How To Start A Lucrative Software Company In Nigeria: The Complete Guide
The demand for software companies in Nigeria is on a fast rise, and so, presents an immense opportunity for local entrepreneurs to tap into the industry’s growth, especially since almost all sectors ranging from education to banking, commerce, health, and SMEs rely on software services and products to operate effectively.
Globally, software services and products have a huge market value and have provided millions of jobs for tech-savvy individuals. Yet, this market potential is yet to be fully met in Nigeria, leaving the software industry largely underdeveloped.
With so much room for growth, aspiring entrepreneurs can start a software company in Nigeria to take advantage of the fast-pacing industry.
Here is how to start a software company in Nigeria.
What Is A Software Company?
Software companies create, sell, repair or maintain software that may be used to instruct, entertain, study, analyze, or accomplish a variety of tasks. These companies make profits from commercial activities like contract services, charging per transactions, license fees, product sales or subscriptions, repairing system errors, and more.
This goes on to mean that starting a software company in Nigeria is a way to earn a great income while providing job opportunities, technological innovations, and contributing to economic growth.
Presently, the software industry contributes over $1 trillion dollars to the U.S economy and is expected to grow higher in the coming years. Hence, it is definitely an industry that prospective tech entrepreneurs in Nigeria and across Africa should tap into.
Business Opportunities In The Software Business Around The World
Some business opportunities in the software industry are:
1). Mobile App Development Company:
In the age of Smartphones and smart devices, building applications is a lucrative business opportunity. App stores like the Google Play and Apple App stores contain thousands of apps which millions of users download daily.
As an aspiring entrepreneur with no software skills, what you need is a great idea that will solve a pressing problem, some startup capital, and a skilled team to help you build your ideas into mobile applications.
You could also offer mobile application development as a service.
Local software developers or online freelancers can be hired in any case.
2). Quality Assurance And Testing Business:
This is a type of software service business. Any newly developed software product requires beta testing to ascertain the quality of its functions and standards. Thus, experienced software testers can start up their own companies and earn profits by providing this service.
3). Web Development Agency:
Designing and developing websites is a profitable software service business. Per usual, web designers are in demand and well-paid for their services. People with web development skills can tap into this huge market by integrating software packages into websites/online platforms for clients. Freelance agents can also render services on contract.
4). Software Repair And Maintenance Business:
The services of software repair businesses are invaluable in this industry. Clients and customers include all industries that use computers for their daily operations. When a system crashes, software analysts are called to identify the source of the problem and provide solutions. These specialists also make earnings from regular computer/software maintenance.
5). Computer/Software Training Institutes:
Educational programs are a driving force in the IT industry. It encourages advancement and innovation by imparting skills and ideas to learners. Spearheading programs or training institutes is a good business prospect for software experts.
6). Software Development/Engineering:
The market for software development/engineering is massive and extensive. Consequently, someone with education and experience in this field can decide to start up a software development company. Developers can choose to go into software products or services (contracts/projects).
Software engineering is perhaps the most sought-after skill within the software industry. People in this field work on complex software packages. They examine programming codes for errors and when necessary, fix them.
Either way, the software development/engineering business is a venture that can generate valuable income provided you have a skilled team and can deliver excellent results.
7). Database Management Company:
Softwares contain databases that require proper handling and maintenance. Starting a company that manages and maintains software databases is a means of generating a sizeable income consistently.
8). Software Sales:
Some organisations make a living from reselling software made by other organisations for commercial use. These could include operating system software, anti-viruses, video games, and much more.
Facts And Benefits Of A Software Company
- Software companies are in the business of producing, purchasing, and distributing software services and products.
- Software products are key components of most common and complex tech devices in today’s world.
- Software businesses in Nigeria can positively impact the economy by providing software solutions to other industries.
- The market for software services and products has grown from non-existent to an industry worth billions of dollars in less than 50 years.
- Software companies have the potential to positively influence the socio-economic situation in Nigeria and Africa.
- Software businesses are technologically intensive, global enterprises.
Types Of Software Companies
1). Software Service Companies:
Software service companies offer intangible, software-related services as a commodity. They are available on contract agreements or get paid after completing certain tasks for clients. In addition, software companies generate profits by using their expertise to supply information and solutions to clients who consult them.
2). Software Products Companies:
Instead of consultations and searching for projects to earn profits, this business type formulates ideas and turns it into software products. Then, they sell those products to end users or companies and make hefty profits.
Furthermore, software products are licensed for installation and performance on devices of users and generate additional income through regular upgrades.
