Despite being identified as the engine for economic growth and development, the Small and Medium Enterprises (SMEs) sector is still bugged with many challenges that make their operations unsustainable and hinder them from realizing their full potential in Nigeria.
Some of these challenges include lack of access to capital; poor infrastructure, weak managerial and organizational skills; low adoption of technology and innovation and poor knowledge networks.
To address these challenges, the role of government is vital, especially in providing an enabling environment for greater growth.
The Nigeria Bureau of Statistics (NBS) estimates that the SMEs sector contributed about 48 per cent of the national Gross Domestic Product (GDP) in the last five years, and also accounts for 84 per cent of employment in the country and 96 per cent of its businesses.
Similarly, a survey by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), indicates that Nigeria has over 40 million micro, small and medium scale enterprises (MSMEs), cutting across sectors like manufacturing, wholesale and retail trade, education, agriculture, and food services.
Making SMEs sustainable
Amid efforts by businesses to recover from the negative impact of the Covid-19 pandemic, small business owners and executives at an Expert Panel organised by the Forbes Business Council (FBC) shared first-hand insights into how SMEs can be sustainable.
First, the experts charged SMEs to ensure their products or services fill a need in the market before launching their businesses, adding that they must also hire the right people and put the right processes in place to sustain their growth.
According to them, planning well and properly putting in the work early would set businesses up for sustainable success.
At the Forbes meeting were 12 experts who shared some crucial insights into what entrepreneurs must do to help build a sustainable business.
Specifically, Neha Kesarwani of Vertoe warned that for sustainability to be assured, entrepreneurs must not compromise on their values, as building the value system from the beginning is one of the most crucial things for a sustainable business.
“Values will set the tone for the vision, company culture, people you want to hire, collaborations, product building and running day-to-day operations. It’s the great values that build great companies and best places to work for,” Kesarwani said.
For Brittany Harrer Dolin, from the Pocketbook Agency, hiring the best possible employees to represent the company is the most beneficial way to not only properly build, but also sustain a business.
He said, “Your employees are a representation of the company as a whole and it is crucial to invest in hiring the right type of people that will embody the values and mission of your company. Top-notch employees are a company’s greatest assets!”
Besides, matching skills with portfolio, Jeff J Hunter of BrandedMedia.io advised entrepreneurs bearing all the responsibilities of their businesses, saying not only is this the opposite of sustainability, but also a perfect equation for entrepreneurs to burn out and have their entire operation fall apart.
Rather, he recommended that business owners should look at their processes to determine which ones can be automated, delegated or deleted completely.
“As you align personal values to your business values, getting them to see what’s in it for them, you will begin to trust in delegation and give yourself the opportunity to work on the business, as opposed to in the business,” Hunter added.
On her part, Lauren Cooney of Spark Labs said it is essential to establish multiple revenue channels when building a business. “Whether you’re selling a product and providing additional services with that product, or you provide support services for a subscription fee, it’s imperative to ensure there are a few demonstrated methods you can drive revenue by.”
Similarly, Anthony Smith of Insightly, said closing the spending gap of a business over time is a key to attaining sustainability. “Watch every dollar coming in and leaving the business. We all know that you must spend money to make money, and in a startup business, cash outflows will invariably exceed inflows at the beginning. The key is to never take your eye off the ball, as spending can skyrocket out of control very quickly. Close the spending gap and get profitable, methodically and predictably, over time.”
Values will set the tone for the vision, company culture, people you want to hire, collaborations, product building and running day-to-day operations. It’s the great values that build great companies and best places to work for.
In his remarks, Skyler Ditchfield of GeoLinks said, “When building your business, it’s easy to want to enjoy the rewards of your success. But do not ratchet your lifestyle up with your cash flow. The time will come when that cash flow needs to go back into the business to grow. It’s hard to turn your lifestyle back down. I’ve seen so many businesses stuck in the mid-size range where the owner now is stuck and cannot grow.”
On his part, Pacific Preferred Insurance Brokers’ Ken Goodwin, said the key to building a sustainable business is to find ways to get all team members from every level personally engaged and motivated in the day-to-day sustainability vision of the business.
Finally, Bruce Maxwell of the MSI Management and Consulting Services Inc. said SMEs must think long-term and not trade short-term gains for long-term successes.
He also urged business owners to have trusted associates who are not directly involved in their business to validate their plans and vision, saying this could lead to a lot of good insights not initially seen.