Stories by Ayo Alonge
The Chief Executive Officer of Brandszevous, Temitayo Tella, is a multi-skilled entrepreneur who mans a fast growing fashion outlet in Lagos. To his mind, small and medium scale businesses can be very profitable, although with attendant challenges that are not insurmountable still.
He discloses that aside being a businessman, he is passionate in leading personal, corporate and societal development through training, project management and civic engagements. He also takes classes on business management and personal leadership.
In this interview, Tella fields questions pertinent to business financing for SMEs and the dynamics of running a successful small business in the country.
Fashion Preneurship is my first forte. I have been in formal business for almost 10 years. I started while still in school. Two years to the end of school, the system was clear to me as boring, yet not for any reason, I just wanted to have a degree like everybody does and keep praying to God afterwards for a job or survival. I dug up many books on economies, entrepreneurship, leadership and governance, and all practical reviews showed to me that I personally needed to fend for myself. I had elders who were still struggling after many years of graduation, plus the present discrimination against polytechnic graduates by employers of labour made me know I must be different by towing the lonely lane. So, before I graduated, I registered my business with the Corporate Affairs Commission. My second forte is organising and delivering business management classes on leadership, business plan, digital marketing, selling, branding, business start-ups, financing, etc.
Asides fashion business, I presently run a business consulting firm as well by assisting SMEs in getting their products/services get to those who are interested in buying through the means of social media. So, it’s safe to say that digital marketing is a product of my consulting business.
Experience have made me know that challenges in business come in stages and have some peculiarities. However, for me, I will say more importantly is finance. I, however, know that it’s not enough excuse to hold you down because there will always be a financial challenge almost throughout the first phase of a business lifecycle. Secondly is that many people go into business without a plan. Writing a plan does not need a professional to write it really. Even a one page document might just be enough. People do not write. They just really on hearsay and common observation. These observations need to be put into figures, market forces and reasonable sales projections cum expenditure, but most people just become business emotional junkies. Third is marketing and sales. We forget that sales is what brings in the income and the income determines profit vis-à-vis the expenditures. Most entrepreneurs feel once they have a ‘great’ product, they would sell. So, in my span of years in business, I have had these three major challenges: finance, structure/planning and marketing. I have been able to survive by being prudent on expenditure, put in my financial accounting skills in planning and learning, plus executing digital marketing skills.
At some point, I outsourced my production arm, using about five tailors to satisfy my orders. Later, I had to rent an apartment for an office where we were, at some point, 12 in number, and about 16 other state sales representatives. We were in Lagos but have clients from all over the country and abroad as well. So, on a large scale, my fashion business can employ as much as 100 people to span across departments of production, marketing/sales, logistics, designing and all, if I have the necessary financial back up. With a N5million boost for many SMEs, they would increase their workforce in three folds at least.
The market is there but without the appropriate funding to institutionalise such, we cannot hope. In fashion, for example, the industry is wide, with importers, bulk buyers, bulk breakers, tailors, finishers, sewing material sellers, printers, designers, sketchers, ready-made sellers, advertisers, packaging manufacturers, etc, you can see that the industry line is full and can hold a lot of people. I, however, advise people going into fashion to pick one place in the long line in the industry.
SMEs do not get finance from commercial banks. Microfinance banks give too rigid requirements as well. Big clients/companies do not fund up to 50% of any project. Many want to do about 30% then balance after not less than a month of delivery. If your profit is between 20-30%, how do you fund 70% of a project when most feel they are even helping you by wanting to give you the deal? It’s such a sorry state for SMEs in Nigeria who have no direct connect to the powers that be and the necessary funding. So, we should not be surprised that many SMEs fail in their first few years, the economy generally is running with many challenges like power. You need money to overcome that. New businesses around now are leaning towards Information Technology, and that is data for browsing needed by many as well. Many tools and gadgets are becoming increasingly useful and important, but you need money for that. We don’t get asset financing, neither working capital loans. Internal Purchase Orders get interests which are almost same as the profit margin. How do we then survive?
The private sector will never succeed without a performing public sector or macro-economic growth as the case may be. Issues like minimum wage, currency value, corruption, etc., affect the success rate of the private sector. Sales will never come when people have low purchasing power. When there is corruption in the land, people will resort to buying premium products which majorly will come from importation. The absence of social amenities will make it difficult for you to survive both in business and in life. A typical example is electricity.
SMEs suffer daily from the lack of power to run the daily activities. For me, as an example, to sew, to weave, to iron, to gum, I need electricity; to meet with my clients online, I need to power my phone, data MiFi, laptop and also power-bank. Should I mention more political effects on the private businessman? Let the fuel pump price rise or there should be a strike action. Okay, don’t let us even go far, let us just pick bad roads.
It affects you meeting up with appointments, affects cost of transportation, makes your cost increase, affects your price, makes demand drop. So, we must have a holistic view of our decision through the eyes of macroeconomics to solve the microeconomic issue in the fastest way.
So, my full advise for SMEs is firstly to ensure that you, individually, be involved in the election of the right people into public offices because the lives and living of the private sector still remain fully influenced by the actions and inactions of the leaders of the public sector. Then, focus should be used as a major tool. We should shun distraction. Survival in the first years in business, with the many challenges, needs an extra dose of strength and focus.
Repositioning SMEs in Nigeria
For me, I think SMEs should first start working with acquaintances then ensure the business relationships are well kept. The worth of the people in one’s network becomes capital at some point. SMEs should run business formally. Most are still doing business in the crude way, and financial institutions want to see your bank statements and other books to ascertain your financial stand and possible positive projections that can in turn lead to financial assistance. Grants are available too. Many businesses, however, do not get such because they do not have a business plan or have never even tried a business before. Institutions want to see that you have tried, failed and got back up on your feet.