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Tag: SMEs’

  • How SMEs can survive, by experts

    How SMEs can survive, by experts

    Small and medium enterprises (SMEs) should have long-term survival plans and be aware of innovations in products and services to build viable companies, speakers at the just-concluded SME Tink Tank (SMETT) Seed Conference have said.

    At the event, which was held in Ikeja, Lagos, the speakers noted that SMEs had emerged as tools for economic growth, but face multiple challenges, including limited access to collateral-free finance, lack of knowledge and awareness about business processes and compliance needs and inadequate go-to-market strategy.

    Speaking on the topic: Surviving turbulent time, Fate Foundation Executive Director, Mrs Nike Adeyemi, observed  that  SMEs had confronted a lot of  challenges occasioned by recession, which reflected in a period of slower economic growth.

    She explained that SMEs faced a tough environment, including low consumer confidence due to fear of rising unemployment, high inflation and reduced real wages.

    To stay afloat, she advised SMEs  to adopt  a  market-oriented  approach,  explore  and  utilise  alternative  source  of  finance,  enhance managerial skills and knowledge on markets.

    She urged small businesses to focus on exploring niche market opportunities, and building stronger relationships along the supply chain and on innovating.

    According to her, Medium, Small and Micro Enterprises (MSMEs) need to upgrade to produce products of international quality for expanding their business.

    SMETT Platform Convener, Sola Dawodu, said the objective of the platform  was  not only  to  project the development potential of the SME segment, but also empower the  small  business leaders with inspiration, ideas, valuable insights, knowledge and most of all, encourage the creation of new  enterprises.

    Web Development Lead, Cities WebIT Solution, Olukoya Benjamin, urged the SMEs to explore digital marketing opportunities to remain competitive with larger firms and established brands.

    He noted that digital marketing opportunities are too important for SMEs to ignore – particularly if they want to keep up with larger competitors.

    According to him, digital transformation is not only permeating every layer of the market, but is acting as a catalyst for new businesses and innovative thinking.

    He urged SMEs to explore digital opportunities as smartphones were transforming the way consumers behave and businesses need to reflect this when looking to interact with them.

    Credit Bureau Association of Nigeria (CBAN) Executive Secretary, Onome Ako, urged SMEs to embrace credit bureaux to expand their businesses.

    She explained that credit bureaux could provide information that will allow financial institutions to better assess the credit worthiness of a borrower.

    According to her,  credit bureau  collect and make credit information from lenders and other relevant credit information sources on a borrower’s credit history available to prospective lenders.

    She said SME owners were not aware of the importance of keeping their records updated and of understanding the components of those records.

    She recalled that there was a that SMEs owners were turned down when they sought trade credit.

    According to her, the financial system has come to regard credit ratings as an integral part of the framework for credit and investment decisions relating to larger and small enterprises.

    She explained that ratings could make SMEs’access to financial services more efficient by providing benchmarks and improving transparency.

  • Linkage offers survival for SMEs

    Underwriting firm, Linkage Assurance Plc, is committed to helping small and medium enterprises survive business challenges and grow into the future, its Managing Director, Dr. Pius Apere, has said.

    He made this known while speaking with newsmen in Lagos. According to him, the company through one of its newest products, ‘SMEComprehensive Insurance Plan’, provides financial protection to small and medium sized businesses against array of insurable risks in order to ensure their business continuity.

    SME comprehensive insurance, he said,  allows business owners to run their companies without having to worry about unexpected events that can slow them down or bring them to a complete halt.

    Apere said the cover provides for water damage from leaking pipes, money lost in transit, theft, fire incidence at warehouse, among other kinds of liabilities, stressing that these are liabilities that cannot always be anticipated. The company, he added, provides business owners the confidence they need to keep moving with the knowledge that their assets are covered from loss and other legal liabilities.

    He said: “The Plan is available with five different optional section and flexible enough to cater for the insurance needs of SMEs across diverse sectors of the market.

    “At Linkage, we understand that Nigerian SME businesses operate in a tough, rough and often fast changing harsh economic environment. SME businesses are still held to the same standards of corporate governance, employee welfare and liability as the larger companies and they often have to manage their risks with fewer resources and less time to spare on distresses other than those relating to day to day business.

