Helping Women Entrepreneurs Thrive in an Emerging Economy
‘’ Thy mother is like a vine in thy blood, planted by the waters: she was fruitful and full of branches by reason of many waters’’ Ezekiel 19:10King James Version (KJV)
There is an increasing number of female entrepreneurs, especially in Sub-Saharan Africa, making huge contributions to the rise of entrepreneurial activities in their countries. These women drive the development of their economy. According to Global Entrepreneurship Monitoring Annual Report, women actually outnumber men in the entrepreneur space in countries like Nigeria, Ghana and Zambia, and the report below from no ceilings show evidences that there are more female entrepreneurs in Nigeria than anywhere else in the world.
Despite this fascinating statistics, many Nigerian female entrepreneurs still face obstacles that limit their ability to build a thriving business. While some of these constraints apply to all business owners, irrespective of their gender, others have been identified to be related primarily to women.
There are more female entrepreneurs in Nigeria than anywhere else in the world
Some of these constraints can easily be attributed to gender stereotypes pertaining to cultural and social beliefs and behaviors, and are described below.
There are many other challenges faced by female entrepreneurs in Nigeria which I have not captured in this piece. However, it is clear that the role of women in driving the Nigerian economy is huge and all stakeholders must continuously put measures in place to encourage women in business.
One of such measures is to organise networking opportunities for women to discuss the issues that they face and provide support on how to overcome those barriers.
An impending women focused gathering is the women MSME conference which holds on the 14th of October, 2017 at Covenant Chapel Lekki. This conference aims to remove some of these constraints and feed the female entrepreneurial mind with streams of ideas, concepts and insights that allow her thrive in business – in spite of the glaring constraints. It is an initiative of Covenant Capital; a business advisory arm of Covenant Christian Centre with mandate to reduce poverty in Nigeria by empowering individuals and businesses with the tools to create wealth through – business advisory services, micro-credit schemes, trainings and seminars. To register for the event, please got to www.insightsforliving.org/
Today, if you ask an entrepreneur one thing that is required in starting and growing a business, the popular response will be capital. There is no doubt that capital is fundamental to the success of any business, however the business climate is evolving from transactions to relationships. Thus, generating and increasing trust is essential in sustaining growth.
Trust is a hidden capital most businesses do not pay attention to, whereas it is valuable in growing the bottom line and will see you through the difficult times in your business. On the other hand, a lack of trust in you and your business can kill your business in its infancy.
No one can tell you exactly where trust originates or how it develops. The trust process is incomprehensible. You can’t fake it. You can’t go through the motions or pay it lip service. Trust in a business speaks volumes on how a company services and communicates with its customers. In business interactions, customers can intuitively feel when you can or cannot be trusted.
When considering if a company should be called trustworthy, customers are looking for the following:
1. First Impression
First impression matters. A customer has expectations that a company’s product will satisfy their need to purchase it. Therefore, their first approach is to test the waters if indeed your product or service will provide such satisfaction. If it does not, they will walk away. Therefore, do not promise what your product or service cannot do. If you are selling a product with lower quality than the original, do not pass it off as the original. Do not sell a low quality product at the same price as an original one. Do not include hidden charges and fees. Your customers will always find out and you would have effectively ruined any return purchase or recommendation. In essence, ensure product or service integrity.
The more significant a purchase is to a buyer, the more consciously he seeks a trustworthy seller or provider.
One of the things that can quickly destroy trust in your business is lack of competency in the service you are rendering. Do you do what you say? If customers cannot trust what you say or the service you render, they will not patronize you. A dry-cleaning service that does not launder or iron clothes properly will not grow. Also, a laptop repair shop will only get anger and frustration from its customers if the laptops he repairs keep breaking down. Therefore, if you must be in business, ensure that you know how to provide the service you are selling or at least hire someone who does.
