The Pains And Gains Of Running An SME In Nigeria


It’s a known fact that building a company is a herculean task because to begin a business is one thing, making it stand the test of time, rigours and fiery dart thrown at its survival is another thing. Buttressing this fact is that Nigeria is ranked 170 out of 189 economies in the World Bank 2015 ease of doing business index so you can understand why kick starting and sustaining a legitimate business in Nigeria is almost impossible.

The Central Bank of Nigeria defines small and medium enterprises in Nigeria according to asset base and the number of staff employed. The criteria are an asset base equal or less than N5 million, and a staff strength equal or less than 100 employees. According to Wikipedia, Small and medium-sized enterprises (SMEs, also small and medium enterprises) or small and medium-sized businesses (SMBs) are businesses whose personnel numbers fall below certain limits. The abbreviation “SME” is used in the European Union and by international organisations such as the World Bank, the United Nations and the World Trade Organization (WTO). Small enterprises outnumber large companies by a wide margin and also employ many more people. SMEs are also said to be responsible for driving innovation and competition in many economic sectors.

In Nigeria today, many SME’s have sprung up due to the unavailability of jobs for young people and the global economic recession. It is difficult to admit but with the amount of problems we have to grapple with as a nation, the more solution discovered for these problems by SME’s, the more insurmountable problems arises. Nigeria is a country filled with so many creative and productive minds but with too many unforeseen forces, the profiteer’s from corrupt practices the intentions of such productive minds will forever be relegated to the background. In this piece, I will be sharing some of the pains and gains of running SME’s in Nigeria as well as first-hand experiences of some entrepreneurs. THE PAINS: • Harsh Environment and Fluctuating Policies:


• Harsh Environment and Fluctuating Policies:



In my interaction with a business owner some years ago, he told me that one of the most difficult places to establish a business is Nigeria, due to the harshness of its environs and the frustration creative minded individuals experience in the generation as well as selling their ideas. Coupled with the environmental problem creative people are made to go through is the fluctuation of immediate policies that affect business in the area of financing, taxation and budgeting.

• Epileptic Power Supply:


This has been the bane of many businesses in Nigeria, as it largely affects the productivity of many SME’s, businesses that depend on power have either crumbled or found it challenging to meet up to the high cost funding alternative source of power. Investors that once had business commitments in Nigeria have moved to other countries, the unabated power situation makes potential investors considering Nigeria as an investment destination have a rethink. Though a micro enterprise, South African mobile-phone company MTN, in an interview granted to Daily Trust recently disclosed that it spends $5.5million (about N660 million) on diesel fuel monthly in Nigeria. The whopping sum is spent on fuelling the company’s 6,000 generators at its base stations across Nigeria. The generators supply power to the base stations for 19 hours daily. Other investors and owners of small scale businesses in Nigeria are also reeling under the burden of huge cost of generating electricity to keep their businesses afloat.

• Hard Times:



According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. A closer look into this reveals that all SME’s are subjected to this test. How many small medium enterprises survive this hurdle is another puzzle to solve entirely. Every business is bound to experience ups and down moment but in contrast to how micro-enterprises cope with such times when they can fall back or concentrate on other major investments as a form of generating revenue, many SME’s don’t have such luxury and if there is no a solid structure that backs the formation of such establishment they stand the risk of been blown away by the wind of hard times as many businesses are currently experiencing all over the world in the form of economic recession.
• Financing: Crucial among the pains and difficulties many SME’s encounter in Nigeria is the easy access to funds to help develop their business level. The impact of Micro-Finance banks in contributing to the maintenance and in some cases expansion is evident but in many cases because of their limits, the financial target of many SME’s can only be met through the support of commercial banks who have stronger financial muscle but the latter are usually held back due to lack of trust in small businesses, as they weigh them on the scale of possessions such as assets and collaterals to meet the required financial aid from the bank.
• Risk: Entrepreneurs and managers of small medium enterprises can be likened to football coaches who receive the encomiums of fans, critics and his employers alike when his team is producing results but he gets questioned when his team begin to falter. This is why owners of SME’s are huge risk takers, because when the business is not doing well, majority of the reasons for such will not be shouldered by the employees, government policies, over tax or even the current biting economy rather the owner of the business will be solely responsible for the solution to his ailing business or risk losing it altogether.
“It has been an incredible journey starting Iconway and working with our team to grow it into a sustainable internet business over the last 3 years. An internet company basically leverages the internet to do most of its business. Its products, revenue streams are powered by it and Iconway is one of such companies. The scarcity of talent, electricity and funding makes it really hard to grow but the truth remains that starting a business is the easy part. Getting sustainable growth is the real deal”. Oduntan Odubanjo, Founder of Iconway Media. This was culled from Iconway’s website.
Founder of Olufunmi Glitz N Dazzle, Adetunji Oluwafunmilayo spoke exclusively to Abayomi on her bittersweet sojourn into the Beauty Industry a few years ago.

“The saying no pain no gain is very evident in SME. You just have to put in effort to reap the gain thereof. Nothing good comes easy they say. This applies in SME, it’s small, so you have to be patient, put in more effort and don’t just give up and you will surely reap the benefit thereof. You just have it at the back of your mind what you set to achieve; I believe this will keep one going. Nobody wants to give a loan to an SME, it’s like testing the waters and there are a lot of what ifs? So you have to save for what you believe in. Also with few friends and few families who believe in you, then you can start up. When I started “Olufunmi Glitz N Dazzle”, we had very few who believed in us. No access whatsoever to loan. People looked at me and felt I wasn’t doing anything because times without number, people who knew about my business still asked questions like how far about job? They didn’t see my business as a full time. Funny remarks like, is this what you intend to do for the rest of your life? You better get a well-paying job. But I was determined, so I just kept my focus. So far we have been able to convince people that Olufunmi Glitz N Dazzle is no joke by our success. We are faring well. Today it gives me so much joy when customers are proud of our accessories. Comments like, your accessories are so unique and affordable. Everyone kept staring at my accessories. We have even gone further by styling our clients. We even get referrals outside d shores of Nigeria which to me is a very great achievement”.


• SME’s and Bond with Consumer:


The consistency in delivery of products and services results in creating a special bond, understanding and sense of trust between most small medium enterprises and their customers. Another way bonds can be developed between SME’s and consumers is that people are attached to products or services they can have a firsthand experience with. SME’s bring such experiences to the threshold of consumers; they create a message behind every product sold or service rendered. Customers are attached to specific brands based on trust, efficiency in delivery and consistency, which is a huge advantage SME’s possess in this present economy. Closeness to clients is important to understand their needs as well as business development and economic growth.

• SME’s run at a Fast Speed:


In today’s economy which is filled with numerous challenges, competition and undulating customer tendencies, SME’s serve as a platform for young employees to grow and flourish. The speed at which SME’s deliver in their efficiency towards the needs and complaints tendered by consumers of their products and services. One of the reasons SME’s are also able to function at this level is due to the size of the business, employees, internal challenges are solved effortlessly. Their flexibility to change helps businesses to adapt to market trends and reduces future crisis. SME’s also contribute on a large scale to the development of Nigeria’s economy as they create job opportunities and support the government in terms of reducing the level of unemployment in the country.
• SME’s Advancement through Technology:


There is no gainsaying that technology is capable of playing an influential role in the promotion of small medium enterprises. Many SME’s this day’s tap into the opportunities and possibilities of social media to create awareness for their brand. It is fair to say indeed the world is on social media now because it costs little or nothing for SME’s who seek to put their products and services in the public space to subscribe to these social media platforms as compared to traditional media which is costly especially considering the financial weight of SME’s.




Goke Alabi

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