Navigating choppy waters: Strategies for startups success in 2024’s economic landscape 

By Omoruyi Edoigiawerie, Esq

Nigeria, a land of immense potential and opportunities, boasts of a burgeoning startup ecosystem. However, the country’s economy in the last couple of years has seen unprecedented volatility, often presenting challenges and uncertainties that significantly impact businesses, especially startups, 2024 is not going to see a departure from this norm as the challenges that have fuelled these challenges cannot be diminished with a magic wand.

In the New Year, startups will find themselves at the forefront of an ever-changing economic environment, presenting both challenges and opportunities. Thriving in under this volatility requires a combination of proactive measures, innovation, and a deep understanding of the local market dynamics.

*Understanding the economic volatility

Nigeria’s economy is heavily reliant on oil, a look at our 2024 budget will show that in its revenue projection, revenue from oil still tops the list and 43.9 percent of the projected review in 2024 is expected to come from the oil and gas sector, while I believe that this is stretching the dough a little too much, it also drives home the point that our economy in this year will be vulnerable to uncertainties from global oil prices and the local instabilities that affect our oil and gas sector. Other Factors like infrastructural deficits, currency fluctuations, foreign exchange unavailability, and regulatory uncertainties are also going to further deepen these volatilities.

More than ever before, we must look towards diversifying revenue streams beyond oil-driven revenue, focusing on other sectors and their productive outputs will provide a buffer not just for our economy but also help businesses stay afloat. Without mincing words, Startups are the principal drivers of the alternative revenue approach for our economy, if we are to look beyond oil, the digital economy would be the next object of our gaze.

*Embracing technology and innovation

Technology has an immense impact on every facet of our lives. From daily tasks to societal functioning, technology catalyzes change, and economic development is therefore no exception. It is reshaping work processes, production methods, and consumption patterns. Technology not only drives innovation and fosters growth opportunities but also presents challenges to traditional models of economic development, the key drivers in technological transformation are startups, who indeed are the principal players in the digital transformation and growth trajectory.

This year, more than the last, and any year before it, technology will reshape the landscape of economic development and offer fresh prospects for businesses and individuals while also introducing new obstacles. 

To stay competitive and thrive in the evolving economy, businesses must adapt to these technological advancements, causing shifts in the way they function. Technology-driven impacts such as automation and digitalization have revolutionized processes, disrupted traditional industries, and caused significant job displacement.

In addition to transforming industries, technological advancements have greatly impacted the creation of new growth opportunities in economic development. As companies strive to remain competitive and thrive in the evolving economy, technology-driven avenues for growth have emerged, leading to the establishment of a new digital economy, fostering new markets and collaborations that propel growth. These advancements in technology have driven the rapid rise of the digital economy, where business predominantly occurs online, opening new avenues for economic activity, and enabling businesses to reach global markets and customers with ease. The digital economy is also providing new opportunities for entrepreneurs, start-ups, and established companies to expand their reach and scale.

With the enormous power of the digital landscape and its ability to transform businesses, and start-ups in Nigeria, E-commerce platforms, digital marketing, and innovative mobile solutions will open new avenues for growth, even in these challenging economic times.

Therefore, to thrive impactful in 2024, I would like to suggest a few strategies that Startups can adopt:

1.           Build Resilience through financial management

In a volatile economy, financial stability is now more paramount than ever before. Startups should focus on efficient financial management, ensuring prudent budgeting, and maintaining a healthy cash flow. Exploring cost-cutting measures without compromising essential operations can provide a safety net during economic downturns.

2.           Diversification is key

Reducing dependency on a single revenue stream or market is crucial. Startups should diversify their offerings, explore new markets, and seek alternative revenue sources. This strategy helps cushion the impact of economic fluctuations and minimizes vulnerability.

3.           Adapt to regulatory changes

The regulatory environment in Nigeria can be dynamic, with policies affecting businesses evolving. Navigating Nigeria’s regulatory landscape can be daunting.  Startups should stay updated on regulatory changes, seek legal counsel when necessary, and proactively engage with regulatory bodies. Compliance is crucial to avoid disruptions to business operations.

4.           Cultivate local partnerships

Establishing strong local partnerships can be a game-changer for startups. This year, many startups should give expression to the phrase “two heads are better than one”, collaborating with other businesses, government agencies, and non-governmental organizations will not only strengthen the indigenous ecosystem but also provide mutual support during economic uncertainties. Shared resources and knowledge will contribute to collective resilience.

5.           Embrace innovation as a driving force

In times of economic volatility, innovation becomes a lifeline for startups. Identifying gaps in the market and developing unique solutions can set a business apart. Embracing a culture of innovation fosters creativity and positions the startup to adapt swiftly to changing circumstances.

6.           Develop a customer-centric strategy

Understanding the needs and preferences of the local market is fundamental. Startups should engage in continuous market research, seeking feedback to refine their products or services. Customer-centric strategies, such as personalised experiences and responsive customer service, build trust and loyalty, creating a stable customer base even in turbulent times.

7.           Seek funding and investment

Despite economic volatility, Nigeria remains a solid ground for technological growth and innovation, and this will attract meaningful investment to our digital economy. Startups must therefore demonstrate a solid growth potential, a strong business model, and a clear market penetration strategy; these will in turn attract investors.

*A note of warning for start-ups – wisely mitigate risks

Uncertainty often brings risks, and startups need robust risk mitigation strategies. This involves identifying potential threats to the business, developing contingency plans, having a clear understanding of the regulatory environment, and carefully navigating the waters of expansion and scaling.  Internal compliance mechanisms that enable a good corporate governance structure will help achieve this.

*Conclusion

In the present volatile landscape of Nigeria’s economy, start-ups face a crucible of challenges and opportunities. To thrive amidst volatility demands a steadfast resolve, adaptability, and an unwavering commitment to innovation.

I know for a fact that the essence of navigating through economic turbulence lies in resilience. Startups must forge their path, viewing challenges as springboards for creativity and growth rather than overwhelming barriers.  They should, therefore, anchor themselves in a mission that transcends transient market fluctuations, having a clear vision laced with an unyielding pursuit for excellence which will serve as a guiding light through the storm.

Omoruyi Edoigiawerie is the Founder and Lead Partner at Edoigiawerie & Company LP, a full-service law firm offering bespoke legal services with a focus on startups, established businesses, and upscale private clients in Nigeria.  The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. His firm can be reached by email at hello@uyilaw.com.