3. Work Experience
We know why there is a term in the labour market called ‘Number of Years of Work Experience’. This is because it cannot be over-emphasized. Customers would always relive their past experience with your business for future transaction, the same way a recruiter would scrutinize a candidate’s work experience. Their experience when leaving your business premises must leave no doubt in their mind that your business is where they should go to in the future. If your customers cannot think that about your business, you need to start requesting for feedback to understand their reasons. You also need to start building trust in your business because this means that they cannot trust your business to deliver value in the future based on past experience.
4. Customer Value
To value your customer is to deliver on your promise and acknowledge where you have fallen short.
If you promised the moon, deliver it along with a handful of stars. You want to shine in your customer’s eyes. Every time you follow through on a commitment, small or large, you build trust. And if you go above and beyond, you make an even stronger impression. So, if you say you are going to email prices to your customer today, it should be sitting in their inbox before their close of business (not yours).
In addition, do not to hide or cover up your errors. Address the issue directly, apologize and explain how you will handle it and if possible, share what steps are being taken to prevent the errors from occurring in the future.
5. External Relationship
Staying up to date and compliant with all federal, state and local rules required to keep your business in good standing is essential. Failure to meet the necessary requirements like taxes, pension, insurance etc. can cost you loss of good will. Customers, lenders, potential business partners and investors will check your company’s credit reports. What is your attitude to your financial obligations? Positive credit affords businesses better relationships with partners, vendors, trade sources and the community at large. Do not renege on agreement with vendors or partners.
The first step in your approach to trust-based marketing will be forcing yourself away from rational, logical thought about why your customers would or should trust you. Instead, if you know how they really process you and your business and what forms the basis of their trust you’ll find yourself holding a new key to growing your business.
CTA – One of the things that can quickly destroy trust in your business is lack of competency in the service you are rendering.
The sheer ingenuity of how some people seem to be smiling to the bank in this recession while others seem to be falling into depression, compelled me to share these 4 tips that have helped me make money in the current economic condition in Nigeria. I hope that these tips help you also to make some big bucks in this recession.
1. Trim your expenses by trimming your personal staff
My Indian friend and I always make fun of how we live like queens in a third world country. However, at one point, I realised that I had several people in my house on my payroll, people who contributed to the reduction I noticed in my monthly income.
I had a security guard, a gardener, a house help, a nanny, a personal trainer and a driver. I soon discovered that not only were this people contributing nothing to my household income, they were in fact contributing to my weight gain. Therefore, I decided that I needed to review the functions and usefulness of my domestic staff.
So the first thing I did was to let my driver and personal trainer go. I started driving myself and spending more time playing with my children as a form of exercise. I downloaded Google map and joined a car pool. As a result, I was able to cut down my car expense by about 60%. My need to meet up activity time with my children made me realise that doing some activities added more value to my weight loss plan than the bi-weekly kick-boxing I spent my hard-earned money on. Therefore, up next was my house help and gardener. Thereafter, the security guard had to add gardening and car wash to his duties to remain on my payroll.Needless to say, I have not been this trim financially in years.
As a business, there are several things and people on your payroll that are not needed especially for a small business. Why would you have an office assistant as one position and a cleaner as another position? Why have an employee as a permanent staff that you only need at certain times in the month or year? It would save you a lot in staff costs if there is a review of your business payroll to determine who to retain and who to let go. In the end, your business will either sink or swim in a recession depending on the actions you take.
2. Put down the Internet
The cell phone has become a major expense for most people. The money you spend on airtime and data would make sense if it improved your business in some way. I as an individual decided that I would research and do mobile packages that gave me the best in terms of airtime and data at the lowest cost. Then I prepared a schedule of how I would spend my time on the phone. So I not only have more time to focus and to do things that brings me better return on my investment, I also save money.
For a business, all telephone service provider have a cheaper plan for businesses that you can take advantage of. Also, evaluate if you need a 30G monthly data for all members of staff in your company if you are not an e-commerce company. Would it perhaps be better to have individual Wi-Fi for each staff member? It may help to monitor how much data and airtime each person uses.
