Surviving And Thriving In A Challenging Economy
The Nigerian economy is currently experiencing difficulties that are inching towards a distress and Small Business Owners are struggling to overcome the problems arising.
As every Small Business Owner grapples to overcome the major obstacles that impede the efforts to grow, there is a relentless search for the silver linings amidst these challenges.
What must Small Business Owners do in these troubling times if they are to achieve their desire to survive and thrive? How can they sift the trees from the forest? What survival strategies and action plans do they need to keep their heads above the storm?
Challenges Facing Small Businesses In Nigeria
As a Small Business Owner in Nigeria, the major challenges to overcome include:
1. Economic Headwinds
What is a headwind? What does headwind mean in business? A headwind is a wind that blows in the opposite direction to the one in which you are moving. Headwinds could be conditions that inhibit progress or have a negative impact on the economy, industries and individual businesses.
Today’s headwinds include inflation, currency fluctuations and rising interest rates. High inflation has eroded the purchasing power of consumers and increased the cost of doing business for small enterprises. It continues to squeeze their profit margins. Fluctuating exchange rates affect businesses that rely on imported goods or services, leading to uncertainty and increase in costs.
Small businesses, which usually struggle to access affordable financing, are now worse off under a regime of higher interest rates that weaken their ability to invest in expansion. These significant obstacles to business growth and profitability, with the attendant economic downturn, has led to reduced consumer spending and business investment, making it doubly difficult for small businesses to generate revenue and grow.
2. Infrastructure Deficiencies
Poor infrastructure, such as unreliable electricity and inadequate transportation, continue to slow down operational efficiency and expansion plans, while increasing costs.
3. Regulatory Constraints
Complex regulations, bureaucratic processes and multiple taxation add significant burdens and uncertainty for businesses.
4. Competition
Intense competition from both local and international players puts pressure on margins and market share.
5. Shortage Of Access To Skilled Labour
Finding and retaining qualified employees can be a debilitating problem, especially in specialised fields.
Opportunities Small Business Owners Can Capitalise On
What are the silver linings amidst these challenges? While the clouds are not likely to clear anytime soon, there are rays of hope that the Small Business Owner must look at and capitalise on.
Examples include:
1. Growing Consumer Market
Nigeria’s large and growing population presents a vast potential market for businesses catering to local needs.
2. Government Support
The Nigerian government is introducing various support programmes and initiatives to assist small businesses during these harrowing times. These initiatives aim to provide access to financing, training and market opportunities.
3. Adoption Of New Technologies
The economic downturn is accelerating the adoption of digital technologies. Digital tools and e-commerce platforms are providing opportunities for small businesses to reach new customers online, reduce operational costs and improve efficiency.
?4. Increased Demand For Local Products
The economic downturn is increasing consumer demand for locally produced goods and services, providing opportunities for small businesses to tap into this growing market. Furthermore, consumers are becoming more conscious of supporting local businesses. This is creating opportunities for small businesses to differentiate themselves.
5. Resilient Entrepreneurial Spirit
Nigerian Small Business Owners are known for their determination. They have a proven track record of resilience and innovation, finding ways to navigate their way to success. This is a valuable asset at a time like this when economic difficulties are encouraging small businesses to innovate and adapt their business models.
This is a time for Small Business Owners to encourage their teams to generate new ideas and experiment with different approaches. It is a time for them to create environments that support risk-taking and rewards creativity.
Practical Survival Strategies For Small Business Owners In Nigeria
With the foregoing in mind, the Small Business Owner must find ways to be up and about. Practical survival strategies for the Small Business Owner would include the following:
1. Embracing Digitalisation
Small Business Owners must leverage technology. They must utilise digital platforms and technologies to extend their reach for new customers, reduce costs and improve efficiency.
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2. Focus On Customer Service
Small Business owners must build strong relationships with customers by providing exceptional service and addressing their needs promptly. The must focus on customer retention, prioritise customer satisfaction to generate repeat business and reduce customer acquisition costs.
3. Control Expenses
Small Business Owners must optimise operations, negotiate with suppliers and explore cost-saving measures without compromising quality.
4. Diversify Income Streams
Small Business Owners should explore multiple revenue sources to reduce reliance on a single product or service.
5. Seek Support Of Networks And Mentors
Small Business owners must connect with other entrepreneurs, industry experts and government agencies. They must identify and join business networks, industry associations, government agencies or non-profit organisations that provide support and networking opportunities for small businesses. They must attend workshops and work with mentors to gain knowledge and access to resources.
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Action Plan For Implementing Business Survival Strategies
The action plan of the Small Business Owner looking to implement survival strategies should include:
1. Exploring Alternative Funding Sources
The Small Business Owner should seek alternative financing options to support the growth of the business. There must be attempts to explore various funding sources and compare their terms, interest rates and eligibility criteria.
There must be a willingness to look for venture capital or low-interest government funds or zero-interest grants. These endeavours must be rooted in the preparation of strong business plans and financial projections that support the funding applications.
2. Investing In Technology
The Small Business Owner must identify and implement digital tools that can streamline operations, enhance customer engagement and expand market reach. This should be bssed on conducting a digital audit that assesses the current digital presence of the business and identifies areas for improvement. This should be followed by the development of a plan to enhance online visibility, customer engagement and sales channels.
3. Building A Loyal Customer Base
The Small Business Owner should implement customer loyalty programmes, gather feedback regularly and always go the extra mile to exceed customer expectations. This would include deployment of of Customer Relationship Management (CRM).
The CRM software should be used to track customer interactions, manage relationships and identify opportunities for up-selling and cross-selling.
4. Negotiating Favourable Terms
The Small Business Owner must proactively engage with suppliers and negotiate favourable payment terms, discounts and delivery arrangements.
5. Exploring New Market Opportunities
The Small Business Owner must research and identify emerging market segments, niche products or services that align with evolving ?consumer demands.
6. Seeking Mentorship And Networking
Attending industry events, joining business associations and connecting with experienced entrepreneurs and professionals who can provide valuable insights and support. These must be standard chore for the enterprising Small Business Owners at a time like this.
In the face of the current economic challenges, the implementation of these strategies will enable the Small Business Owner to stay agile. This is essential to being open to new ideas that can help in adapting to the changing economic landscape. This mindset will help the Small Business Owner to navigate the difficulties of the Nigerian economy, seize opportunities and be in a position to achieve personal and business growth.
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Originally published on The Business Builders Blog