Ayo Alonge, [email protected]
Despite the peculiar challenges that greet Small and Medium Enterprises (SMEs) in Nigeria, it is no gainsay that the hurdles can still be surmounted, experts have had to assert.
Since the establishment of Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) in 2003, the agency, which was saddled with the responsibility of facilitating, promoting and developing a structured and efficient Micro, Small, and Medium Enterprises (MSMEs) for sustainable economic development, has appeared weighing too low on the scale.
In 2018, stakeholders of the agency, led by the Director General of SMEDAN, Dikko Umaru Radda, in a meeting held in Abuja, recommended deliverables of the Conditional Grant Scheme (CGS). The CGS is to provide grants for small businesses in the country, seeing that the it mitigates challenges that accompany running a startup in Nigeria, coupled with the lingering global economic crisis that has hampered the potential for profit-making.
Daily Sun spoke with a businesswoman, Olivia Obiagwu, who highlighted some of these challenges.
Her words: “Entrepreneurs face so many challenges in Nigeria that make it very difficult for expansion and growth of businesses. Some of the challenges include the unstable state of the economy, currency fluctuation which makes the importation of goods and raw materials costly and mostly unavailable to the man in the street. Poor state of infrastructure and unstable power supply have also forced so many businesses to shut down or relocate to neighbouring countries. In my company, we spend so much on diesel and fuel to run generators because you need to keep cosmetics and fragrances at a very cool temperature or else you run the risk of damages. Others are issues from the Nigeria Customs and Immigration officials; lack of capital and difficulty securing loans from the banks, and so on.”
In starting up a business, a business plan is of paramount importance, after a feasibility study must have been conducted. You may not be able to measure the risk involved in running a business that is not well planned before it kick-started. Emphasis should also be made to the fact that most businesses fail as a result of copycatism. This is when an entrepreneur jumps into a business simply for the sake of profit-making, perhaps because a couple of investors around have succeeded in the business.
For Saviour Ogonenwe, a startup coach and the Team Lead of OneBigPie Limited, there are certain reasons responsible for the failure of most SMEs. If you are surprised you are not making much headway in your business, maybe there are certain things you are not doing right. Some of them are just personal character flaws that we bring into the business. Before you start crying there is no capital for expansion, let me mention some of these characteristics: Have you considered the fact that you need to learn to separate your personal money from the business money? It may surprise you to note that as long as you still mix both, no investor would like to invest in you and no bank would like to give you capital to expand because you have not built financial discipline in yourself,” Ogonenwe said.
Truth is that there is no one-size-fits-all mechanism for profitability, implying that making profit in business is not about copying verbatim from an investor but through a SWOT analysis. SWOT is the acronym for strengths, weaknesses, opportunities and threats.
Among other inclusives, SWOT entails how you produce and deliver your product/service to prospective clients/customers. It also involves capital infusion and effective money management. For a wise businessman, every kobo counts. An investor must also evaluate his Key Performance Indicators (KPIs).
One of the salient questions to which every entrepreneur may need to provide answers include the following: What is my target market and how do I penetrate that market?
Having a niche for the business is another fundamental factor for a successful business. It is about having an edge over other competitors which makes your business stand out in the competitive market, making it possible for people to stay glued to the brand.
There has to be something you can offer better than anybody else, even in the same line of business. Most experts prefer to call it comparative advantage cost. It is that which makes customers/clients willing to come back every time.
Digitalisation and technology is another way to stay afloat in business, amid challenges. It is, therefore, imperative to know that no startup of the 21st century can go farther than the technological advancement in that sector. Putting it succinctly, you must be tech-savvy, if you must leverage on the numerous opportunities in your business. We now live in a global village such that no investor can afford to be left backwards to the age of analogue marketing. There are now so many business software businesses can deploy to automate inventory and sales records. That automatically eases the worry about your staff stealing your money in that small business. This is just one example of technology at work in businesses, today. Technology has come to stay, thereby outliving the primitive ways of running businesses. You can now save time, automate tasks and make more money. The information has overflogged the internet already. It is not rocket science.
In addendum, an entrepreneur has to continue to innovate and ensure the business evolves. One effective innovation is enough to make the business go global. It is what some motivational speakers call ‘thinking out of the box.’
Your business should also evolve, rather than being straight-jacketed. Suffice it to say that one of the key reasons most businesses die a natural death at an early stage is because they did not evolve. Despite the seeming unfriendly business environment in which most SMEs have found themselves, Adebayo Adedokun, a lecturer in the Department of Economics, University of Lagos, asserts that there is always a way out of the economic quagmire.
Speaking with Daily Sun on a phone conversation, Adedokun said: “In a difficult business environment such as the one we have in Nigeria, SMEs can still make some reasonable profits through judicious use of their business acumen, sound accounting principles and efficient use of human and non-human business resources.
“Some SMEs don’t keep records of their transactions, some don’t have basic books and documentation necessary to track business trend and profitability. It is necessary to keep basic books such as daily cash transactions, sales day book, purchases day book, receipt booklet, invoice booklet, etc, to be able to have a track record of all financial dealings with clients.
“SMEs can also get profit through business credit windows offered by large wholesalers to tested and trusted SMEs operators. This will involve taking the goods on credit and returning the value after sales within an agreed period of time. This will ensure a win-win situation for both the wholesaler and his or her downliner SMEs operators.
It is okay to look for a lucrative business to invest in but more importantly is understanding the pros and cons of the venture. Lack of an intrinsic knowledge of the business is a common definitive characteristic of every failed business. Before investing in that idea in your head, study the market trend with the aim of having a full grasp of how the business works. Ask a lot of questions.