How To Start A Software Company in Nigeria: A Step By Step Guide
1). Choose A Niche:
Choosing the type of software company you want to start up is the first step towards owning your software business. Generally, your options lie between launching a product or service software company. But before making a decision, you must be sure you have enough experience in that niche.
The software/tech industry is a competitive industry, therefore, your service or product idea must be good enough to give you an edge in the global or domestic markets. First, consider the potential market size for your business idea. In doing that you may have to observe and study the needs of consumers.
Secondly, consult with experts in the software industry to find out if your product or service idea is sustainable. This would prevent waste of funds and investments especially if the business is not viable.
Lastly, conduct a market research to determine the level of competition your business might encounter. At this point, organizing focus groups to obtain feedbacks will be immensely beneficial. Another option is to enlist the help of consultants/field experts.
2). Register Your Company & Safeguard Your Patents, Copyrights, & Trademarks:
Before registering your software company’s name with the Corporate Affairs Commission in Nigeria, determine the legal structure of your business. The common legal business structures include partnerships, corporations, or sole proprietorship. The type you choose determines the tax fee and filing for your business. Get a lawyer to help you select an option that suits you the most.
Safeguarding your company’s products next important if your venture involves building software products. Anyone involved in the building process should sign a non-disclosure agreement. Other protective methods are trademarking and patenting. These methods prevent others from using your product’s name and unique features.
It would be prudent to hire a lawyer who deals with intellectual property legalese. He or she would provide you with information regarding the patenting of your products. To let people know you trademarked a product, add a ‘TM’ symbol to your product’s name at any given time.
Your trademark can only be obtained through registration with the Nigeria Patent Office.
3). Secure Capital For Your Business:
Establishing a software company takes time and most importantly, financial resources. There are several avenues you can explore in order to obtain sufficient funding for your business. Commercial banks or investments from interested individuals are reliable means of amassing capital.
Other options include grants, personal savings/wealth or venture capital funding. Accepting funds from venture capital firms will mean giving up equity in your company. If you decide to get capital from venture capitalists, get in touch with firms that have a history of investing in software companies.
4). Purchase The Essential Equipment:
The daily operations of a software company entail using the required devices, applications and equipment for software products or service development. So, your business budget will include the purchase of equipment for you and your software team.
Provide your team with computers, servers, data storage devices, programming applications, and all other essentials they need to get started and deliver enterprise-level applications.
5). Rent An Office Space Or Start From Home:
When looking for an office, consider the location and the size of the space. A good place to set-up your operation is at a business district. Your equipment and staff need an office space that can accommodate them without being stifling.
Hiring the services of a real estate agent will make the process easier and less time-consuming.
If you don’t have the required funds to rent a space, you can start from home and have your team work remotely.
6). Employ Personnel:
Software companies of all scales and sizes require personnel with the right skill set. So be sure to employ applicants who have the necessary expertise i.e. programming, computer security, hardware engineering, project management, office assistance and much more. Offer key employees incentives such as stock options in the company.
7). Market Your Products Or Services:
A software company needs the expertise of marketing professional or firms to help get its products to the end users, and this can include advertising services on popular websites or media platforms.
Marketing is all about the strategies and means of raising awareness for a product or service. Expert marketing consultants get feedback on products from potential consumers. Plus, their input aids decision making during the product development phase. They are a mine of information for your products and their marketability.
Social media and the internet are the biggest platforms for marketing, presently. Whether it’s a service or product software business, take advantage of the advertising power of Instagram, Facebook or blog sites.
Challenges Of The Software Business in Nigeria
- Importation of software solutions has hindered the growth of the IT/software industry in Nigeria, causing any new software company in Nigeria to struggle.
- Starting a software company in Nigeria might be challenging due to a poor availability of competent/skilled software developers.
- Innovative software ideas and plans by ay software company may require considerable capital to execute.
- Without collateral, getting loans to fund tech start-ups or software development might be challenging.
- Security breaches are a common occurrence in the IT industry. Untimely detection results in loss of profits due to system failures in any software company.
- The inconsistent price of software services and products in the global market is a significant challenge for tech entrepreneurs looking to start or run a software company.
A software company in Nigeria can be profitable with the right set-up and system of operation. Entrepreneurs in this industry can create wealth by offering services or creating innovative software products that will change the face of African-based technology.
In conclusion, tech-savvy individuals in Nigeria who take advantage of the numerous business opportunities in the software industry by setting up a software company will benefit from the rising global and domestic demands for software solutions.
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