    “SMEs, therefore, require an affordable, well packaged insurance policy, which will protect their assets, liabilities and employees from the risks associated with operating a business. Our comprehensive plan covers a wide spectrum of SME customers from a small single office premises for self-employed business owners to a multi-dimensional retail companies with a material damage/business interruption exposure spread across multiple locations.

    “The cover is for hotels, hospitals, water bottlers, publishers/printers, drycleaners, haulage, furniture, logistics and cottage manufacturers, among others.”

    Features of the plan listed include damage to buildings as a result of fire; theft of contents, with the following options to cover; occupier’s liability; personal accident for employees; professional indemnity and motor, including own goods.

  • SMEs: Multiple taxation, dearth of infrastructure hurting our businesses

    Small and Medium Enterprises (SMEs), particularly those on the Ikorodu axis of Lagos State, have cried out that excessive taxation and dearth of supportive infrastructure, among other harsh operating environment-related challenges, are taking a huge toll on their businesses.

    Some of the small business owners in Ikorodu, who spoke with The Nation, lamented that constant and multiple demands for taxes by various agents of the government were hurting their profitability and threatening the sustainability of their businesses.

    For instance, Logistics &Facility Manager, Hallel Engineering Company, Mr. Adeolu Akinpelu, said his company was faced with the challenge of double taxation by the government under various names and categories.

    Akinpelu said there was a need for the government at all levels to harmonise the various taxes to be paid by different categories of businesses, to avoid the current situation where businesses, particularly SMEs, are forced to pay the same taxes but with different sub-heads.

    He argued that multiplicity of taxes was having debilitating effects on SMEs by cutting into their profit margin. Besides, those who could not cope with the excessive taxation have been forced to either close shop or relocate to other climes where tax regimes are SME-friendlier.

    To the CEO of Zaiphie Transformation, a firm of make-up artists, Miss Ifeoma  Ikechukwu, the challenges facing SMEs in Ikorodu area of Lagos go beyond tax. She said the perception of Ikorodu as being in the backwaters of civilisation due to lack of infrastructure was a pain in the neck of small business owners.

    The beauty artist said: “The price of makeup and hair products increases daily, and it is affecting my business. But, unfortunately, people see Ikorodu as an undeveloped area and insist that our products must be cheap without recourse to the fact that we all buy from the same market,”

    Miss Ikechukwu lamented that the location of her business in Ikorodu was a major disincentive as customer patronage was low because of the poor infrastructure in the area, such as regular supply of electricity, potable water and good roads, among others.

    She, therefore, called on the state government to improve the infrastructure in the area in order to boost SMEs and ultimately, create jobs.

    Similarly, Managing Director, Marthridge Stitches, Mrs. Martha Aimuemojie, complained that because of poor infrastructure in Ikorodu, many of her customers are unable to locate her business address.

    According to her, the difficulty by prospective customers in locating her business address affects the price of her goods and services. She expressed regrets that location determines the price of goods and services, whether one is good or not in the business.

    Another dealer in beauty products, who gave her name only as Mrs. Orakwe, however, said the hurdles before SMEs in Ikorodu cannot be divorced from the general economic downturn plaguing the nation following the collapse of oil prices at the international market.

    Orakwe said the economic recession that gripped the country since the crisis started has forced many people to re-order their priorities, as many Nigerians now prefer to feed their families first before thinking of buying beauty products and indeed, other products and services.

    Apart from the economic downturn, Orakwe also lamented that the seeming gradual disappearance of the apprenticeship culture from the SME landscape was not helping matters. She said nowadays most apprentices want to make money rather than learn from their masters.

    She added that apprentices learn the trades now are cajoled to do so. She decried the lazy and poor work culture among the youth, and called for a paradigm shift.

  • Group seeks ministry for SMEs

    The Association of Micro Entrepreneurs of Nigeria (AMEN) President, Prince Saviour  Iche, has urged the Federal Government  to establish a Ministry for Small Business and Entrepreneurship as part of its  commitment to place the economy and job creation at the centre stage.

    Iche, who spoke at the weekend, noted that the much-needed economic growth and employment opportunities will come from policy that enables small businesses to thrive and grow into profitable enterprises.

