Hello,
I was in a conversation with my wife last night, we were discussing what exactly is required to grow a profitable business in Nigeria.
I thought I should share our conclusions with you because I believe it might benefit you one way or the other.
I am also hoping we can be corrected if our conclusions are wrong.
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Below are some of the few steps discussed:
1. Validate your business
I was speaking at an event yesterday and I asked a business owner to tell the audience why we should buy their products and services.
And then I asked someone random from the audience to tell us why they would buy his products and services.
Something interesting happened, the person from the audience had a different reason from the business owner.
As the person from the audience was saying why he would buy and you could hear other people in the audience agreeing. This did not happen when the business owner was talking.
I repeated this 3 – 4 times, it was the same result.
Build a business that people want.
Key Point here: – If your business is going to be profitable you need to validate it with your customers (The way you see your business is always different from the people who buy it).
Find out what your customers want and why they will buy it from anyone. If you understand what they want and why they want it then it is easy to sell to them and for your customers to buy from you.
2. Do your math and discover the number of customers you need
Most business experts will tell you not to focus on money but value (Value is money).
This is very true and that is why the first step is to validate your business.
Your customers know the value they want from your products and services and based on the value they are happy to pay for it.
After you know the values that your potential customers will derive from your products and services. You now need to put a cost to it.
Pricing is an interesting topic but you need to understand that a profitable business means you need profit.
This means you decide the price (not the customer) that makes you profitable however, here is a point of warning that your pricing must be at least 10% of the value your customers will perceive.
An interesting thing about value is that it is perceived, we bought an iPod made with $99 for $499 simply because we perceived more value.
Apple is an amazing company that will start telling you about the value of their products 6 months before it is launched.
So, you already perceive the value of the product and imagine the cost as premium. Because they also tell you the value based on customer research – You want it, they give it to you.
Your pricing should also be guided by rule of quantity or quality.
After you decide the cost then you need to understand how many customers you need every month:
a. How much do I want to make this year that makes me profitable? Let’s say 12 million.
b. Divide the number by 12 months and you have 1 million every month.
c. Now, let’s say your product cost is 100,000
d. Divide how much you want to make monthly by your product cost. 1million/100,000 = 10 customers.
e. This simply means you need 10 customers every month to meet your profitability target.
Key point here: It is easy for you to reach profitability in your business if you know how many customers you need to meet your profitability target.
You want to make a pledge and if you have a marketing team you want them to make a pledge. This is the pledge:
I, ______________________________
Every week, you measure your progress by this statement.You are allowed to get more customers but not allow to get lower than the number you need to achieve profitability.
3. Marketing is everything in business
You need to first figure out where your customers are and show them how your products and services can drive value for them.
Here you want to understand that the most important activities in marketing is selling value and not the products or services.
The key point here:- You can only achieve profitability if you market your products and services by selling value.
What are the best business ideas to start in Nigeria?
Some of the best business ideas in Nigeria include food and beverage services, e-commerce, agriculture (like poultry and fish farming), and small-scale manufacturing. These sectors have shown consistent demand and growth potential, making them ideal for new entrepreneurs.
How can I conduct market research for my business?
To conduct market research, start by identifying your target audience and their needs. Use surveys, interviews, and online tools to gather data. Analyze market trends, competitor strategies, and consumer behaviour to understand the landscape better and refine your business idea accordingly
Final thoughts
If you have an online business and want to learn how to use digital marketing to reach more people, you can register for our comprehensive digital marketing course to gain the skills and strategies needed to grow your online presence, drive website traffic, and convert visitors into loyal customers.