Peju Kukoyi, founder and CEO of JPPlus Consulting, is an experienced business strategist and change manager, with a special focus on small businesses. In this interview with Ibrahim Apekhade Yusuf, Kukoyi who holds an MBA in Finance from Frances Grenoble Graduate School of Business, London Campus, and an MSc in Innovation Management and Entrepreneurship from Temple University Fox School of Business, United States, shares deep insights into the Nigerian SMEs ecosystem offering solutions to help transform the sector and engender sustainable growth.
What prepared you for the current career pathway?
I am the founder and CEO of JPPlus. However, before registering my business in 2009, I worked for a number of organisations, including the defunct Diamond Bank, where I managed ValuCard transactions. During this time, I worked closely with SME owners and began to learn the pain points of their businesses. These interactions triggered in me the urge to support small and medium-scale enterprises to address their business challenges. In the time since then, I have equipped myself to provide quality solutions to SME challenges. I obtained an MBA, in Finance, from Frances Grenoble Graduate School of Business, London Campus, and an MSc in Innovation Management and Entrepreneurship from Temple University Fox School of Business, United States. JPPlus Consulting is focused on providing support in corporate strategy, operational improvement and organisational structure to SMEs, developing fit-for-purpose solutions to help them scale business hurdles and enable business continuity.
How did you start your business, and would you say it has been rewarding so far despite the numerous challenges synonymous with the SME space?
I started out as a freelance business strategist, consulting for SME business owners. I would hold one free strategy session with them to fully understand their needs, visit their business to perform a diagnostic assessment and give a report of what the challenges were and how to address them. I had clients who took my suggestions for improvement and tried to implement them without me, while some signed me on immediately.
Over time, my clientele base increased. And yes it has been rewarding. Of all the rewards, the most fulfilling has been the success of the business outcomes of my clients, based on the solutions I developed and implemented in their businesses. That sense of building a business alongside the owner is quite exhilarating. However, this has not been without its challenges. One that is prevalent is educating business owners on the need for my services and the value-add to their business. I dare say, the rewards outweigh the challenges.
As a Business Strategist, can you tell us some of the problems stunting the growth of SMEs in Nigeria?
Internally, I find that most business owners have the technical expertise for the market they are operating in, but little or no idea about the inner workings of a business. This is reflected in the inadequate organisational structure and in some cases misalignment of corporate strategy, which significantly impairs business growth.
Externally, funding and governmental policies have always played a role in the growth and development of the SME community. Indeed, a lot has been done to create opportunities for SMEs. However, I fear it is not enough and a model that takes into consideration the peculiarities of the community, in regards to their market of operation, needs to be adopted to ensure critical issues are addressed.
Picking on governmental policies, what’s your opinion on the multiple foreign exchange policies of the federal government and how they affect SMEs?
Foreign exchange policies can be quite cumbersome, with aspects appearing to have little or no consideration for SMEs. Let’s look at the devaluation of the naira against the dollar, for instance, each time this happens, we find that the cost of doing business increases, particularly for businesses that are import heavy as their profit margin can shrink significantly or they lose their customers who are unable to cope with the price increase and thus seek alternatives.
Foreign exchange volatility is another one that directly impacts the business performance of an SME, with research showing that a 1% increase in exchange rate fluctuation has a 0.96% decrease in the performance of SMEs. If a business ability to profit from its resources and achieve its goals is impaired, the rate of growth for the business will become dependent on its ability to stay afloat.
Let me state, for clarity, that government policies are influenced by several factors, and requesting that a particular sector or community be considered above others is far from being ideal. As such, the SME community can lobby for support to cushion the direct impact of foreign exchange policies that negatively impact their business.
The backward integration policy of the government is already yielding some positive results. Big companies like Dangote and BUA now source their raw materials locally. How would you react to this?
This policy is one of the best things that the federal government could have done for SMEs, but I would love to see it expanded to include other business sectors while ensuring to put in place a high barrier to entry for foreign businesses that target the SME space. What do I mean by this? Let me expand a little. Several small businesses can serve various needs of a business process when sufficiently broken down. For instance, if a printing company that is into packaging and the like is not properly protected with a policy that makes it difficult for foreign companies to establish a presence in its space and undercut prices, it will lose market share and fizzle out. Don’t forget the foreign company is bringing in forex and so is backed by the strength of forex against the naira.
Despite the challenges, many SMEs are still pushing on. What strategies should they adopt to stay afloat?
Yes, SMEs are still pushing on in spite of the challenges faced, but the competitive advantage strategy, which has guided the operations of most SMEs, is no longer as viable as it used to be. The concept of this strategy has meant that each business focuses on highlighting its differential value to be more profitable than its rivals. This has been ongoing with more businesses trying their best to outdo others by presenting some form of value proposition or the other to customers. The effect of this type of strategy in the SME community, considering the challenges faced as a community, is that collaborative opportunities are not being harnessed.
To optimise the opportunities available I would recommend the cooperative strategy (competition), which is the coming together of two competing businesses, within the same market, to increase their chance of growth. This strategic alliance is designed to help two or more competitors who have complementary strengths enter an agreement to share common gains. This does not mean that they will collapse their businesses into one entity, no they still exist as different businesses, still competing in the market in other areas where they generate greater value creation as stand-alone entities, but cooperate to attain higher value creation, when compared to what they created without the strategic alliance, and when they struggle to achieve a competitive advantage.
There are some challenges to the cooperative strategy, such as trust, a clash in professional philosophy, who controls distribution, complementary needs and equity in risk. However, the benefits, which include but are not limited to cost reduction of the individual entities as a result of shared cost, complementarity of resources, elimination of duplication, and technology transfer, far outweigh the challenges.
A word of caution though, this strategy requires detailed work and should not be embarked upon without the guidance of an expert, as it is necessary to draw up guidelines to cater to potential challenges of the strategy.
How do you think the sector can be encouraged for growth and development?
As mentioned earlier, internal challenges in corporate strategy, external issues of funding and the impact of governmental policies have been core to the growth and development of the SME community. The government has also done a lot to enact policies that will enable growth for the community. However, more can be done in this space to encourage continuous growth and ensure a stable competitive environment.
Now for funding, the bloodline for many businesses, there are so many funding options available, right from the Bank of Industry to any of the commercial banks and microfinance banks on our high streets, down to venture capitalists and angel investors. In addition to the policies that the government is putting in place, there are also funding programmes sponsored by the government to ensure the cost of lending is affordable.
I know it is easier to say more needs to be done, and to some extent, I agree. However, I would encourage business owners to start by optimising the opportunities available. This can be done by working with an expert to develop the right strategy for the business and ensuring that the business is properly structured from the beginning. Please note that there are free business clinics available for SMEs to get the support and information needed to access funding, as well as understand how governmental policies will benefit the business.
What does an individual need to establish a medium-sized business in Nigeria?
Starting your own business is no small feat. It involves a series of steps and activities with varying levels of specificity. However, the most important is to be clear that the solution the business is providing is meeting a need that is an actual pain point to the target market. If this is lacking in any way, it is almost certain that the lifespan of the business might be shorter than anticipated.