    He noted that only a special ministry dedicated to small businesses,  such  as the Ministry of Micro, Small & Medium Enterprises (M/o MSME) India   can  address  different needs of the sector.

    As a ministry, he said it would  provide  the  need for enhanced support to small businesses  and through  it  unlock economic opportunities and achieve sustainable employment.

    Iche lamented that Nigeria’s small businesses were facing operating challenges with rising interest and electricity rates compounding operating cost.

    He explained that small businesses face a challenging future as a result of inflation growth, naira depreciation, looming business rate increases, and wider economic instability.

    According to him,  a lot  of small businesses  are struggling to  access  credit, adding  that  the success and profitability of  their businesses depends on how they  are able to access funds to   keep their operations afloat and    get into new markets.

  • Lagos disburses N4.5b to 5,527 SMEs

    Lagos disburses N4.5b to 5,527 SMEs

    Lagos State government has, through the State Employment Trust Fund, approved N4.5billion for 5,527 Medium Small Manufacturing Enterprises (MSMEs) in the last one year, the state Governor Akinwunmi Ambode, said yesterday

    The governor spoke at the opening ceremony of the second  edition of Micro, Small and Medium Enterprises (MSMEs) Exclusive fair, with: Unleashing the Potentials of MSMEs for Economic Diversification as theme.

    Represented by the Secretary to the State Government, Mr Tunji Bello, he said the Fund, in partnership with the UNDP and private sector employers, will also train 16,000 unemployed Lagosians in order to take up technical and vocational jobs.

    “The state government would launch innovation driven enterprise framework to support business startups in the fourth quarter of this year,” he said.

    He reiterated the commitment of the government to continually implement enterprise-friendly policies and develop the critical infrastructure that would enhance the productivity and competitiveness of all businesses in the State.

    “We will continue to support the growth of MSMEs and make concerted efforts to develop enterprise cluster parks especially the Imota Light Industrial Park,” Ambode said.

    He said the theme of this year throws a challenge to all players, both public and private which is that everyone must look inwards and develop the internal and external capacities of the local non-oil MSME for steady growth and global competitiveness.

    According to him, the four-day  fair would match-up the local small-scale industrial giants with business development support providers,  investors from the private sector, public regulatory support agencies at the state, federal as well as the foreign economic development institutions.

    He said despite the contributions of the MSME sector to the Lagos economy, the sector’s competitiveness is weakened by limited access to credible, customised-business support.

  • Fed govt committed to SMEs’ growth, says minister

    • BoI to expand lending windows

    The Minister of State, Industry, Trade and Investment, Mrs. Aisha Abubakar, has restated the Federal Government’s support for Small and Medium Enterprises (SMEs) because of their impact on economic growth.

    Speaking at the African SMEs exhibition in Lagos, Abubakar said the focus of the exhibition, Promoting SMEs for sustainable development and economic growth, tallied with the plan to ensure that skilful entrepreneurs were actively engaged in one economic venture.

    The government, according to her, is harnessing efforts to design and sustain viable initiatives, which can solve the problem of unemployment, while shoring up the Gross Domestic Product (GDP).

    “The future of SMEs in the continent is bright, but we must all do our part to make sure we achieve this. This expo will no doubt, stimulate and attract Foreign Direct Investments (FDIs) into the African business ecosystem, which will in turn promote investment and trade,” Abubarkar said.

    The Bank of Industry (BoI) announced that it would have dedicated N1.2 trillion to SMEs’ development by 2019, noting that the bank would leverage on its partnership with commercial banks to bring its risk assets from the current N600 billion to N1.2 trillion.

    BoI Managing Director Mr. Olukayode Pitan, represented by the Executive Director, SME, Waheed Olagunju, said the bank  budgeted about N310 billion for SMEs’ development with an average of N60 billion yearly.

    He said SMEs’ major challenge  was not finance, but the dearth of feasible business models and bankable proposals. According to him, Nigeria does not lack the funds to support SMEs.

    Pitan listed other challenges holding SMEs down to include lack of skilled manpower, inability to meet the requirements of financial institutions, and SMEs’ vulnerability to shocks, among others.

    He, however, said despite the challenges, there were a number of successful SMEs that prove that it is possible to promote SMEs and run them viably and efficiently.

