Business is one of the fundamental elements of our society. Buying and selling has been wound into the fabric of society, and it plays important roles in the existence and growth of people within them. In a much advanced world of technology today, there are quite a number of businesses available to everyone. Given the economic conditions of different states across Nigeria, it is understandable that a lot of people are thinking of going into business, either as entrepreneurs or as just a side hustle. Whatever the case may be, there are important details which business owners and prospective entrepreneurs need to consider.
Through this article, we will provide with detailed information on how you can successfully run your business, ways to avoid failure, challenges that face businesses and so on. Using this guide, it is easy to expect success in any business endeavor you may be planning or are already into. Whatever the case is, this guide ensures you achieve success in your chosen field of business.
Ways to run a MSME Successfully
Have a clear vision of what you intend to do and the business you wish to run.
Vision is a key hallmark of success principles in business and other aspect of life. Vision gives you a vivid picture of what you want to accomplish. It makes you see the end from the beginning. This picture will illuminate and motivate your mind throughout the course of your business journey. By having a clear vision for your business, the mission takes shape and business objectives and goals emerge.
Source for funds security and sustainability
Running a small business requires financial backbone, prudence and efficiency. One way you can do this is to explore all available financial options open to you. These include family, friends, business associates, investors, banks, etc. Banks today have been known to offer small business owners opportunities for building businesses. However, choosing the right bank for your business’ financial plan and support is vital as not all banks in the country are big on SMEs.
Acquire business information and technical input
Today, a number of businesses and professionals give expert business advice and services at a token fee for individuals and groups wanting to go into new businesses or diversify their existing businesses into new areas or line of products and/or services. These services range from legal advice and consultation, to business development and strategies, as well as recruitment and management of staff from business psychologists, and so on.
These professionals provide help and sound business support and solutions services during all stages of the business life cycle. They can help you create a powerful business plan to approach a lender or investor with, help with information and advice on legal documentation and business name registration, marketing and sales strategies, and also provide temp recruitment services, to name a few.
Create a workable business and marketing plan for your MSME
One of the keys to running a small business enterprise is having a detailed and workable business plan that outlines your objectives, goals, target market and projected growth. In addition to having a concrete business plan, ensure that you work out a detailed business marketing plan to go with it. In the business plan, endeavor to carefully outline your finances so you know what sales numbers you need to meet in order to break even along with specific goals you have for the growth or improvement of the business.
Launch your business
Once you have established the vision and mission of the company, defined clearly what type of products and services your business wants to offer, contacted your financial sources for funding and secured your business funds, consulted business professionals for necessary legal and business strategy building aspects such as registration, documentation and business structure and processes building, and then finally you have built a creative and detailed business and business marketing plan to drive and carry the business, it is now the time to start!
Build a strong brand identity
Actually, branding of your business should start the very moment you articulate and conceptualize the business idea. At that very point your branding has begun. Branding your business involves creatively building a business identity that would appeal to the target market you wish to sell to. This identity building is a never ending process.
The identity begins with the choice of business name, the type of business you engage in; to the personality you want your business to have. Remember that people approach and relate to and with you in relation to the type of personality you exhibit.
Prioritize on making profit
It’s amazing how many times people start up business enterprises and then forget how to make profit. It is a known rule in economics that the chief aim in business is to make profit. When that is no longer the case, it becomes difficult to sustain or grow business.
Therefore, the moment you set out in business, if you truly want to be successful, you must understand money, and that the golden rule of money is to make sure more comes in than goes out. Applied to your business, more money should come in than should go out. It’s that simple.
Network and connect with other businesses
To grow your business for a wider reach and approachability, ensure you network with other local small businesses and small business owners. Connect with them on overall business vision and shared business strategies and opportunities. Attend regular business events in your area. These are great opportunities and avenues for small businesses to come together, rub minds and share business ideas and experiences.
Ensure all customers are Satisfied
It may be very difficult to keep every one of your customers happy. That is a business fact. But you must try to keep every one of your customers satisfied. That should be your business reality. Having a pro-customer orientation – whether you run your small business alone or have employees working for you – is as vital a decision as the one when you decided to go into running a business in the first place.