3. Say No to that equipment
Most start-ups in Nigeria start out by buying all sort of things they do not need. Such items like renting an office space, buying furniture and electronics. Why do you need an office space for a two-man company when you have a 3-bedroom apartment with only you as the occupant? Why does your company have an office car if your company is an IT company? Do you really need a 20kg packaging machine that costs thrice as much as the 5kg machine?
If you would just say “no” to the cravings of shiny new items at the start of your business and focus on growing the business, you will reap the benefits. Therefore, you should be focused on putting your profit back into your business at least for the first three years.
4. Backward integration cannot be over-emphasised
Backward integration is a business model whereby a company takes direct control of how its products are supplied. For example, a company may buy another company that previously supplied its raw material. That is, a butcher may own a ranch so that he does not have to buy slaughtered animals from an outside ranch. Another example is a bakery business having a wheat farm where it uses the wheat to make the flour for the products in the bakery.
Most businesses in Nigeria need to start exploring the possibilities of backward integration. There is so much cost savings potential here. For example, producing the raw materials you use in your business instead of importing them will save you import duties and the associated costs and also spare you the head ache of looking for foreign exchange. Patronising local producers in Nigeria is also another option to explore.
In summary, as a business you must be aware of your business operations and processes to enable you to spot opportunities for cost cutting in this recession. Also, recognise when to invest more money into your business and when to hold back. This would save you and your business a lot in the future.
Years ago, people suffered from the menace of high robbery incidence, but these days, theft of intellectual materials is more rampant. There is therefore a need for owners of creative works to know how they can protect their works from intellectual thieves (otherwise known as pirates).
Before more, let me establish one fact straight away- an idea is worthless until expressed in a tangible form. That is why this article focuses on what you should take cognizance of in the process of turning your idea to a finished worked.
I pitched on I.T. professionals in this article because theirs is the most difficult to handle. For one, the internet is the most unregulated society and that is where I.T. professionals showcase their works. Secondly, when those works get copied by pirates, millions are lost.
I do not guarantee that your work will not be pirated if you follow the suggestions in this article, but I assure that you will be placed in a better position to establish your ownership and defend your claims against any pirate.
Briefly stated below are seven things you can do to establish the ownership of your works and thereby prevent them from being pirated:
1. If you are a software developer or you are into programming and coding, embed your name in computer codes that you generate so that if you need to prove ownership, you are not left stammering.
2. Keep the master copy (initial design) of your work. If you have a lawyer, seek his or her counsel for safe custody.
3. If you have support team that is working with you on the task of creating the work, ensure that they sign an agreement which recognizes you or your company as the owner of the work to be invented. Truth be told, it is easier to get your support team to sign such agreement at an early stage than when your work starts to attract millions of hard currencies.
4. Ensure that your support team signs confidentiality agreement so that they are under legal obligation to keep your apparatus secret especially when they choose to move on.
5. When you launch your invented work, remember to mention that the work is your copyright. Simple way to do this is to use the symbol “©” with your name or that of your company and the year the work was invented. For example “©Eyitayo Ogunyemi 2017”.
6. Register your ownership of the work with relevant government agency. While this is not what primarily gives you ownership right, it gives a better assurance that the work is yours.
7. Imprint your trademark in the finished work. This makes it easier to establish your ownership in case of dispute. Remember however to first register your trademark with the relevant government agency.
After you have established your ownership of the work following the highlighted steps, you can give license to people to use the work in exchange for a token or even figure out other ways to generate money from the use of the work.
Most importantly, do not release your work to the public without first protecting your ownership of it one way or the other.
A news correspondent once asked a Somali nomad how much his house cost. The nomad found the question slightly baffling. He explained that he had built it himself, with materials he had on hand. The walls were made of sticks, woven together and curved into a dome. For protection against rain and sandstorms, he had laid animal hides over the top and lashed them down. He could not say how much the dwelling was worth, because it would never have occurred to him to sell it. When he moved away in search of better pasture, he simply dismantled his house, loaded it onto a camel’s back and took it with him.
