Among the biggest challenges facing small and medium-sized enterprises (SMEs) across Nigeria are accessing sufficient capital. While 47 percent of those surveyed said financing was a barrier to starting their own business, 30 percent admitted financing and cash flow remains a constant problem even after launching an enterprise. Other common challenges admitted by owners included difficulty finding new clients and lack of focus of how to grow and market the business.
Sage South Africa found similar findings from their own survey, suggesting these issues are true for SMEs across Africa. In fact, 29 percent of all SME owners around the world cite cash flow as one of the main reasons for failure. Thus, despite Nigeria’s unique infrastructure and political issues, the problem is common amongst SMEs. Fortunately, SME leaders can do more to take control and improve both their circumstances by embracing the following approaches.
Make staying informed part of the business plan
With so many responsibilities falling on the shoulders of so few, sole traders and SME teams often do not have the time to stay up-to-date with the latest business practices and technologies. While it is easy to dismiss staying informed as idealistic and expensive, falling behind can quickly lead to a business losing its competitive edge.
Thus, every SME should make staying informed part of their business plan. Small teams can delegate subject-areas and meet regularly to inform of anything that could help improve business efficiency, while sole traders can call on virtual assistants to provide them with the information they don’t have the time to research themselves.
The key to taking control of cash flow is to make use of emerging technology. AI-enabled applications are now capable of automating invoice creation upon completion of a service. Even better, these apps can also send the invoice directly to the customer’s e-mail or phone, and integrate with banking software to give the customer a choice of how they can pay. By delivering the invoices on time, and making payment more convenient, customers will pay for services faster, improving cash flow for the business.
Use the competition for inspiration
Another key way SMEs should seek to establish new customers is to focus their advertising campaigns on their key demographics. However, with many SMEs not knowing how to go about achieving this, marketing remains one of the key challenges for Nigerian enterprises.
The fastest way new businesses can overcome this challenge is to look to the competition. Leaders should look at where their competitors are advertising, how, and to who, and then do the same. In this way, SMEs can begin building a customer base sooner, and can take the time to narrow their target audience over time.
While the Nigerian government needs to do more to improve the country’s infrastructure and power supply issues which so frequently plague local businesses, SMEs can improve their opportunities for success by taking this advice and embracing new technologies and approaches which will allow them to stay in control.