There can be no business without customers. And the more customers you have patronizing your business, the more the chances of you making a profit from your business and actually building something successful and wonderful.
Advertise your business
No matter how good or of great quality the products and/or services of your business is, if your target market do not know about them or are not motivated to patronise them, then there is no point being in business in the first place. To run a successful small or medium scale business enterprise, you must advertise and promote such enterprise to the market that needs what you offer. In today’s modern business world, opportunities abound to advertise your brand on a cheap through a lot of social networking platforms such as Twitter, Facebook, Instagram, Youtube, LinkedIn, and so on.
Marketing Strategies that can help MSMEs Succeed
Consistent Online Presence
It is strategies which Micro, Small, and Medium enterprises can employ in order to reach their target market. To achieve this feat, it is important to set up your business profile across all social media networks available and accessible to your target market. Some of the most popular social media platforms you can set up your business profile includes Facebook, Instagram, Twitter, LinkedIn, and so on. That way, you can be within reach to your customers from anywhere around the world.
Write about your products
This is one of the most effective means to market your products online. Writing blogs about the products and services you offer is one of the easiest ways to get the attention of your target market. Through these blogs, you will have a chance to give a detailed description of your products, how you execute specific services, the perks of doing business with you, reviews and so on.
Use word of mouth – connect with Influencers
Businesses that offer good customer satisfaction not only enjoy good customer retention, but also enjoy good word of mouth – or client testimonials on your site and social media platforms. The more customers write positive things about your products and services on the site, the better surge you will see in your number of customers.
In addition to this, if you can get an influencer (a celebrity, a well-known blogger, anyone who a lot of people follow and trust) to endorse your services and talk about them, the visibility of your product will grow by leaps and bounds.
Mix them up
No one strategy can help you achieve the desired growth in silo. What you need is to mix and balance the strategies and use them continuously. The keyword here is continuously. The moment you stop working on a piece, the strategy will fall.
Here’s a list of a few proven strategies that are helping businesses across the world:
• Advertising on Facebook
• Add your profiles on directories such as Google My Business
• Invest in content marketing
• Build an email marketing funnel
• Speak at, sponsor, and host events/webinars
• Offer a free consultation
• PR works wonders – advertise in a highly rated print media
• Write a column/article – continuously
• Join and make your presence felt in local business groups
Effective Ways to Fund Your business
As expected from entrepreneurs, if you wish to startup a business or keep one running, you need to first input your personal finances through either your savings or funds earned from your investment portfolio before you can think of inviting external bodies to show support for your business with funds. Injecting your own cash at first establishes your commitment to the business, and your unwavering conviction and belief in your business to succeed. By being the first to act and invest in your business, you will be able to attract and convince others to join in on the project.
Friends and Family
The next easy way to seek and secure funds for your business is through your family and friends. With these sets of people, they are banking on the trust they have in you and the fact that they know you. As a result, there isn’t any required documents or interests on funds acquired from them. One of the things which may be required of you is to draw out a plan on how you intend to utilize the funds, what benefits it brings to you, your family, and in some cases, the community. Once all that is done, you can successfully receive the funds to do whatever you planned for it.
This option is for entrepreneurs who also work in government or federal institutions across Nigeria. This is one of the oldest ways of securing funds for MSMEs. These organizations within federal and government corporations are organized are run jointly by members of said corporations. These members contribute and benefit through profits earned from interests on loans and access to funds contributed by members at reduced interest rates.
This is a type of finance that allows businesses receive cash on their invoices before the customers make payment. It is a form of financing that enables business owners improve their working capital and cashflow positions. This facility allows businesses get prompt payment while finance institutions discount their invoice. For most financial institutions, this option is referred to as the SME Invoice Discounting Finance (IDF) which is usually available for varying periods, some between 1-180days to contractors, manufacturers and traders.
