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Top 4 Common Challenges For Small Business Owners And Recommendations

Emmanuel Nnaemeka
  Nigeria is the biggest market in Africa, with a population of over 200 million people. With this population, Nigeria is a viable place to do business. However, business experts and investors have claimed that the business climate in Nigeria is harsh. According to a World Bank study, Nigeria ranked 131 out of 181 nations in the easiest places to do business.
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In another study, 80% of small businesses in Nigeria fail to reach their third year of operations. These statistics go a long way in telling us how difficult it is to do business. The challenges vary, and in this article, we shall highlight them, and provide recommendations on how small business owners can navigate them.

  1. Access To Capital

This is usually the first problem encountered by many SMEs. Many business owners have the problem of access to finance. As a result of a lack of finance, many small businesses can not get the necessary equipment and tools to grow their businesses. For this reason, many of these businesses fall under the 81% of businesses that do not survive to their third year. Furthermore, over 40% of Nigerians are financially excluded.

How To Overcome

The best way to navigate this problem is by getting sufficient capital through personal savings and donations from family and friends. Second, there are various federal government funding agencies to which you can apply. For example, Bank of Industry, Tony Elumelu Entrepreneurship Programme (TEEP), YouWIN Connect Nigeria, GroFin Fund, Diamond Bank BET Programme, AYEEN Financial Grants, etc. Third, you can pitch your ideas to venture capitalists who can finance your business and give you the necessary resources you need to grow. The way to go about this is through the use of social media, where you search for investors interested in businesses in Nigeria. One such platform is LinkedIn. On LinkedIn, reposition your business as something profitable and send your proposals to them through cold emails. Further, rather than seeking funding from banks and other financial institutions, which is often difficult, SMEs should take advantage of various online lending startups and companies in Nigeria. Some popular online lenders for business loans in Nigeria are Renmoney, Carbon, Lydia, Credit Direct, Quickcheck, and of course, Lendigo.

  1. Government Regulations And Policies

Another problem facing SMEs in Nigeria is the bottlenecks encountered through various government regulations and policies. Most of these regulations and policies make a business thrive in Nigeria. For example, the cost of registering, licensing, and paying levies taxes for your business in Nigeria can cost you a whole lot, especially as an SME. Further, irregular exchange rates and unstable increases in pump prices can lead to unforeseen challenges of an increase in goods.
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How To Overcome

The best way is to play by the rules in the book. Study these policies and regulations, and see where you navigate easily. Various businesses join pressure groups that can influence government decisions. Another way to navigate this problem is to negotiate where possible, especially for open-ended policies. You can lobby for immunity. You can do this when you have influential members on your board of trustees. This is why you must network as a businessperson. Take opportunities like the window opening, when licensing and registrations are always cheap.

  1. Unqualified And Untrusted Staff

Many SMEs and businesses suffer the problem of untrained, less-trained and under-trained staff who don’t know the rudiments of doing. There are cases of theft in the business place. Little wonder, many businesses fold up within a period of 5 to 10 years, because of hiring dishonest people. In a country where the literacy level is very low and the corruption index is high, finding the right staff can be difficult.

How To Overcome

The best way is to employ the service of HR firms who can get the right skilled workers, who are tested and trusted in getting jobs done. These HR companies train and retain their staff, ensure that the right persons are given out to companies. HR firms do their background check on their staff before sourcing them out to companies. Second, getting to the right staff begins with you. You can make special requests to schools to send their students for internships. The leading HR firms in Nigeria include WorkForce, Kimberly Ryan, Ashford & McGuire Consulting,  Gigastreams Consulting and so on.

  1. Inadequate Public Infrastructure

Finally, the problem of poor public infrastructure poses serious threats to small and big businesses. These infrastructures take diverse forms, such as poor transporting systems, epileptic power supply, and access to potable water. These infrastructural deficits the growth of industries, factories, mini-factories, and other small business outlets negatively.

How To Overcome

While businesses wait on the government to fix bad roads and create a stable power supply, SMEs must employ coping mechanisms. To overcome poor transportation systems, SMEs should endeavour to build their businesses closer to markets, rather than far away. For example, if you are into poultry farming, you can build your poultry close to a major market, where people can come and buy your products. Secondly, you can rely on delivery companies to help you deliver your goods. These delivery companies have their way of navigating the problems of transportation with their numerous facilities. Also, if you’re faced with an epileptic power supply, it is high time you used solar energy and alternative energy like soakaway, to generate cooking gas and electricity. Featured Image Source: Keap
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