as more profit and customer relationships.
With this steps its hopeful your having an online business soon will be a reality, kindly comment below if you have questions or contributions to make.