Hernando de Soto (De Soto), a famous Peruvian economist known for his work on the informal economy, defined dead capital as “an asset that cannot easily be bought, sold, valued or used as an investment”. De Soto’s work showed that even those who live in slums possess far more capital than anyone realizes. These possessions, however, are not represented in such a way as to make them fungible assets i.e. exchangeable assets. These assets therefore cannot create value for the owners thus they are ‘dead capital’.
De Soto in his book titled “The Mystery of Capital” revealed that most people in third world countries are not as impoverished as portrayed. He found out that the total value of untitled real estate (land) held by the poor of third world and former communist nations is at least US$9.3 trillion. Furthermore, De Soto estimated that the total value of Africans’ informally owned houses and farmland in 1997 was roughly US$1 trillion. These assets are not captured in any land registry known to the legal or financial system in those countries. They are only in possession but not legally recognized to be owned by them. Therefore, these peasants are unable to exercise transferable (ownership) interests and rights in these assets as financial capital in the form of collateral/guarantee for loans, secured assets (asset securitization) or as capital contribution to a partnership.
In the same way, SMEs in Nigeria invest a lot of capital in the form of factors of production (land, labour, financial and intellectual capital) into their business, however they still do not generate as much value (profits) as the capital invested. This is because the capital employed in the business is dead and has not been activated. Some SMEs are afraid to approach a financial institution for a loan because they are not even aware of the capital they possess that they can exchange as collateral for the loan. Some entrepreneurs are selling their business/companies for far less than it is worth because they are not aware that the value of a business is not only the cash in the bank and the business premises. Client list, business name, softwares, equipments and even employees are all capital of a business that has value and can be sold. On the other hand, how can you sell what you do not know exist?
Recently, the Acting President Yemi Osinbajo signed into law, the Secured Transactions in Movable Assets Act, 2017 (otherwise known as Collateral Registry Act). The Act ensures that Micro, Small and Medium Enterprises (MSMEs) in Nigeria can register their movable assets such as motor vehicle, equipments and accounts receivable in the National Collateral Registry and use same as collaterals for accessing loans. This, in turn, will increase their chances at accessing finance and thereby tackle one of the major obstacles faced by MSMEs. However, the question remains – how many SMEs are ready to tap into this potential? That is, how many SMEs have properly documented capital to register at the Registry?
In order to ensure that you are generating value from your capital, you must ensure that it is formally or legally represented and traceable to a functional institution, department or agency recognizable at law. Dead Capital is any form of capital without formal or legal representation. Capital is given life only when it is represented in writing by a recognised authority established by law.
Some practical ways of ensuring your capital is titled or formally represented to enable your business have access to incentives and financial capital include the following:
1. Business name registration with the Corporate Affairs Commission;
2. Software/Intellectual property/Patent registration with the Trademarks, Patents And Designs Registry, Federal Ministry Of Industry, Trade and Investment;
3. Product registration with the National Agency for Food and Drug Administration Control (NAFDAC) and Standard Organization of Nigeria (SON) for product imported into Nigeria;
4. Certificate of Occupancy or registered Deed of Assignment with the Land Registries in all States;
5. Motor vehicle registration with the Federal Roads Safety Commission;
6. Equipment registration (with value above NGN 500,000) with the Industrial Inspectorate Division of the Federal Ministry Of Industry, Trade and Investment;
7. Preparation of a statement of affairs such as cash flow, profit or loss and statement of financial position; and
8. Bank Verification Number
Remember as faith without works is dead so also capital without legal ownership is dead. Therefore, in order to create that confidence in investors to invest in your business and financial institutions to make credit available to you, you must bring to life every capital in your business no matter the size or type.
Objective statistics shows that SMEs are over 90 per cent of the businesses in Nigeria and they contribute up to 45 per cent of GDP. This is despite being underfunded and unstructured.
