Entrepreneurial insights and skills are needed to transform challenges into opportunities, according to the Lagos Chamber of Commerce and Industry (LCCI).
At a virtual global leadership training held last Tuesday, Toki Mabogunje, president, LCCI, said without such attributes, it would be difficult for micro, small and medium enterprises (MSMEs) to chart a new course for their businesses and position themselves for emerging opportunities.
Mabogunje said the capacity of MSMEs to handle stress and remain calm and focused in the midst of chaos would engender hope within the workforce and enable the business to continue to maintain order while restraining from a fire brigade approach to solving problems.
“A big lesson from the covid-19 disruption is the need for SMEs to leverage technology to improve on the quality of their service delivery while sustaining relevance and competitiveness,” she said.
She urged entrepreneurs to adopt a flexible management approach to keep tight control on cost and non-revenue-generating segments of their businesses.
“Flexibility helps business owners to adapt to dynamics,” she said.
“MSMEs can free up liquidity trapped inside the business to increase their chances of survival and improve resilience and sustainability. MSMEs can do this by introducing cost-reduction measures, negotiating new terms with input suppliers and service providers, reviewing portfolios of receivables and offering discounts for early payment to large buyers,” she admonished.
She advised them to reconfigure their supply chains through backward integration for inputs that could be sourced locally.
Backward integration occurs when a company purchases part of its suppliers or produces what used to be supplied by another firm.
The national survey of MSMEs conducted by National Bureau of Statistics (NBS) and Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) in 2017 said the number of MSMEs has risen from 37 million to 41.5 million MSMEs.
The growth is down to the rising number of survivalists who opened micro businesses in the face of economic slump in order to survive, analysts say. Small businesses face multiple taxation, high energy cost, poor access to credit and infrastructure, but the the spread of COVID-19 has combined with these age-old problems to worsen their plight.
MSMEs contribute 50 percent to Nigeria’s GDP and accounts for 86.3 percent of jobs (59.6million jobs in 2017), according to the report by the NBS and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
Mabogunje urged SMEs to maintain a healthy cash flow.
“As the saying goes, ‘Cash is King.’ Cash flow is the lifeblood of any business. To ensure the business is healthy, MSMEs need to keep an eye on their cash flows. Besides the objective of generating more sales which lead to greater increase in cash flows, you must know how to manage cash.”
She urged them to focus on their core competencies to strengthen their competitiveness.