How to start a Software Company in Nigeria

How to start a software development company in Nigeria

How to start a Software Company in Nigeria

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HOW TO START A SOFTWARE COMPANY IN NIGERIA

Software companies are in charge of creating, repairing, maintaining software that will aid in accomplishing tasks. Software companies in Nigeria is on the rise and people are demanding for the services. Many sectors such as education, banking, commerce, health, Small medium enterprises (SMEs) rely on software products in order to make their services and products more efficient.  Software companies make profits from commercial activities like contract services, charging per transactions, license fees, product sales or subscriptions, repairing system errors, and more.

Top software companies in Nigeria includes

  1. Inlaks Ltd
  2. Microsoft
  3. Chesca Technology & Systems
  4. Coquina Software Ltd
  5. Dreamlabs Technology
  6. Dallas Global Technologies
  7. ExcellentBridge
  8. Codespace Technologies

The types of software companies that one can establish includes the following:

  • Software service companies

Software service companies are companies that offer software related services to various organizations. Software service companies are available on contract agreements or get paid after completing certain tasks for clients. They also offer consulting services to clients who needs their expertise

  • Software products companies

Software products companies formulates, creates and builds ideas into various software products. They now proceed to selling the software products they created to companies for high profits

Various business opportunities and ideas in the software industry

The software industry is broad and one can adopt any of the following business opportunities and ideas:

  • Mobile App developing

Mobile App developing deals with building applications for mobile smartphones and devices. This category is very lucrative and is common because a very high population make use of smart phones. This will require a skilled team and start-up capital as well as solving problems with your ideas

  • Quality assurance and testing

This is a software services business that deals with testing a newly developed software product in order to ascertain the quality of its functions

  • Web development agency

This deals designing and developing websites for clients, most organizations require the services of a web development agency that will aid them in setting up their websites

  • Software repair and maintenance

This deals with helping clients or industries repair and engage in weekly or monthly checking of their system by identifying the source of the problem and providing solutions. Every software is liable to develop a problem as time passes, this is why the Software repair and maintenance business is a lucrative one

  • Establishing a computer or software training institute

This deals with providing educational programs to those in the IT industry and those who are also willing to join.

  • Software engineering or development

The market for software development/engineering is massive and extensive and it deals with examining code errors and fixing the problem. This is a profitable venture in the IT industry especially if you have a skilled team and if you deliver excellent results and services

  • Database management

This deals with handling and maintenance of database that are present in various software. Having a company that deals with data management is also a lucrative business

  • Software sales

Software sales is the buying of software made by other organizations and reselling it to those that are in need of them in order to make profit. The software ranges from antivirus to video games and other software products

PROCEDURES AND GUIDELINES ON HOW TO START A SOFTWARE COMPANY IN NIGERIA

The following procedures and guidelines are to be strictly adhered to if you want to start a software company in Nigeria:

  • Select a niche

Before venturing into the software industry, you will need to determine the category of the software company that you want to establish, you will decide on whether you want it to be a software service company or a software product company.

  • Develop a business plan
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After selecting your niche, the next important step for you to take is to draft a comprehensive business plan for your software company. The business plan will carry out a proper research on the competition you might encounter, your financial projection and other relevant information that will help you plan your business towards success. A well detailed business plan will consider the following

  1. Executive summary (This will be done after the plan is written)
  • Business Overview
  • Market Overview: The Opportunity & Solution
  • Competition
  • Financial Highlights
  • Our Ask
  1. The company overview

This is the introduction and description of your company. It covers the following details

  • Mission and vision
  • Overview of company history/capabilities
  • Product description and present stage of development
  • Competitive advantage (what’s different or better than competition)
  • Past customers and performance (if applicable)
  • Legal entity, hours of operation, location description and attributes
  • Structure & Ownership
  • Management Team
  • Intellectual property status (if applicable)
  • Commercialization strategies (if applicable – timeframe and actions to move from idea to marketplace
  1. Product and services

This covers the following:

  • Definition of Products or Services to be Sold
  • Product Viability
  • Technology
  1. Industry analysis, market analysis and marketing strategy
  2. Swot analysis
  3. Market analysis
  • Market size(Estimate of the total market size for the product or service and trends
  • Quantification of the size of each market segment in terms of (Naira spent, units used, number of people, percent of income etc.)
  • Competition to the business
  • Market Segmentation and Demographics
  • Customer Profile(Actual and potential purchasers of product or services by market segments)
  • Barriers to Entry
  1. Marketing/sales plan
  2. Management and operations
  3. Summary of risks involved
  4. Professional and advisors
  5. Financials
  • Cash flow projection and/or existing (3 years) with breakeven analysis
  • Income/Expense projection and/or existing (3 years with ratios and benchmarks to industry)
  • Sources and uses of funds (funds needed, owner equity, how funds will be used/start-up cost analysis
  1. Funding
  • Amount of Money Sought
  • Use of Proceeds
  1. Project implementation schedule if any
  • Register your business with CAC

After you have developed your business plan, the next step for you to take is to register your business with the Corporate Affairs Commission (CAC) in Nigeria. This will ensure that your company is treated as a separate entity that is different from its owners while also protecting the owner’s personal assets. The type of business structure you will set up while registering with the Corporate Affairs Commission (CAC) in Nigeria will affect your tax fees that will be paid. You can register your company as a limited liability company, partnership business or a sole proprietorship. The following are the requirements for registering your company as a limited liability company

