Financial literacy key to SME survival and growth, says Ebunoluwa Ashley-Dejo at SME Hangout

Business analyst, researcher, and writer Ebunoluwa Ashley-Dejo has emphasized the critical importance of financial literacy in helping small and medium-scale enterprises (SMEs) survive difficult economic conditions, sustain growth, and attract funding.

Ashley-Dejo made the remarks during the SME Hangout programme organized by BusinessDay Newspapers under the theme: “Financial Literacy for SMEs.” Other speakers at the event included Success Ajilore, Ubong Ita, and Bidemi Adebayo.

Speaking during the session, Ashley-Dejo explained that many SMEs struggle during economic downturns not necessarily because they lack customers or strong products, but because they lack operational visibility and financial understanding.

“I think cash flow becomes even more important during difficult economic periods because a business can survive temporary slow sales, but once cash flow breaks down, operations become difficult,” she stated.

According to her, one of the first steps SMEs must take during uncertain economic periods is gaining clearer visibility into how money moves within their businesses.

“For example, business owners need to understand which customers pay late, which expenses are unnecessary, which products generate the fastest turnover, and which services consume too many resources,” she explained. “Those insights help businesses make smarter decisions quickly.”

Ashley-Dejo advised entrepreneurs to prioritize operational stability over aggressive expansion during difficult economic conditions.

“Sometimes the goal should not be aggressive growth immediately,” she said. “Sometimes the goal is operational stability — protecting cash, reducing waste, managing inventory carefully, and strengthening customer retention.”

She also stressed the importance of customer loyalty in sustaining businesses through challenging periods, noting that companies with strong customer relationships often perform better during economic uncertainty because of repeat patronage and trust already built with consumers.

Speaking on financial indicators SMEs should closely monitor, Ashley-Dejo urged business owners to look beyond revenue figures and focus on sustainability metrics.

“I think SMEs should focus on indicators that help them understand whether the business is healthy and sustainable,” she noted.

According to her, important indicators include cash flow, profit margin, revenue trends, operating expenses, customer retention, inventory turnover, and debt obligations.

“Revenue alone can sometimes be misleading,” she explained. “A business may have strong sales but weak profitability because expenses are too high.”
She encouraged SME owners to shift from simply asking whether sales are increasing to evaluating whether their operations are efficient and capable of sustaining long-term growth.

Ashley-Dejo further described financial literacy as one of the most important tools for sustainable business growth in Africa’s challenging economic environment.

“Financial literacy plays a very big role in sustainability and growth because it helps SME owners move from just ‘running the business’ to actually understanding the business,” she stated.

Using the example of a small food business, she explained that consistent sales alone do not necessarily indicate financial health, especially when operational costs, supplier expenses, and delayed customer payments continue to rise.

“That is where financial literacy comes in,” she said. “It helps the owner ask better questions like: ‘Am I making profit or just making sales?’ ‘Which product gives me the best margin?’ ‘Where is money leaking?’”

She added that financially literate entrepreneurs are better positioned to survive difficult periods because they can identify waste, improve planning, manage expenses, and focus on the most profitable aspects of their businesses.

According to Ashley-Dejo, financial literacy also increases the likelihood of SMEs attracting funding from banks and investors.

“Banks and investors want to see records, revenue trends, cost control, and repayment ability,” she noted. “If the business owner can clearly explain the numbers, lenders are more likely to trust the business.”

She emphasized that financial literacy goes beyond bookkeeping and accounting, describing it instead as a critical decision-making tool.

“So for me, financial literacy is not just about bookkeeping,” she said. “It is about decision-making. It gives SME owners visibility, discipline, and confidence.”

Ashley-Dejo also warned that many SMEs fail not because their business ideas are weak, but because owners fail to identify financial warning signs early enough.

“A financially literate business owner can spot problems earlier, make better decisions, and build a business that can survive, grow, and attract funding,” she stated.

In her concluding remarks, she encouraged entrepreneurs to focus on understanding the deeper financial patterns within their businesses rather than concentrating solely on making sales.

“I think one key takeaway I would want entrepreneurs to remember is that financial literacy is really about visibility,” she concluded. “Once you can clearly understand your business, you make better decisions naturally.”

The SME Hangout programme by BusinessDay Newspapers continues to serve as an important platform for conversations around entrepreneurship, financial management, and business sustainability for SMEs across Nigeria.