The Lagos Chamber of Commerce and Industry, LCCI has handed down strategies to operators of Small and Medium Enterprises, SME’s in their determination to scale through the difficult environment posed by COVID-19 pandemic.
Speaking during a Virtual Global Leadership Training in Lagos, president of the Chamber, Mrs. Toki Mabogunje, identified technology as a major tool to drive business operations.
Mabogunje, whose paper was themed, “Playing To Your Strengths: How To Position And Thrive As An SME In Tough Economic Times” stated that traditional business models are losing relevance and facing increasing challenges of competitiveness given the fast-changing dynamics in today’s business environment.
She said that it has become imperative that SMEs adjust their business models in line with current realities while ensuring such models are technology driven.
According to her, a big lesson from the covid-19 disruption is the need for SMEs to leverage technology to improve on the quality of their service delivery while sustaining relevance and competitiveness.
“SMEs should incorporate remote working arrangements by leveraging information and communication technologies, such as teleconferencing software, instant messaging services, cloud based file sharing systems, collaborative work apps etc. Staff should be empowered by offering them tailored training programmes.
Where remote working is not feasible businesses should take common sense precautions to ensure workspaces are hygienic and safe.
Although these measures may imply additional costs in the short run, they will reduce a small businesses costs in the future.
Adopting technology in your business operations helps you optimize costs and expand your customer/clientele base. Technology driven firms have a better chance to survive and thrive during this critical period.” she advised.
The president also spoke on the need for operators to adopt a flexible management approach to keep tight control on cost and non-revenue-generating segments of your business.
Flexibility she notes help business owners to adapt to dynamics.
She opined that SMEs can free up liquidity trapped inside the business to increase their chances of survival and improve resilience and sustainability.
“SMEs can do this by introducing cost reduction measures, negotiating new terms with input suppliers and service providers, reviewing portfolios of receivables and offering discounts for early payment to large buyers.
It also enables SMEs to revise their plans by incorporating new innovations while staying on course to achieve sustainability. Some SMEs have chosen to adapt their business models temporarily to cope with the crisis. Restaurants are experimenting with direct home deliveries; Hotels are accommodating health workers who do not want to return home and contaminate their homes; The apparel industry in several countries have reorganised to produce Personal Protective Equipment (PPEs); Other manufacturers are producing ventilators or ventilator components. Some businesses unable to adapt have loaned their staff to other’s who are experiencing a boom.”
She further added that SMEs should reconfigure their supply chains possibly through backward integration for inputs that could be sourced locally.
Manogunje, counseled that operators should practice import substitution to wean the business of imports, where applicable, and mitigate the risks which arise from global supply chain disruptions.
“Frequent and frank communications with suppliers, customers and service providers such as transport companies and banks will determine whether an SME can ensure business continuity. By having control on significant portions of the supply chain, SMEs can bring down costs while ensuring improved efficiencies in operational activities.” she said.
Speaking further she said, “As the saying goes, ‘Cash is King’, cash flow is the lifeblood of any business. To ensure the business is healthy, SMEs need to keep an eye on their cash flows. Besides the objective of generating more sales which leads to greater increase in cash flows, you must know how to manage cash. This handy skill ensures you maintain a consistent cash flow which will result in a healthy cash balance. Many Banks are providing short term loans or allowing re-negotiation of payment terms. SMEs may also focus on product and service lines that provide the quickest access to cash, even if they are not the highest value. Additionally, SMEs should try as much as possible to minimize credit sales as it could severely affect cash flows. Informal businesses and those not connected to formal financing networks should reach out to understand government support programmes and take the necessary action to benefit from them.”
The LCCI boss also noted that it is important for SMEs to focus on their core competencies to strengthen their competitiveness, adding that business owners should not get involved in too many things or products to avoid being thinly spread and possibly losing focus. This can damage the core business by taking valuable time and resources and putting them into less important activities. Your brand and reputation could be affected. Identify your core business and focus on it.
She pointed out that there is a saying that a bird in hand is worth two in the bush and so existing customers are an opportunity to make more sales without the extra costs of soliciting for new customers. “Some of your existing customers, especially the loyal ones, provide more sales opportunities. While striving to have more customers and expand your clientele base, never stop giving your best to your existing customers.
Do not cutback on advertising & marketing
“During tough times, many SMEs make the mistake of cutting their marketing budget. It is during tough times that consumers are restless and contemplating adjusting their buying decisions. This is the moment to help them find your products and services. Therefore, do not quit marketing, instead step up your marketing efforts. Use technology. Engage in digital marketing.” she advised.