Redefining business models necessary for SMEs’ growth
With poor power supply in Nigeria, small and medium enterprises (SMEs) incur additional operational costs when they operate generators to power their businesses.
Coronavirus practically changed the business models of many firms. Just about the time the world thought the crisis was gradually coming to an end, the prices of crude oil skyrocketed, thus increasing the pains for businesses, which come in the form of higher costs of raw materials.
It is thus surprising that some Nigerian businesses still stick to the old ways of doing things. The old model produced poor customer convenience and a low customer satisfaction. That is why the order of the day now is innovation around technology adoption in businesses to improve performance and retain customers.
It is thus surprising that some Nigerian businesses still stick to the old ways of doing things. The old model produced poor customer convenience and a low customer satisfaction
Nigerian businesses need to raise their game due to the increasing competitiveness on the African markets as the African Continental Free Trade Area (AfCFTA) gains more traction and because of the urgency to create more jobs for the increasing number of unemployed Nigerians who are getting more frustrated daily.
In this regard, businesses that wish to maintain survival need to adjust to the reality around customer expectations, preferences, and convenience without further delay. If small businesses fail to recognise these changes in customer expectations, they may face a business continuity threat rather than just poor performance. This also applies to large firms.
Some firms are already working with this realisation. A case in point is the sudden deployment of point-of-sale (PoS) terminals to agents throughout the country, with the agents executing some banking transactions nearly everywhere outside the banking halls. All these concepts are intended to capitalise on customer convenience and the current realities.
Therefore, business owners and SME operators should understand this and know that when it comes to the most crucial aspects of customer needs, convenience is supreme. Each customer, though, may have different ideas of what constitutes convenience, from pricing to the business location, payment options, ease of shopping or making transactions, business opening days and time flexibility, customer experience of ordering, delivering, and the likes. It is important to note that most consumers are price sensitive though and base their purchasing or service decisions on it.
Despite a lack of solid business concepts and knowledge, the numerous neighbourhood corner-shops, traffic hawkers, and businesses without recognised classification, operate on this convenience model. Though it may seem to be an insignificant way to operate a business, the turnover, revenue, and profit could be sufficient to sustain the operators.
Read also: Inflation leaves Nigeria’s MSMEs vulnerable
The expectation is that customers will hurriedly need items or products, and such businesses exist on this premise. Whereas major enterprises with a brick-and-mortar retailing strategy still paying exorbitant rent to maintain a physical presence without operating online or adopting technology for convenience. They ignore the digital age that has changed the retail industry, and indeed most sectors of the economy, where businesses can relate with customers anywhere and at any time.
It is high time for structured enterprises, retail outlets, and large businesses to adopt the convenience model in order to improve business sustainability and profitability. Convenience is more important to consumers than ever before, particularly in terms of pricing, and location that is easily accessible (physical or online). What matters to most consumers is the time and effort they have to expend because they are largely impatient – the less the time, the better, and the less the amount, the better.
Market survey and customer research may assist in determining which solutions will enhance business service, and overall provide a high degree of ease.
Businesses that do not leverage on feedback from customers are always at the receiving end. It is good to have present customers submit comments or reviews highlighting instances in which particular business (or rivals’ business) failed to meet their convenience expectations, and this may be a pointer to the needs to be addressed. It takes more than pricing to outperform competition, and therefore, businesses must consider how to integrate convenience into a designed business model.
To effectively engage with today’s hyper-connected, technology-savvy, and impatient consumers, businesses must be preoccupied with offering quick, convenient, and simple’ solutions. There is nothing that pays more for businesses at this time than being more convenience-oriented because it could be the shortest path to increasing customer retention, loyalty, and business profitability.