In this interview on SMEDigest Radio Show on Inspiration 92.3FM, Adeola Adeyanju, Managing Director, Cinalt Resources Limited, looked at some complaints small business owners in Nigeria have especially the operating environment, and proffered some solutions.
Excerpts. 
What have you seen as internal (self imposed) and external challenges faced by SMEs?
Whether
you are talking about SMEs or big corporations, everybody have internal
and external issues. The internal issues are not limited to SMEs they
are just more pronounced because of their scale. They don’t have the
buffer that the bigger businesses have. Those internal issues are of
management concerns, level of knowledge, availability of funds, (which
is where most SMEs assume they are most challenged) and availability of
raw materials if they are manufactural.
Then,
you have external issues that are also common to all, whether big or
small. Government policies, the flip flop of those policies, multiple
taxation (this where local government, state government and federal
government tax businesses beyond what is suppose of them). There is also
infrastructural issues. Recently I was talking to someone in Benue
State, and he said as they drove on the road they saw pineapple and
other fruits that were abandoned by the road side because the farmers
couldn’t get them to the market in time. Whatever they don’t sell from
their farm, they left it on the road side to rot. Yet, we have some
other parts of the country begging for these things and they are ready
to pay a premium. This happens because there is no road infrastructure
to connect.
Have you faced some of these challenges personally?
It
is not enough to have an idea. Some people start out because they had
brilliant idea, or they are tired of their current state of employment.
So the SME route was a way out. None of the reasons I mentioned for
starting a business will help you survive. The statistics for SMEs
are horrible. In the first two years, about 50% of SMEs will die. After
the next 3 years making 5 years, 70 to 80% of those SMEs do not make the
transition. It is critical that lessons are learnt. I will give you an
example. I had an uncle who came to me at one point and said to me, ‘‘I
had this great idea for fishing. I said to him, great idea. We didn’t
had to spend money to make all the baths. We will do natural pond by
digging a hole and line it with net.’’
It
sounded like a brilliant idea. So we started the process, bought the
fingerlings, and I was buying the feeds every month. About this time
that year (rainy season), when it was getting close for us to start
selling the fishes and I will get some returns from the business, there
was this heavy rain that came. Because the land was on a low plain, the
pond got flooded and the fishes rose with the water and found their way
into the community. The people within the community started catching
fish in their homes and were thanking God for the miracle of fishes the
rain of blessing has brought their way.
One
thing I never did was visited that pond. Which was an error. I kept
sending money without having enough information about what I am getting
into. If I had visited that pond, I would have observed that error of
low plain and ensure it was corrected.
A
lot of people start side hustle they know nothing about and put people
in it to run it for them and they never bother to find out about how
things are running until the entire thing dies. That thought me a
lesson, anything I cannot be part of, aside from putting money in things
like stock market and bonds that have systems that govern them, I don’t
do it. Don’t start out with something that you cannot have control over
and leaves you dependent on people. The major problem with SMEs is that
there are not just that many good people, whether in terms of character
or in terms of knowledge.
But
sometimes you find people who are good who want to do right, but they
don’t know how to do right, because they don’t have the training. The
person who is starting the business doesn’t have enough training to pass
on the knowledge that the business requires. So you have the blind
leading the blind.
What is the way forward from these challenges?
One
of the first things we must address is the knowledge gap. We,
sometimes, find an instance of not being knowledgeable enough or too
knowledgeable. I say that with due apology to a lot of people. When
knowledge is not enough people can tell. But you find that when people
have done all the MBAs and they know all the Ps of marketing, all the
Porter’s forces and all of those things, very often they feel it immune
them from the reality in our environment. You will find out that most of
the businesses that failed are started by this truly brilliant people.
Recently I was talking to a group of people, and I told them it appears
that the more we learn, the more stupid we become. My uneducated uncles
and aunts do tell me that you don’t test the depth of a river with your
two feet. You put a toe in first before going further. But, all these
brilliant people, raise capital of $200,000 or $1,000,000 and just throw
it into something they have not done before. It is incredible. That is
why people are shocked two years down the line that they’ve failed.
