Post by Trade Coach on Jul 22, 2017 17:58:58 GMT 1
That the economy is in a downturn is no news to business operators in Nigeria, and indeed all over the world. It may also no longer sound a good refrain for anybody to blame his financial failure on the poor state of infrastructure in Nigeria. Easily cited among the challenges are the poor state of the nation's infrastructure, its protracted power crisis and some basic institutional errors, including the continued retainership of some obsolete laws, which are believed to be inhibitive to business and trade promotions, in the country's legal system. However, the poor state of the nation's infrastructure, one may say, has compromised the performances of firms, more than other macro and institutional factors.
For small businesses, the prosperity the owner is directly tied to the success the businesses, unlike what obtains in big organisations.
Notwithstanding the harsh operating environment, some businesses have been thriving, while the owners have been prospering economically as a result of the strategies they employ. Of course, the fact that the hardship in the polity has produced more millionairs than the good old days lends credence to the economic maxim, "success, in most cases, is not in the star but in the style."
What have been their secrets?
A foremost business advisor and author of "Business Success Foundation", Prof Tom Kilmon, seems to have provided the key in his work as he says, "The seeds of business success are sown during difficult times."
According to him, rather than giving in to lamentation, organisational experts believe that economic downturn offers good opportunities for focused individuals to thrive at the expense of others.
According to him, job losses credit troubles, a bleak housing market, decreased consumer spending, high energy costs and intense housing problems characterise such a time as businesses face challenging times. On the contrary, it is possible to look at this period as a chance to find new profit opportunities that make your business more efficient. For instance, he says an economic slowdown can provide the chance to streamline, by looking for operations to outsource.
Generally, finance experts and business advisors have generally outlined seven basic steps to consider by success-hunting entrepreneurs during an economic slowdown. They, however, warn that the degree of the strategies' effectiveness obviously depends on the state of your organisation now, the area of the country where you are located, and the industry in which you operate and how you are able to turn the strategies into results.
A business advisor, a fellow and former employee of the Nigerian Institute for Social and Economic Research, Liz Taylor gives priority to an Ingenious sourcing of alternative productive facilities. She says, "For entrepreneurs that have made up their minds to succeed, breakdowns in social infrastructure should be promptly tackled by looking for alternatives." According to her, "excuses about poor facilities would do three things: Drive down your customer base, destroy your business integrity and reduce your profitability. The final stage is the failure of the company."
Mr. Isidore Aruehru, a business advisor and Managing Director, Klint & Associates, a Lagos-based organisational building firm, notes that the primacy of marketing as a critical step to be taken during an economic downturn should be emphasised. He says, "When cutting expenses, it may be tempting to stop spending on marketing and advertising. But that can cause a further downward spiral when new customers are not coming in. If you have to cut back on marketing, look for less expensive ways to keep your name out.”
He advises on the need to focus on potential customers, who would generate financial results. According to him, there is the need to create a marketing plan that identifies the company's niche and attracts the customers required. "This will generate greater sales at less cost and with a more meaningful bottom-line impact," he says.
Kilmon, on his part, sees objective restructuring exercise as another key and sure survival strategy. His view, "Crunch the numbers and look at your organisation from every angle. Your accounting firm can examine your operations and find opportunities to control spending, increase productivity, decrease waste, better manage assets, take advantage of tax breaks, improve cash flow and enhance your bottom line."
Taylor's business plan method advice may naturally follow as the fourth step. In this wise, an entrepreneur should focus on his business plan: review of business (company's) mission and core competencies and taking such actions that make sense in the long term and avoiding panic reactions can provide survival ways.
Out-flanking (through expedient alliance forging) could be a critical step during an economic downturn. Aruehru says investment capital may become scarce during a downturn. So, pooling strengths with other businesses may give parties. This would do some things: Create a competitive edge, a chance to enter new markets, an opportunity to gain economies of scale and reach new customers and an opportunity to attract additional investment capital.