When you consider that the current value being derived from SMEs is substantial despite the fact that most of them are subsistence/micro businesses, then you can begin to imagine how big this opportunity will become if they scaled up just one level.
The biggest challenge in terms of financing SMEs in the country is the fact that SMEs do not have the ability to scale to an extent where bank debt will make a meaningful impact. This prevails because of lack of proper financial education of SME operators, Lack of good corporate governance and business structure and Lack of access to equity – our markets for equity is not very developed.
A few SMEs recognize the challenge, whilst many of them believe that the banks should solve their problems, this is mostly because they do not understand that the nature of bank loans do not accommodate an appetite for funding start-ups or for giving loans that behave like equity. Despite increased attention and support for SMEs by banks and the CBN, most SMEs out there still have this perception that the banking industry is not favourably disposed to SMEs. In other to correct this impression, SMEs need constant education on how the economy runs. If the banks lower their appetite for risk and fund the businesses with poor structure and governance, the loans will go bad, shareholders’ funds will be eroded, and the cycle will hurt SMEs even more.
There are however alternative solutions for SMEs which can be facilitated by banks or any other stakeholder in SME ventures. SMEs can be assisted through business trainings/capacity building programs, business incubator can be set up to cater for handholding businesses, a mentoring platform can be created for entrepreneurs so as to open them up to business best practices as well as provide market access.
In addition to the above, there is however still a need to work at developing alternative sources of funding apart from commercial bank debts. Banks collaborating to set up various pockets of SME entrepreneurship funds might help meet the need for patient capital which commercial bank debts can then ride on.
In the interim, start-ups and SMEs in general can take advantage of intervention funds such as the You-Win initiative and other government driven funding opportunities.
Eyitayo Ogunyemi | @eyitayolaw
One of the questions that I usually ask my students during my training sessions for Entrepreneurs is for them to tell me what they understand by a Limited Liability Company and a Business Name, and why they will choose the business option that they are opting for.
Unfortunately, I usually do not receive an answer that captures the basic differences, and it is unfortunate too that many Investors have chosen their business option without proper guidance.
This article proffers keynote differences between a Business Name and a Limited Liability Company in Nigeria. The points stated below are not exhaustive, but they constitute some of the basic differences between a Limited Liability Company and a business name under the Nigerian Law:
DIFFERENCE NO 1:
DO YOU WANT YOUR BUSINESS TO BE YOU OR DIFFERENT FROM YOU?
Business Name: A Business Name is the name and style with which you trade; remember that it is just a “style”, and it is therefore not different from you. Being a mere style, the business does not assume a separate legal entity; cannot sue, nor be sued and properties cannot be purchased in the name of the business.
Another point that you can identify with the above is that, when the owner dies, the business also dies (since in the first place, it does not have a life of its own).
Company: The moment your Company is registered, it becomes a separate entity different from you (otherwise known in law as an “Artificial person”). The best way to understand this severance process is to consider pregnancy, and delivery process- once a child is born, the child has an independent life; can grow, stand alone (with time), and even die. The process of the growth of the child is not hinged, as such, on that of the mother.
By implication, ‘your company’ is considered to be different from you after registration; you can be broke while the company is rich, and the death of the founder does not necessarily mean the death of the company, because the company has a life of its own.
DIFFERENCE NO 2:
DO YOU WANT TO RUN A ONE MAN BUSINESS? ONLY A BUSINESS NAME WILL DO.
Company: If you intend registering a company, it takes two or more persons to form the company. The popular form of company is “Company Limited by Shares”, and at least two people must subscribe to being shareholders in the company.
Business Name: If you are interested in running a one man business where everything will revolve around you and you alone, registration of a Business Name may be suitable.
Note however that you can also register Business Name where you and any other person intend to operate as partners.
