Entrepreneurs want their businesses to grow; this is a nearly universal rule. But not everyone knows what they need to do to make sustainable growth happen. And that, among other things, is why so many SMEs fail.
Read more about Business
If you’re going to avoid stumbling repeatedly on your entrepreneurial journey, you’ll need to be clear about what’s required to spur growth.
At the September edition of Connect Nigeria’s monthly webinar, Ochije Nnani, CEO of Obana Africa (a sourcing and logistics solutions company), laid out his ideas for how SMEs can scale on every front that matters. A serial founder himself, Nnani drew insights from his many years of being at the frontline of Africa’s tech renaissance.
The former Konga executive opined that there were numerous business opportunities in Nigeria waiting to be explored. But he qualified that statement: these openings could only be exploited to the fullest extent by ventures that have nailed four vital things:
- Digitalization
- Cash flow hacking
- Sales and distribution
- Customer retention
In this article, we’ll provide you with a summary of his thoughts on these themes.
Digitalisation Means More than Having a Website
In fact, Nnani believes that small businesses can operate for much of their formative months and years without having a standard website. But they do need a digital presence.
“You can create your product listings, sell via WhatsApp, receive payments, and run end-to-end digital operations”, he explained.
“Platforms like WhatsApp Business, Bumpa, and your social media pages enable you to run your business. “
He also harped on the need for brands and their creators to be seen, known, and trusted—all of which he says social media can do for them.
“People want to be educated. And they want to engage a business that is trustworthy. So, are you on LinkedIn? Are you on Facebook? You need to have a presence.”
Nnani says Nigerians are more willing to transact with brands that have a human face (or human faces) to them. That is, their founders and/or staff should be known, at least on social media platforms.
He notes that digital technology allows people to expand their presence well beyond what the old selling systems could accomplish.
Differentiate Revenue from Cash Flow, and Operate Accordingly
“There is a difference between revenue and cash flow”, Nnani says. “Your business thrives on cash flow, not revenue.”
He notes that, while revenues are the recorded gains from selling a product or service, cash flow—which is the cash that actually comes in at a given time –is often less. And that’s usually because there are outstanding payments from customers who have purchased items on credit.
“I have seen a lot of SMEs that don’t know whether they are making a profit or a loss, or don’t know what their revenue levels are. You should know these things.”
Sign up for the Connect Nigeria daily newsletter
According to Nnani, many businesses are cash-strapped because they have not properly managed customer debts. He recommends that businesses solve this by partnering with Buy Now Pay Later (BNPL) platforms.
BNPL providers enable businesses to get their payments in full, even when their customers have yet to complete settlements.
“There are a lot of BNPL platforms,” Nnani revealed. “You can partner with any of them to ensure that you get your payments upfront.”
He also advises that merchants “regularise their business”—that is, get registered, keep financial records, and maintain a valid address –so they can qualify for support from BNPL and other platforms that might help them.
Hacking Sales and Distribution is the Most Important of All
Nnani contends that most businesses rise or fall on the effectiveness of their selling and distribution.
“Without distribution, your growth is stunted and you’re not selling,” Nnani says.
He points out that winning the distribution game comes down to putting your products in front of as many people as possible. And that, he notes, might require partnerships with both physical stores and e-commerce stores.
“You can list your products on [online] marketplaces and sell there.
“You can also partner with large and medium-scale outlets and sell to more people. These partnerships will help you grow faster.”
Another tip he mentions is creating bundles and larger collections of unit items, which may be sold to customers who want them.
For Nnani, the aim of any innovative approach to selling and distribution is to raise sales beyond what conventional selling can achieve.
He recognises that some tradeoff needs to be factored in, as partner platforms will take a cut of whatever small businesses sell on or through them. But he reckons that, in many cases, the benefits of this strategy far outweigh the costs.
Do What You Can to Retain Customers
“If your business can’t retain customers, it will gradually die,” Nnani warns.
He insists that every small business that’s serious about growth should have a customer retention strategy in place.
A big part of keeping customers happy is engaging them and communicating information that they need to be aware of.
Nnani has ideas for how this can be done.
“Create a WhatsApp group and have customers on it; then provide them with updates there. As a small business, the easiest way to maintain low costs with respect to customer relationship management is to use WhatsApp.
Use [standard] Customer Relationship Management (CRM) and other marketing tools.”
Beyond keeping customers in the loop, Nnani urges business owners to be reliable.
“You want to be able to make a promise and keep it.”
As far as he’s concerned, this quality puts its adherents ahead of their competitors in the Nigerian context. This makes it possible to attract and maintain a loyal customer base.
Register to attend the CN Business Mixer
Final Words
Your business can excel in its domain if it has strong distribution, figures out customer retention, expands its presence via digital platforms, and solves its cash flow issues.
Deal with these issues, and you’ll be well on your way to winning with your venture.
Featured Image Source: Business Africa Online
Got a suggestion? Contact us: [email protected]