Grants and Loans from Financial Institutions
This is one of the most popular and explored option by many entrepreneurs from time immemorial. Despite being the go to options for many business owners, it has proven to be one of the hardest, sometimes unfeasible option to acquire loans.
It is usually due to the long, drawn out processes of documentation, evidence of collateral, and all other requirements needed to be fulfilled. Additionally, most financial institutions offer loans with exorbitant interest rates which is not so favorable for many business owners. This makes it usually the last option to secure funding for MSME, usually when all other options like the ones outlined in this article fail to provide the needed funds.
Reasons MSMES Fail
Having discussed where you can seek funding, a key information to note for entrepreneurs is diagnosing why businesses fail.
There’s a popular saying that goes: “If you fail to plan, then you plan to fail”. This principle is multidimensional as it cuts across all sectors that affect human life, relationship-wise, health-wise, business-wise, and so on. MSMEs also are not left out. A lot of businesses are launched with probably a great idea for a specific product or service which as obviously thought, would yield massive profits, but eventually crash as a result of the inadequate or lack of a solid business plan to back it up.
To have an effective business place, it must incorporate the following:
- Mission and strategy
- Development financing
- Financial objectives
- Sales and marketing strategies
- Competitor analysis including pricing
- Market summary
- Resource plan
- Financial forecasts (income statement, balance sheet, cash flow forecast, capital requirements, working capital)
Lack of working capital
This doesn’t really need any much explanation, as pretty much anyone knows nothing works without the capital to fund the business while it’s running. Most businesses find themselves in such a situation due to unrealistic expectations in terms of revenues and fund generation on the side of business owners. This can also result from a loose business plan which only focuses on the set up cost without reverence to running costs of the business. This leads to the untimely death of any such business.
To be better prepared in this aspect, entrepreneurs and business owners need to keep it in mind that most MSMEs take a lot of time, up to two years to be established and run on self generated income. During this period, business owners have to keep the business running by finding the business needs like paying staff, maintenance, and so on. Having a pessimistic approach towards your business in its early life will help you avoid this mistake and improve your chances of successfully setting up a great MSME.
Excessive Customer Incentives
Sue to the presence of huge competition in any business market today, many business want to have more customers to edge off their competitors. They do this by offering massive deals, promos, and added incentives to customers who do business with them. Some go as far as offering products on credit to customers. While it is a huge plus for your business to have big clients in the market, providing customers with incentives that are over the top can prove critical for your business, and could spell the end of it.
Failure to outsource correctly
Outsourcing can be one of the most important parts of running an MSME, and it could be the end of it as well. When a business is still in its early stages, it might prove difficult to avoid outsourcing, that is, obtaining goods and services by contract from an outside supplier. Businesses still in their early stages usually have specific functions and tasks that needs to be outsourced, and usually is to the benefit of your business.
Rarely will you have a market where competition does not exist. It is an integral part of day to day running of business. The only way competition might be absent is only if your business sells a new product that never had a market. Without proper understanding of what your competition does through their products pricing, strategies; your business may find itself in a huge mess. To think that the success of your business also depends on your competition usually sounds ridiculous to many, but it is the truth.
In order to tackle competition issues properly, you need to do a detailed analysis of your competitors. This has to include the products and services they offer, their pricing, strategies and so on.
Poor/Lack of Finance Tracking
This is an easy trap to fall into by business owners, as more energy and focus is invested in developing and selling products/services but err in tracking their income and expenditures. To most, accounting is like a huge bulk of work, but in real sense should be the basis for effectively running a MSME.
Advancing technology has given many business the easy way to track finances through many applications and software solutions specifically designed to help in this vein. It is also possible to outsource your MSME accounting needs by employing a local accountant that is cost effective to help in this side of the business.
It is possible that your MSME product offering is one of the best across Nigeria and beyond. However, if your target customers have no idea of your business, or where to reach you, the chances of success of your MSME just got slimmer. Marketing and advertising is one of the easiest concepts in our technological world today. What’s more? It is cost effective to run. So why not take the chance to set up a great marketing strategy when the consequence of not doing so is so damaging that it might kill the growth of your business.
