The rising cost of living is heaping fresh pressure onto small business owners, with nearly two-thirds believing there is a possibility they will be out of business within the year if nothing is done to support them.
Dwindling income and rising poverty levels have reduced consumers’ purchasing power, thus lowering sales for businesses – with many entrepreneurs seeing over 50 percent drop in their margins.
BusinessDay interviewed several small business operators in Lagos – Nigeria’s commercial nerve centre, and found that at least two micro business owners plan to shut down and move into paid employment owing to poor sales.
The two major disruptions in the supply chain caused by the pandemic and the Russia-Ukraine war have led to job losses and business shutdowns. Small businesses are the worst hit by credit and FX crunch, including poor infrastructure, hitting them hard. Below are some responses of small business operators interviewed.
Adenike Fagbemi
Fagbemi is the creative director and founder of BrandTell Nigeria.
How are you coping with the rising input cost?
It’s been super draining mentally and emotionally. The thought of the increase in everything within the workspace and outside space is alarming. But, as usual, we have been trained to keep pushing and keep a positive spirit irrespective of situations around us.
Are you making more money compared to before?
This is a selectively dicey question. So, one would expect that as things are expensive, the prices of the services or products sold increase… but the question is, do the people who we target have that much to part with? People find it hard to adjust to price reviews especially when there is an increase. We win some, we lose some. So what we do is switch prices sometimes to sell off what is on the ground not considering the profits made.
Are people buying your products?
So we do branding, customised items that can be used for gifts and all that. The rate of patronage has dropped. But we intend to explore other marketing options to reach paying clients considering what the economy has made out of the business we find ourselves
How is the worsening power supply affecting your cost of production?
That one is another big problem! Well, thank God we now use prepaid. Before now, we paid N18500 to N19000 plus per flat per month, still, there won’t be light. Now, we have prepaid so whether they bring it or not, we won’t be paying for what we didn’t use.
The light issue is another major setback but it’s all good.
What strategy did you adopt to survive the Covid-19 pandemic?
Since the pandemic, our sales dropped significantly owing to the shutdown. To ensure we survive and remain in business, we started rolling out online courses for some of our clients. Also, we diversify into other businesses where we identify any opportunity.
Is the Nigerian business environment improving?
I don’t think so. We can do better. Every odd seems to just be against the average Nigerian business owner. Bills to pay left and right, the environment oozes so much pressure, and depressing tales of hikes in everything. It’s like the government is after our lives.
The average Nigerian business owner cannot think of vacations after a draining work experience. Things one goes through to put food on the table are so much.
You see an average entrepreneur doing business and juggling four other jobs to keep body and soul together. It hasn’t been this worse, however, we would survive.
Read also: Inflation leaves Nigeria’s MSMEs vulnerable
Omowumi Afolashade
Afolashade is the head baker at The SweetTreat Paradise
How are you coping with the rising input cost?
It’s tiring and discouraging, even clients have a budget and tend to not exceed their budgets thereby turning us down, if we decide to do it cheaper then we run at a loss.
Are you making much more money compared to before?
No! Most times I just do it so it won’t look like the business is packed up. Sometimes there’s profit, sometimes there’s not
Are people buying your products?
Yes, a number of retiring customers, but we turn down some that are not profitable.
How is the worsening power supply affecting your cost of production?
It’s affecting the cost of production and even storage. We currently spend a lot on diesel and that is impacting our bottom line. There is hardly any power supply where my business operates, so we rely on diesel most of the time.
What strategy did you adopt to survive the COVID-19 pandemic?
During the pandemic, it was difficult for us, especially during the shutdown to curtail the spread of the virus. We had to re-invent the business to survive the difficult moment by developing a menu for individuals that want to satisfy their cravings and we leveraged social media to drive our sales.
Is the Nigerian business environment improving?
No, it’s not. It is still difficult to get your business registered and you still have to pay several taxes. We still cannot access cheap loans despite the surge in everything as we see it today. Many businesses are even planning to shut down owing to the numerous challenges in the ecosystem.