DIFFERENCE NO 3:
DO YOU WANT THE VALUE OF YOUR INVESTMENT TO BE STATED IN THE PUBLIC DOCUMENTS OF YOUR PROPOSED BUSINESS? A COMPANY MAY BE YOUR BEST OPTION
Company: If your level of ownership, stake, investment, or interest in your proposed business differs from that of your co-investors and you want this to be recorded publicly, you may choose to incorporate a company (i.e. Limited Company).
Business Name: If you register a Business Name, your level of ownership, stake, investment, or interest will not be publicly recorded. If for any reason you prefer to register a Business Name and you want the extent of your ownership, stake, investment, or interest to be clearly spelt out, you can do this preparing a Memorandum of Understanding between you and your partners. You may consult your choice Legal Consultant for further information.
DIFFERENCE NO 4:
DO YOU WANT AN EXISTING COMPANY TO OWN SHARES IN A BUSINESS THAT YOU ARE ABOUT TO START? ONLY A COMPANY REGISTRATION WILL BE SUITABLE
Company: If you operate a company that is registered, and you want that company to own shares in a business that you are about to register, or you are a foreign investor with a company already registered in your Country, you may choose to register the intended business as a Company and then purchase shares for the existing company from the allotted shares of the proposed company.
If the existing company is however undergoing a process of being wound up, it cannot join in the formation of the company to be incorporated.
In a like manner, if you already have a company in operation and what you intend to register is a Business Name but you want your existing company to have a stake in the Business to be registered, you can give instruction to your Legal Consultant to record the existing company as a partner in the new Business Name to be registered.
Business Name: You cannot use your Business Name (as an entity) to own shares in a company neither can you start a partnership in the name of your registered Business Name.
For non- Nigerians (aliens) and foreign companies seeking to do business in Nigeria, once you have complied with Nigerian laws regulating the rights and capacity of aliens who want to undertake or participate in trade or business in Nigeria, you will be allowed to join in forming company in Nigeria.
DIFFERENCE NO. 5:
IF YOU HAVE MORE THAN 20 PARTNERS, YOU MAY HAVE TO REGISTER A COMPANY
Company: Where a business is intended to be carried on as a partnership, and the partners are more than 20 people, the business can only be registered as a company but not as a business name.
Business Name: You can register these three businesses as a business name notwithstanding that the partners are more than 20 are;
a. Co-operative Societies registered under any law in Nigeria;
b. Partnership of more than 20 Lawyers each of whom is qualified to practice as a lawyer in Nigeria; or
c. Partnership of more than 20 Accountants each of whom is qualified to practice as an accountant.
DIFFERENCE NO. 6:
IF YOU HAVE MORE THAN 50 INDIVIDUAL INVESTORS, YOUR ONLY OPTION MAY BE TO START A PUBLIC COMPANY.
Company: Where the total number of persons who intend to own the shares of a proposed company is more than 50 people, the company can only be registered as a public company. In other words, a private company in Nigeria must not have more than 50 shareholders.
There are exceptions to this rule; for instance, where an employee becomes a member/shareholder upon his employment, or where the employee continues to be a shareholder during and upon the expiration of his employment; his tally may not be taken for the purpose of numbering the 50 members.
Consider the following illustrations:
1. If AZ Private Company has 50 shareholders and Bob was given a number of shares in AZ Private Company upon his employment, he is not going to be numbered as Number 51 shareholder; rather, the number of shareholders will still stand at 50 in the eye of the law.
2. In a similar vein, if Bob continues to hold shares as an employee until he stops working for AZ Private Company, and he continues to own the shares after his employment, he is not going to be numbered for the purpose of counting the 50 benchmark.
3. Two or more people, or even an Association or a Group can invest in a company jointly. They are treated as a single member for the purpose of numbering the members of the company. It is however important that your Association or group must have been registered under the appropriate law.
For further information under this heading, you may check my article titled: How to Register Your NGO, Church, Mosque, and Other Associations with Corporate Affairs Commission (C.A.C.)
