Hello friends, I am excited to share my first experience of importation and running a business in Nigeria, my mistakes that cost me over $100,000 and lessons learned.
I hope someone learns from some of my mistakes.
In 2008 April, I registered my first company Bazz Global Concept Ltd, got my first product Bazz Tomatoes registered with NAFDAC and secured my trademark. The product was produced in the Southern city of Italy called Salerno.
NAFDAC remarked that the product was one of the best.
I secured an office, warehouse, vehicles for distribution, staff and distributors in Lagos mainly in Trade Fair and Ebutte Ero markets. (It’s very important in recruiting staff to make sure you recruit entrepreneurs who are committed to achieving the set goals and objectives)
Do not employ staff who are only interested in getting their salaries or because they are related to you. That’s a huge mistake. You are not in biz to satisfy family members especially those who feel entitled to your money and perceived success.
The first mistake was entrusting a brother who was not committed to the success of the business. You can love and care for your people from afar but focus on those who are not just competent but passionately committed to the success of your vision.
The business started successfully in August 2008 when our first shipment of 5 20ft containers of tin tomatoes arrived. We sold all of them within 2 months and also did massive market storms in different markets in Lagos which was successful.
We embarked on a round of radio adverts and jingles which at the time was not necessary. It was a waste of resources. In doing business, ensure that you are frugal with your money and only invest in things that will increase your sales and profits.
Explore avenues where you could achieve sales and profits without unnecessary expenses. Research and focus of minimizing expenses and increasing profits.
We had a warehouse which we could use as office so we didn’t need the office space we rented.(A mistake you should avoid)
Anyway, business was good and we added another product to our brand, Bazz Safety Matches which was also a huge success in the market. I actually sent someone to India to tidy up negotiations and start importing.
Now, this may sound like a great idea but the mistake was that we should have consolidated before expanding to other products as this was only gonna make out budget and funds tight.
One good thing was that we had separate bank accounts for them and kept the funds separated.
Now, when doing business in Nigeria, ensure you have a lawyer who you should retain or if you can’t afford to retain one, always consult a lawyer before taking any major decisions.
The benefits of having a lawyer can never be over-estimated.
So many businesses fail because they do not have legal guidance. Money spent consulting a lawyer or lawyers is never wasted.
And make sure every agreement is well documented and filed. NEVER BE CONTENTED WITH VERBAL AGREEMENT.
Whenever you are dealing with companies who produces your brand of products for you, ensure you have Manufacturing Agreement in place. The benefits of having such agreements is to ensure that your business arrangements are documents, enforced and defaults punished/compensated.
So, while I was enjoying the first year of business and expanding to other products, I was having an exclusive relationship with Zenith Bank Plc.
You see, I used to have this trait, when I start using a product or company, I start getting so attached to them will become loyal.
I refused to entertain the courting of other banks who used to troop into my office almost on a daily basis asking me to bank with them.
Skye Bank approaches me those early days, I asked what they could do for me to make me ditch Zenith Bank,
Hey offered to give me 100m Naija loan at 20% interest per annum but I refused because I don’t like to be in any kind of debt.
I hate owing anyone money and I had this mindset that owing banks money was bad. (Another mistake)
If you know what to do with money, use their cash.
However, it is always better to start business and run it with your cash. There’s a peace that comes with doing business with your cash especially if you are someone that can’t sleep peacefully if you are in debt.
That’s how I stuck with Zenith Bank.
We developed a working relationship, I would visit the manager whenever I needed to do some transactions and she would come to my office at times especially when I’m upset with them. She would come running to pacify me together with my account officer/relationship manager.
For some reasons, I won’t mention their names and the branch here now.
We were manufacturing and importing our products and I normally made wire transfers to my manufacturers in both Italy and India.
Then at some point, I decided to raise a Letter of Credit(L/C)
For my manufacturer in Italy but before then, I had a meeting with the bank manager and we agreed that the bank would pay the custom duty while I focus on the shipping company. We agreed on this before I authorized the Letter of Credit for 5 containers worth $100,000.
Like I said earlier, the huge mistake was that I didn’t get them to write this down. I believed her and we proceeded.
Everything was done & funds moved to the company. Bank received shipping documents but refused to pay the duty as agreed.
This was where the problem started.
Like I said, Never take verbal agreements, they can be denied at any time.
Every effort and proposals made to ensure the goods were cleared were not successful.
We didn’t have enough cash to sort out the duties and shipping costs plus demurrages which were increasing rapidly.
Another mistake was that we did not separate the containers, we had all 5 containers issued a single Bill of Lading so you can clear them one by one.
Always ensure you have enough cash to sort out all charges and if you are doing multiple containers, issue single bill of ladings
In the process of trying to raise enough cash to clear the goods, the customs gazetted the containers and auctioned them.
Actually, I was reliable informed that their boss(name withheld) gave them as gifts to some people.
This experience shook me. I was devastated. It took me quite a few years to pull myself together and continue on this entrepreneurial journey.
I made mistakes, I learned from them and I’m conquering still.
Hope you’re able to learn a thing or two. Feel free to ask any questions and I will try to answer them all.
Thank you for reading.