When you participate in a workshop or focus group with micro, small, and medium enterprises, participants often make the case that their businesses face unique challenges. Small Business Owners almost always complain that the lack of finance stops them from growing and fully exploiting profitable investment opportunities.
Based on feedback, the problems facing Small and Medium Enterprises go beyond finance, usually include some of the following:
- Domestic market conditions.
- Recruitment and attraction of talents.
- Access to networks.
- Regulatory compliance.
How can SMEs overcome these challenges?
A major challenge for small businesses is accessing the finance they need to develop and grow. Issues of collateral and alignment with approved accounting standards also affect SMEs. Financial institutions also have less experience lending to the small business segment and often perceive them as riskier than the evidence indicates.
Furthermore, the Nigerian government has a critical role to play in ensuring fair competition and ethical business practices. An unsafe market or unfair regulation will destroy thousands of businesses in an instant. Government can provide friction-free regulations that are transparent and easy to understand. This will protect local businesses and make the economy attractive to investment.
SMEs also need adequate infrastructural facilities like power, transportation at subsidised rates. This will reduce their production costs, increase their profit margins, and enable them to compete in the marketplace.
Another issue usually overlooked is that of networking. Most business owners operate under some form of secrecy. They seem to forget that thousands of businesses offer the same exact product or service as they do. SMEs need partnerships and networks. By developing strategic partnerships, they can lay the groundwork for progress. This will also expose them to a pool of talent that can accelerate the achievement of their business goals.