    “At BOI we lend to SMEs at single digit, because we are able to mobilise resources from national and sub national sources, and the tenures are quite generous. Because of our branch network, we are also able to work closely with the SMEs,” Pitan said.

    The BoI boss, however, explained that the projects the bank supports are those that have considerable developmental impacts by way of job creation; projects supported by women and projects that are environmentally sustainable as well as those that rely on local content by way of their raw materials.

    “We are making a lot of progress in terms of supporting SMEs. We have come up with lots of innovative schemes to reach the entire country,” Pitan said.

    He however, noted that the bank’s Non-Performing Loan (NPL) ratio has consistently been at four per cent, which is below the Central Bank of Nigeria (CBN’s) threshold of five per cent.

     

  • 29 win SMEs grants

    Expo 2020 Dubai  has announced the first recipients of its Expo Live grants to socially responsible fledgling start-ups.

    The winners of the $100,000 (Dh367,000) social entrepreneurship grants were selected from 575 applications in 71 countries in a three-stage selection.

    One of the winners include West Africa Vocational Education  ( WAVE Nigeria), which aims to match young people without formal qualifications to find formal jobs matching their skills, helping curb youth unemployment.

    The winning applications come from 23 various countries, emphasising the global nature of the Expo, said Vice-President of Expo Live, Yousuf Caires.

    “Expo 2020 is a global event in Dubai. Expo Live mirrors that,” he said. “We need to deliver on that global promise,” he said.

    The programme, which will announce new grants twice yearly till October 2019, is not intended to support promising start-ups, he said, but to support those intended to make a profit while having a positive social impact.

    “It’s making money while doing good. It’s business with a purpose. It’s not one or the other — they have to go together,” he said.

    Expo Live set out to counter two gaps its research exposed in the start-up accelerator, incubator and funding sector.

    The first is geographical disparity. “If you are in London, if are in Silicon Valley, there is money for you,” Caires said. “If you are in the tech business, there is a lot of money for you. What we found is that when you go to less traditional markets the opportunity for funding isn’t always there, especially if you are in an area that banks find too risky.”

    The second gap is in the level of funding. The scheme sets its grants  to position them between the small-scale funding options of tiny, fresh operations, and the kind of projects looking at attracting high-level venture capital or angel investors. The grants are designed for companies that have set up, and produced prototypes, but need help to scale up to full production.

    Each winner will attend the expo as a global innovator, with the support, resources, training and exposure to help them turn their presence into an advantage.

    “They’re going to get into those meetings, they’re going to get their one-minute pitches to the VCs [venture capitalists], to some of the funders from our region. They’ll have a chance to talk to some of the big shots who are coming to Expo.

    “We call it ‘partnership ready’. Our role is not just to fund them. We can fund them, but we can say, ‘Hey, if these guys develop, they need to prep up for that connecting minds moment.’

    “These guys represent Expo 2020. They represent who we are,” Caires said.

    Caires said he did not expect all of the funded start-ups to succeed. “If we’re too conservative, we’re not catching the good stuff. If we’re overly risky, we might be throwing some money away — money that we don’t necessarily have to waste.

    “We know it’s a pipeline game, a portfolio game, and what we hope is that if we do our job right I think we’re going to get there, having a good nose for what these social entrepreneurs are and the kind of value [in what] they’re doing and the kind of progress they can make, and having a hope that a chunk of them will … surpass Expo as an entity, and we will forever be a part of their legacy.”

     

  • Building systems and structures for SMEs

    Introduction:

    Most small businesses fail within first few years of operation due to lack of proper systems and structures. A lot of small business owners always think because their businesses are small, they don’t need to put structures and systems in place. The degree and level of the systems or structures to be put in place will vary depending on the size and nature of the business.

    The importance of systems and structures cannot be over emphasized for small businesses. Some of the benefits include:

    It makes operation to be seamless and easy to carry out.

    It helps you to build a lasting business.

    It assists in training of new employees.

    It reduces rate of fraud and error in the business.

    It frees owner from day to day running of the business.

    No employee will be able to hold the business to ransom (No employee will be indispensable).

    It facilitates the establishment of new branches because you don’t have to reinvent the wheel.

