In this piece, I have deliberately replaced ‘challenges’ with ‘maladies’ to highlight the subtle but devastating nature of their impact on business – just as diseases wreck the body.
Understanding certain peculiar challenges facing micro enterprises and small businesses would allow us to solve the puzzle of why not less than eighty percent of small businesses in Nigeria fail between two to three years of operation. These circumstances appear trivial but have negative impacts on businesses, if not properly managed.
Countless essays have been written on the reasons small businesses fail and how to curb them. Unfortunately, none has aptly identified realistic scenarios and circumstances surrounding their operations which are breeding grounds for failure if they are not optimized.
Here are some scenarios and what small and micro enterprises can do to overcome such situations:
All eggs in one basket
Firstly, electric power situation in Nigeria is generally bad and unreliable. How do residents, who share the community with small businesses and have no alternative power supply, meet their power needs? They hang around and within shops and kiosks to charge their phones and other electrical and electronic gadgets. For businesses that profit from customer’s retention, this is a money-spinner.
An example is a gambling shop. Instead of discouraging their prolonged stay, provide an organised ‘power corner’ with durable power sockets and extra seating arrangements. In this part of the world, businesses are not immune to the syndrome of ‘Scratch my back…’, even when you are not legally obligated to them. They would only frequent shops that ‘help’ them.
Did you ever think you can earn commission from displaying and selling shoes for shoemakers? You can even design the shoes yourself!
Attitude to challenges
Micro enterprises respond to challenges of business climate very quickly because of their small size. These responses most times cost them unbudgeted cash expense. Consider a cocktail mixer whose preparation went awry as a result of miscalculation. He is faced with the dilemma of either disposing the bad product or selling it as it is but at the risk of disappointing customers. He can turn that challenge into an opportunity to experiment with more additives, an opportunity to discover more recipes by playing around more flavours.
Thirdly, do you give credit? Sometimes, customers want to make purchases but are limited by the funds they have at hand. In fact, they may have cash in bank or may be expecting money from a friend or family or employer. If you fail to sell your product or service to them because they cannot tender the full payment, they may not come back to you when they have the full money.
To be on the safer side and minimise your business risk, give partial credit to those that advance nothing less than half of the cost price of the product or service. However, have a solid strategy in place for collecting outstanding debt and this should be stated clearly to creditors in your statement of terms and policy.
Micro enterprises or small businesses that adopt these techniques would surely survive the age-long curse of ‘eighty percent of small businesses failing between two to three years of operation.’
Best wishes to small and micro enterprises everywhere.
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