DIFFERENCE NO. 7:
THE STATUS OF YOUR KEY INVESTORS DETERMINE THE KIND OF BUSINESS ARRANGEMENT
Company: In a company arrangement, your shareholders are considered as the joint owners of the company. The shareholders elect the Board of Directors who are responsible for the daily affairs of the company and also give periodic account of management to the shareholders.
Note however that a shareholder may also be a director or even the company secretary.
Business Name: In a Business Name arrangement, there is no clear-cut difference between the business holder and the director because in most cases, the director is the owner of the business.
This article has been designed for information purposes alone and is not intended to take the place of a legal advice. Readers are therefore advised to seek proper legal advice.
People give businesses to their friends.
Imagine your business in 5 years’ time, would you be proud to have started the business or wish you had stayed in your current employment and saved your capital?
The decision to succeed as an entrepreneur in Nigeria is totally up to you. First of all, you must determine that you want your business to succeed. Secondly, you must make decisions that will enable your business succeed.
There are several ways that your decisions can directly affect the success of your business in the current economy. However, I have explained 5 critical things (decisions) you must do to ensure that you and your business stay on top during the current recession. Remember that these are just general ways and do not relate to any specific industry.
Number 1: Focus on your core competence – Be the best at what you do
Quality will speak for itself and provide you with repeat customers and referrals. Either by identifying a need, offering a solution or being the alternative will ensure that customers pick you to do business with over your competitors.
Focusing on your core competence ensures that you become the best at what you do and earn that mark of trust that customers look out for.
Quality over quantity, always remember this!
Number 2: Develop and implement strategies to get your competition’s customers
If your business is going to prosper in tough times, you need to continue to expand your customer/client base – and that means drawing in customers from the competition. How can you do this? By creating additional value to your product offering compared to your competitors.
An example would be to include variants of your product either in flavour, size (large, medium or small) or material used.
Number 3: Make the most of the customers/clients you have – Add value
For your existing customers, remember that a bird in the hand is worth two in the bush. Your existing clients are opportunities to make more sales without incurring the costs of finding a new customer. in addition, existing relationship must be well managed to ensure repeat business and referrals.
Some ways to do this is by cross-selling your product and/or services. For example, offering to provide transportation for a small fee as a furniture company or offering free fitting as a clothing company. In essence, understand your business entire value chain and see how you can tap into it either through a forward or backward integration.
Number 4: Maintain a healthy Cash flow – Every Naira counts
There are two (2) ways to protect your cash flow in an economic recession:
Collecting accounts receivable
Early collection of accounts receivables and reduction in credit days on hand is a part of cash flow management that is vital to your business’s health. If collecting your accounts receivable has become a slow process, there are two main courses of action to improve your cash flow:
Take action to speed up payment
First, invoice promptly and follow up clearly stating payment dues dates and sending overdue notices. Putting off invoicing gives customers the impression that you don’t care how long it takes to get your money. Secondly, take measures to encourage prompt payment by giving discounts for early payments. Your turnover within the shortest possible time guarantees more income than waiting for longer periods for the same income.
Collect in instalment
Customers like this as it gives them the impression that they do not have to part with a lot of money at once.
Re-examine all aspects of the business to seek ways to optimize cost. Remove all activities that do not add value to the entire process.
This may involve right-sizing your manpower capacity for efficiency and increased productivity. Remember tough times don’t last, tough people do!
Number 5: Ensure efficiency in your operations – Be convenient
Customers want and expect convenience, which accounts in part for the tremendous surge in online shopping. If you have an e-commerce website, streamline the checkout process, particularly for returning customers. Make it easy to find in-depth information about products and to make returns, and offer customer service via e-mail and by phone for shoppers who want immediate answers.
Traditional brick-and-mortar store owners should reevaluate hours of operation, as well as checkout wait times and staffing to ensure a speedy and convenient shopping experience.
Finally, businesses must not forget that for every period in which the economy nose-dives there will be subsequent recovery and economic peaks. The economic upturn will present opportunities that your strategic decisions during the downturn will have a spillover effect on.
Ann Olalere |