    Some of the essential systems and structures that must be in place for small businesses include:

    1. Accounting System

    Every business in respective of size must have an accounting system in place. It doesn’t matter whether you are operating manual or electronic accounting system, basic book keeping records must be in place. There must be system in place to capture all transactions of the business such as expenses, sales, purchases, receivables etc. For a small business that cannot afford to buy an accounting software, you can start with a simple ledger book to record your daily transactions. If you have a laptop you can keep your records in an excel sheet.

    Your accounting system will help you in monitoring the performance of your business on a monthly, quarterly or yearly basis.

    1. Inventory System

    This is essential to help you keep track of your stocks. A good inventory system will tell you when you arerunning outof stock and will help you with your re-order level. A business can easily lose credibility when youcannot meet a customer’s order because of stock out. The inventory system should be able to give you an up to date position of your stock level. A good inventory system will help you to have accurate accounting records since your stock level is very key to accurate financial records.

     

    1. Budgeting System

    Every small business should have a budget. The budget is just an estimate of your income and expenses prepared maybe monthly, quarterly or yearly based on your previous experiences and current reality.

    The budget will help you as a small business owner to manage your resources in an efficient manner.

    A good budget will help you to plan your cash flow very well; it will also push you in your marketing efforts.

    Without a regular budget it will be difficult for you as an entrepreneur to have adequate plan for growth and expansion.

    1. Human Resources Management System.

    As long as you have at least one staff in your business, you must have an HR system in place. Some of the areas you must have system for in HR include:

    Recruitment policy

    Disciplinary policy

    Payroll system

    Leave policy

    Opening and closing policy etc.

    Having this in place in respective of your current size, is an indication that you are prepared for growth.

    1. Quality Control System

    Whether you are into products or services, you must put a mechanism in place to monitor the quality of your products or services at any point in time.

    For product, every batch must be checked to meet the minimum quality standards that have been put in place.There should be standard in place as per the quality of raw materials and the suppliers to be used.

    Finished goods must pass through a quality control check before final sale to customers.

    For services, there must be a good feedback mechanism in place to monitor quality at all times.

    Every entrepreneur must take feedback system very serious for continued relevance in business. The business environment is highly competitive, and you must be on your toes at all times to be ahead of competition. This can only be made possible with a good quality control system in place.

    1. Management System

    Every organization must have a management structure in place. The organization should indicate the reporting line for each department in the organization.Each staff must report to one person at a time (unity of command). There must be very clear role and job description for each position in the organization.

    The organogram must be in place and circulated to all staff. There should be no ambiguity in the reporting line. Orderliness is the first law of increase.

    1. Marketing System.

    The life wire of any business is sales. There can be no guaranteed sales without marketing. It is essential that every small business has a marketing system/planin place. Since marketing is fundamental to any business, it cannot be done haphazardly. Your marketing system will be a guide for your marketing activities. It will cover such things like: marketing channels, target market, marketing strategy, pricing strategy etc. The marketing plan must be reviewed regularly to remain relevant and competitive.

    1. Production System

    The production system must be put in place by any SME involved in production or manufacturing. This is very important to have a standard and uniformity in the production line. This will ultimately affect the quality of the product. The production system is like an operation plan that will cover the entire production process in any manufacturing business.

    Conclusion

    As an entrepreneur, you can put in place some of these systems by yourself. Some will require professional services, if you can afford them. There are a lot of templates you can get online and adapt to suit your own business. I will advise that all existing and start-up SMEs begin to put in place these systems and see their businesses grow to the next level.

     

    TomiOmojuwa

    tomiomojuwa@gmail.com

    08134354847- WhatsApp only.

  • Captive power good for SMEs, says report

    Captive power possesses huge potential that can transform small and medium enterprises (SME) and the economy, if leveraged, a report by The Corvus, a financial and economic publication of Guaranty Trust Bank Plc, has said.

    It said developing a captive power plant (CPP) was quite complex.

    Quoting Pricewaterhouse Coopers  (PwC), it said the project development timelines for CPP may span about three years, noting that it involves several predetermining factors ranging from regulation to mode of financing.

    “The latter is the easier part as it often comes down to either project financing, where the sponsor is directly responsible for the cash flow, or balance sheet financing, which typically involves debt financing based on cash flow generated by the project.