Poor management and leadership
One thing is to have a powerful idea, another is to have the management and leadership skills to properly execute the idea. Poor management of an MSME results in reduced productivity, lack of focus on the important aspects of your business, poor morale, poor business outlook, and so on. While lots of people, especially entrepreneurs, have inborn leadership skills, it is also something you can learn.
Today, there are lots of books, materials, and guides to become the great, insightful leader that your MSME needs to reach the next level.
Challenges Facing Small and Medium-Sized Business
What are the possible challenges which businesses face that leads to failure as discussed earlier in this article? Here we give you a breakdown in order to effectively understand how to treat each one when they arise.
This is one of the biggest challenges that may be a risk for any king of business, organization, and entity; not just for MSMEs. While other kinds of businesses may require people who have vast experience in a particular field, or company to take up leadership positions, this is not the case in MSMEs. Because MSMEs are usually personal, small scale business, the sole proprietors of the business usually assume responsibilities and has the highest position.
Getting the right culture in business is becoming a rising and relevant trend. In the last couple of years, lots of business owners have been trying to cultivate a culture of which their business are known for. By establishing a culture of business, customers are well aware of the well defined purpose of the business through which organizational values flow. Though we can admit to the existence of different values which a business may have, but we will list here four of the most important values which every business must possess.
The most important values of business offered through a consistent culture includes:
- Professionalism & Integrity
- Customer Service
- Initiative & Innovation
At the end of the day, sticking by these values creates a culture which your staff will strive to grow I to and protect. These values and cultures will become the backbone and support of your business in turbulent times, just like the recent coronavirus pandemic.
Planning the next moves, changes, recruitment are some of the most important aspects of any business entity, including MSMEs. Without the right strategy in business, a MSME will find itself in the downward spiral due to the lack of innovation which is meant to help businesses adapt to changing trends. With time, the business venture becomes outdated and obsolete. Poor strategy is one of the direct consequences of lack of leadership.
While having a plan or idea is so important in business, executing these ideas is even more important. One of the easiest ways which a business can be fast tracked to success is through perfect strategy execution. Implementing ideas, plans, and strategy at the right time, in the right conditions can make a business much more easier to run. Additionally, objectives and projections of business are achieved in a much quicker time.
Picking the right team
To many entrepreneurs and business owners, picking the right team is one of the biggest tasks while setting up a business. As vital as all the other challenges of MSMEs might be, picking the wrong set of people to work with can be the beginning of the end for any business. It is important to find the right set of people who are well grossed and experienced in different parts that make up the entire business. Vital positions like sales, production, customer support, marketing z, operations, and accounts need the right people who are passionate and dedicated to helping your business grow.
Making the Business Stand-Out
The business sector is a very competitive space where new companies and business entities are always coming up to displace the others in the market. In order to thrive, it is vital that your business has a competitive edge which makes customers prefer to do business with you than your direct competition.
Despite being the obvious secret to achieve success in whatever sector your business falls to in the industry, finding that competitive edge in the market can be such a daunting task as it require a lot of time, investment, and innovation to finally come up with the right idea which will make your MSME unique.
MSMEs can have a competitive edge by considering the following factors when thinking up a strategy to earn more customer and advantage over your competitors.
- Customer Service
- Convenience (Local/Delivery/Stock availability
- Difficult to buy it elsewhere
Productivity has close relations with high quality and systems and more. It is important that everyone that is part of your business team to understand your business goals and objectives which has to be achieved in a given time frame. That way, all hands will be on deck to work towards achieving those goals within the give time by driving up productivity without compromising quality.
As the saying goes, “What gets measured, gets done”. This has been one of the most enduring principles in small and large scale businesses. The most challenging situations for MSMEs is the inability to identify and pinpoint the important metrics that the business thrives on. Some of the key metrics that drives MSMEs includes parameters like sales revenue, gross profit, net profit, price, quality, efficiency, productivity, and so on. While these performance metrics information is available for every business, finding the right measure can be a task.