  1. The first step required by the applicant is to choose two suitable proposed names for the company. Where this is done, an availability check will be conducted on the CAC online portal to find out if the name is available and not already in use.
  2. Choosing the type of company to be registered whether a private limited company or private unlimited company or company limited by guarantee.
  3. The objectives and business of the company must be provided.
  4. The registered principal address of the company.
  5. The share capital and shareholding formula among shareholders will be required.
  6. The particulars of a minimum of two (2) Directors will be required. A copy of their means of identification such as voter’s card, national ID, drivers’ license or international passport.
  7. Particulars of the company secretary (one of the directors may also act as the Secretary of the company)
  8. The applicant will be required to furnish details of the shareholders of the company. Details such as names, occupation, residential address, email address, mobile phone number and means of identification such as driver’s license, international passport or national identity card. It should be noted that the directors listed can also hold the capacity of shareholders in the company if desired.
  9. The memorandum and Articles of association of the company to be registered which is advisable to be drafted professionally by a Legal Practitioner. However, the CAC has provided a generic MEMART, which any new company can be adopted.
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After which a consultant will prepare the following incorporation documents. They include

  1. Duly verified particulars of the director and statement of share capital known as CAC Form 1.1
  2. Duly stamped Memorandum and Articles of Association
  3. The individual completes all the incorporation documents with the input of an accredited lawyer to duly attest to the incorporation documents.
  4. The payment of the prescribed fees will now be duly made online and the incorporation documents immediately stamped online.
  5. The stamped incorporation documents will now be duly uploaded into the CAC online portal again for the final review of the commission
  6. If all the incorporation documents are well completed and executed, the commission will incorporate the company and issue an incorporation number immediately online.
  7. Certificate of Incorporation and the Certified True Copies of the other documents will be issued by CAC and received by the consultant or lawyer, usually in less than 48 hours after the company is duly incorporated by CAC
  • Obtain funding

You will need to obtain funding in order to start up your software company. The amount of money you are likely to spend would have been determined in the business plan. You could obtain funding through the following means:

  1. Self-financing: This has to do with the capital provided by the owner of the business
  2. Grants from government agencies: Various grants can also be gotten from the programs run by the state government or federal government
  3. Loans from banks: Having a detailed business plan and registering your business name will enable you access various bank loans
  4. Investors: Investors who have gone through your business plan and are assured that your furniture making business is profitable can invest millions of naira in your business
  5. Family and friends: Finance can also be gotten from families and friends that are willing to support your business
  6. Venture capital : This is provided to companies that have a high growth potential
  • Purchase the necessary equipment

The next step after obtaining funding is to purchase all the necessary equipment that will be required for your software company. The various equipment that will be needed

  1. Computers
  2. Servers
  3. Processors
  4. Operating systems
  5. Data storage devices
  6. Programming applications
  7. Routers
  8. Wi-Fi connection
  • Rent an office space

When looking for an office for your software company, you must consider the location, the size and the accessibility of the office location because this is where you will set up your equipment and also where your employees will work

  • Intellectual Property Protection and Safeguarding your Patents, Copyrights and Patents

It is very essential to protect the intellectual properties of the company in order to prevent them from being stolen. The company will have to file for intellectual property protection in order to protect the company properties such as the company name, logo, documents and software that are unique to the company. Your trademark can only be obtained through registration with the Nigeria Patent Office

  • Hire and train employees
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In a software developing company, you will need the services of various employees or teams such as

  1. Software developers
  2. Accountants
  3. Marketers
  4. Project managers or supervisors
  5. Programmers
  6. Hard ware engineers
  7. Office assistants

Personnel can be gotten through

  1. Posting about the vacancy on your website and across any social media or email marketing channels
  2. Asking your business network, as well as friends and family if they know anyone suitable
  3. Adding the vacancy to general recruitment websites
  4. Advertising the vacancy in industry trade media or local newspapers
  • Market and promote your business

Marketing is all about the strategies and means of raising awareness for a product or service. When running a software company, you must ensure that you employ certain means in order to promote your business and attract customers to patronize your product. These are some of the marketing ideas and strategies that you can adopt for your software company

  1. Direct Marketing
  2. Sponsor TV and Radio Programs
  3. Erect your Billboards in Strategic locations around the city
  4. Making use of sales Agents and sales reps
  5. Online Marketing
  6. Referral Marketing
  7. Ensure that all your employees wear your branded shirts during work hours
  8. Sponsor relevant community programs
  • Develop a sales strategy

After marketing and branding your software company to your customers, the next step to take is to develop a sales strategy. This includes bidding on various software contracts from both private and public companies, the bid will include proposals, cost reviews, face to face meetings and pitching your business that will ensure that people are willing to patronize your business

As a business owner, you can also contact clients individually and approach them with the services you offer. Another sales strategy is through referrals, after performing an excellent service to your company, you can ask your clients to refer you to an individual or a company that will also require your services.

  • Launch your business and maintain your reputation

After all the above steps have been taken, the final step to take is to launch the business and maintain a good reputation with customers by delivering excellent services. You must ensure that your services are appealing to the general public in order to build a good reputation for your software company

CONCLUSION

Starting a software company in Nigeria will require the business owner to choose the specifics of the services he or she wants to venture into because the software industry is very broad and it is also profitable. We’re in a digital age and every sector is implementing the use of software to help ease their work. For more information how to start a software company in Nigeria, you can contact us on  08023200801, 08075765799, Email: info@qeeva.com

About the author

Onamakinde Dare Daniel is a highly motivated accountant with knowledge in Accounting, Taxation, Management, Audit, Costing and Research. He is keen on tax matters due to its ever dynamic nature.

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