    “The major sticky points to the development of captive power plants in Nigeria are in regulations, where the laws governing captive power generations (CPGs) are quite restrictive.’’

    According to the Electric Power Sector Reform Act of 2005, CPP generates ‘’electricity for the purpose of consumption by the generator and which is consumed by the generator itself and not sold to a third party.”

    This is contrary to the industry’s understanding of a “captive plant” as one owned and operated by a third party, it added.

    The report said beyond financing and regulation, the building of any CPG project is complex and demands experience, expertise and patience.

    ‘’First, like working on any other venture in Nigeria, the project developer needs to be nimble understanding that the rules and road map are not very clear and ever willing to adjust his schedule and resources to accommodate for that.

    ‘’It is also essential to enter local partnerships with co-developers, to facilitate a smoother market entry and project development, and with clients – in this case SME clusters or industrial estates, to guarantee the financial viability of the project. Perhaps, most importantly, it is imperative that the project developer be as self-reliant as possible to ensure control over the entire value chain ranging from the operation of the power plant to the distribution channels.

    ‘’Where all the issues mentioned are effectively taken care of, the success of the  CPP generation project is virtually guaranteed with enormous rewards certain for the project developer, its clients and the economy at large,’’ the report added.

    Quoting the National Bureau of Statistics (NBS), the study stated that as at February, there were 37 million Small and Medium Scale Enterprises (SMEs) in the country.

    It noted that their contributions to the economy was over $250 billion, though $150 billion less than the gross domestic product (GDP) of the Australian city of Sydney last year, which has a population of just under five million people.

    It put the reason for the differential on limited access to finance and markets compounded by low skilled manpower and technology and mainly poor power supply.

    It would be recalled that  10 years ago, the government, through its Financial System Strategy 2020, targeted SME clusters for infrastructural support, as critical to solving their power challenge.

    Today, with these clusters still bereft of adequate power supply,CPP generators can fill the gap. The case for CPG is apt; industrially, they can guarantee SMEs security of power supply, commercially, they require significantly less time and money to develop when compared to traditional power, and technically, they can be configured to the specific industrial demands of SME clusters, it added.

    SMEs, and most businesses in Nigeria, rely on individually purchased, operated and serviced generators as their major source of power supply. The result was that Nigerians spent over N17 trillion on fuelling generators between 2010 and 2015, according a report by electricity-focused NGO, Good Governance Initiative.

    The study, built on the survey of SME owners in Southwest and Southsouth, reveals that over 70 percent of small business owners consider individually operated generators not good for their businesses as they spend nearly 50 percent of their yearly income on the fuelling and maintenance of their generators.

  • UNIDO to develop Nigeria’s SMEs

    UNIDO to develop Nigeria’s SMEs

    United Nations Industrial Development Organisation (UNIDO), will help develop  Small and Medium Enterprises (SMEs) in Nigeria.

    UNIDO’s  Chief Technical Adviser, Investment and Technology Promotion Office, Stanislaw Pigon, who stated this at a breakfast meeting with agencies of government in Abuja, yesterday, said the idea was to foster enterprise and investment promotion across every sphere of the business strata in Nigeria.

    He said the focus on enterprise development was borne out of the discovery that investors in the country did not have the desired skill and knowledge of enterprise development, saying this has affected the country’s economic growth.

    Pigon said UNIDO-ITPO,  was training professionals of various associations in the private sector, financial institutions and governmental investment promotion institutions, so that they would in turn, train Nigerian businesses.

    He said Nigeria could leap-frog in economic diversification, industrial upgrading and technological innovation, to make it a more competitive brand in the African continent and the world at large, adding that UNIDO ITPO would like to transfer knowledge and introduce the best practices in preparation for the investment process.

    “This way, the investment project will be presented outside Nigeria in form of attractive portfolio. But then, it is not only to train the trainers; we would also like to interact with the universities and the educational sector in general. We want the graduates to be prepared for business in life,” he stated.

    Also speaking, the Head, UNIDO ITPO, Nigeria, Mrs. Adebisi Olumodimu, said the primary target of the capacity building programme was to support the Federal Government’s bid to diversify the economy.

    She said the country needed to demonstrate its readiness to diversify her economy and take advantage of unlimited opportunities in the non-oil sector now, especially with the dwindling prices of crude oil in the global market.