SMEs play an important role in the Nigerian economy by contributing to its sustainable growth and generating employment. In the last few years, we have seen a growth in the number of small businesses and most Nigerian job seekers after waiting endlessly for jobs that are not forthcoming had started one venture or the other despite the unfriendly business environment.
However, the uncertainty presently being felt due to the pandemic is quite epic as it has not only affected one particular industry but rather, it could be termed as generic as all sectors are affected. Some of these include trade, supply chains and manufacturing and further having an effect on business sustainability though in varying proportions. Most businesses in the second quarter of the year were not fully operational and those that operated, had reduced scope of operations.
Aside the reduced scope of business operations, the continued closure has resulted in downsizing, redundancy, closure and pay cut. Furthermore, the inadvertent effect of the pandemic on businesses especially its financial strain should not be underplayed as business owners need to be more creative in order to get out of the woods.
What are the steps business owners need to consider to jump-start their once thriving businesses?
- Seeking Help:
It is not out of place to seek for help. Business owners should not delude themselves by thinking they can do it alone. They need to learn to surround themselves with knowledgeable people that can offer counsel, business advisory on operations and financial matters. Sometimes they shy away from wanting to commit funds to such ideas but this can save them the headache of stress and financial losses. I had an interactive interview session recently with the managing Director of Prothrive Astute Heights, makers of “grandiose pap” and despite being a chartered accountant, she said she still has an auditor and a financial consultant come in periodically to assess her records.
As a business coach myself, sometimes I reach out to other coaches to navigate some challenging issues. Learn to also surround yourself with positive people who believe in your vision and your business. Listen to their suggestions, sometimes, best of plans come from employees. Richard Branson of Virgins said he got the idea to start Virgins Blue from one of his employees.
The need to have mentors or coaches can go a long way in creating better clarity and directions for your business as they can act as sounding board to enable you bounce ideas off them and pick their brains for suggestions or even providing alternatives considering your minimal resources.
- Review and adjust business model
This is one of the times to review your current business model. What is working and what is not impacting positively especially if you have committed a lot of funds into it and it does not seem to be yielding positive returns.
Assuming you are in a furniture making industry, what other creative things can be added to your business line that would not take you off track but which could complement what you are presently doing. Someone in this line of business could add duvets, bedspread, pillows and pillow cases so it becomes a one-stop-furniture store where your clients can get what they want without the stress of going elsewhere to look for complementary goods.
As a business owner, consider doing a SWOT (Strength, Weakness, Opportunities and Threats) analysis. What are the strengths of your business that you can leverage on, what weaknesses do you want to tinker on and improve? You need to be weary of threats so what plans do you have in place for any emergency.
The pandemic revealed so many unpleasant things about small businesses as some simply could not innovate around their service offerings. How can you adapt to serve your customers even if your business location is under lock and key? If government were to introduce a new policy or regulation, how would your business survive and transit to something else.
Remember the logistic business when government said owners have to pay a regulatory fee of N2,000,000.00 for a minimum of six bikes to operate . Many businesses just could not survive or the case of Go-kada and Oride, they simply translated from passenger carrying to parcel/cargo carrying outfits. How flexible is your product or service offering? You need to work with an innovative mindset.
Have you also heard of cross-selling and up-selling? You need to check out what could serve as alternatives or complement your product or service.
- Reduce Costs: It is good to know the state of your finances and be able to work round it. You need to know what you are earning as revenue, what you are owning as your assets and what you are owing especially debts that cannot be serviced timely due to reduced business scope.
Look at your operating expenses as a company and know what you need to take off. Review all the costs and identify the major cost areas to work on. Do you need to reduce some expense? What can you compromise on that would further reduce your expenses? Do you need to check the consumption rates of some office items so that your overheads can reduce?
- Improve Cash-flow: This is a vital part of staging a comeback after the easing of the pandemic and most business owners need to be aware of its significant as the lack of cash can further compound a business woe.
They need to learn to issue invoices promptly and follow up on them regularly. This sounds simple, but many people put off or avoid paying others simply because some business owners do not follow up with reminders on the outstanding payments. Managing receivables will make money circulate easily in your business and you can honour obligations.
Another way is to work on payment patterns. Most businesses are facing dire financial condition, you need to offer a discount for early payment in order to get more money into your business rather than have continuous delayed payments that may hinder your ability to replace stock. If your standard contract has a thirty-day payment term, give a small discount for payment within two weeks or less than seven days.
If you have an on-going project, you can also structure the payment with an upfront deposit or, if long term project, schedule payment in intervals throughout the project lifetime. This will ensure smooth cashflow.
Reducing your inventory and desist from just stocking up on goods when people are not buying can also have effect on your cash flow.
- Consider new vendors:
Even if your business reopens, the vendors in your supply chain may not be in business again. That could require finding new vendors to handle your supply chain. You can look at the complaints your customers have been making references to and you can use this as basis to initiate new relationships with vendors as they would be more disposed to signing on new clients and would want to do all possible thing to have you on board.
- Creating a Unique Customer Experience: you should follow through on your commitment to your clients. If you promise to get back to them with any information, do not forget to follow through on it.
If you have a feedback mechanism that says clients will get a response within 24 hours or that a product would be delivered within certain time, be sure to fulfil them.
In the aftermath of this pandemic, you need to find ways in which you can have repeat businesses from your existing clients, increase the wallet share of their business and impress them with excellent customer service culture.
Rita Babalola is a Life and Executive coach, Entrepreneurial skill developer and Business transformation consultant with strong passion for personal effectiveness and improvement