In
Nigeria for example, the Igbo trader apprenticeship programme does not
only help to bridge a knowledge gap, it also helps you to learn with
somebody else’s money. So that in the learning phase, there is an Oga’s
money who seemingly has deeper pocket like the big business who can take
the shock. If you read Malcolm Gladwell’s Outliers, it tells you that,
“It takes about 10 years to master something”. It is only in this age
that I see people who think they are masters because they have read a
book. You find that the Igbo guys shop grows from one to two, to three
and so on. The amazing thing is, they have sustained the businesses
without any formal education. Why? Because they have an education in
their trade.
I
studied engineering. But all my engineering knowledge did not help me
sell spare parts. People have become too important to learn what is
important to them. That is why I personally have a policy never to give
my money to anyone who hasn’t demonstrated any form of apprenticeship.
The form of apprenticeship can be intern or learning from someone who is
already doing what you want to do. The truth is, anything you try to
escape during pregnancy, you will suffer in incubator.
Secondly,
I find that a lot of SMEs build like Nigerian builders. If you have
ever seen a Nigerian builder building a house, and you approach him and
say, this wall is not straight. The response is usually, we will correct
it when we are plastering. To correct when he plasters means that he
will spend more when plastering. Because the plastering is also
excessive, it is going to crack eventually. If even painted with the
best paint, it will look good for a while after which the wall will
crack later on. Instead of doing the right thing by setting a line,
making sure that the blocks are straight in the first instance, we
neglect the basis. This shows that we are not dedicated to do the basis.
We want to do cosmetics; quickly set up a website, open social media
handles and expect to make money instantly. We are not patient to build
our business; we want overnight success. That is why we have businesses
that spring up and in about two years they are no more. I have only two
awards on display. One in my house and the other in my office. One is
the plague that says, 10 years award in a place where I volunteered. The
other one in my office says 15 years. These are the only two I display,
because these are the only two things that has demonstrated that I am
consistent at something. By fluke one cannot becoming a million this
year.
Another
challenge most SMEs talk about is the issue of lack of funding. I have a
lot of people with money to invest in businesses, but the issue is they
cannot trust a lot of SMEs operators with their money. These people I
am talking about are not banks, but a pull of professionals with a lot
of money idle to invest. The truth is, most SMEs have not been proven
with the little they have now, so it is difficult for these
professionals with a lot of idle money to trust them with money.
What should those who are about to start a business do before starting up?
When
you are coming to the market, you must know that you are coming to
compete with big players and you won’t have their kind of big pocket to
start with. So come in a differentiating way. Like Sun Zu would say, you
have to change the playing field. That means, change the basis for
competition. Whenever you come to the table and you don’t have
competitive advantage, it is a sign that you shouldn’t take on such
business. If you can’t do it faster, cheaper or provide more convenience
or do something that the bigger players cannot provide, don’t do it at
all. The strength of anything can also be its weakness. The bigger guys
may not be able to respond fast as a result of process. For instance,
they may need about three or four persons to sign a document and the
board will sit before a product is shipped to customer. You can make
shipping that product faster than the bigger company.
Secondly,
if you have an idea, it is not enough to present it in a lovely
PowerPoint Presentation. Any idea looks good in PowerPoint. You must
also put it in Excel Sheet. Excel Sheet is all about numbers. If you put
a number that doesn’t pencil in Excel Sheet, it won’t work. Your
numbers must pencil for it to give you the right final outcome on Excel
Sheet. When the numbers work, you can then put the grammars in place.
Thirdly, don’t have a confirmation bias. Just because you’ve worked so hard on your idea doesn’t mean you will not put it to test. Ask yourself and people who are constructive in their criticism questions like, would you buy this product if you have need for it? Why will you buy this and not others? Do you think this price is equal to the value? If you can answer these questions without bias, I think you are ready for business.
