HOW TO START AND MANAGE SMEs PROFITABLY
Small and medium scale enterprises play enormous role in the development of the country, as the sector has been described as the engine of growth of any economy.
The sector has become highly critical to the development of economies worldwide, through value-added services such as, employment creation, economic empowerment, poverty alleviation and revenue generation.
However, in spite of the strategic importance of SMEs to the nation, it is faced with various problems, including how to start and manage them successfully, inadequate capital and infrastructure, among others.
Against the backdrop of the critical role that the sector plays in the economy, the Chairman, Nigerian Association of Small Scale Industrialists, Lagos and Chief Executive Officer ,Spectra Nigeria Limited, Mr. Duro Kuteyi, says the success of SMEs depend on the innate motivation of the promoter, as some people start businesses early in life while others start when they retire.
The industrialist says a prospective business man must have the conviction and the vision to succeed, the resilience to surmount problems, insatiable lust for information, the courage to deny himself/herself of some good things and the patience to see small seed germinate and blossom into an oak tree.
He says a business promoter must be prepared to put in extra effort to succeed in Nigeria because of the challenging business environment, such as transportation, energy and security problems.
Kuteyi also speaks on project funding .He says, "it is easier to consummate an idea and put the idea into a business plan, but it is not easy to get sufficient credit to back the dreams up; and to source for credit, there is the need to agree on an amount that will be enough to cover the project in order to avoid under capitalization.
He says one must be committed to all loan terms, especially as regards repayment of the principal and the interest; transparency to the banks or sponsors; utilizing the money for the purpose for which it was collected, and operating good accounting system that will encourage effective control and judicious use of resources.
On the kind of products or services to produce or render, Kuteyi says it is better to choose such products in ones area of competence, adding that information on the product should be sought with the evaluation of its attractiveness and linkages with other business.
He also says the question about who, what and where to locate your customers and competition should be taken into consideration by the entrepreneur. The NASSI leader advises potential business men to purchase imported equipment and machinery to reap quick returns, just as he says that some local fabricators are good in making low technology for milling, conveying, oil seed extraction, mixing and cooling systems, as selection of equipment can make or mar business which makes the use of internet for equipment search necessary.
On the raw materials, he says it will require a large amount of money, adding that supply of such raw materials must be factored into the total cost of the business. Where this is lacking, it can cause delay in supply and business growth. He also counsels that the investor must calculate all that he requires by taking note of the stock, future sales plan/delivery time, price advantages in terms of quantity and time of order and install a strict control of receiving supplies by ensuring all books are kept appropriately.
On work force management, he says it is quite difficult to manage it in Nigeria where most workers want to get rich without showing the will to work for it. He says workers must be thoroughly supervised to achieve high productivity, as it is of no use setting up an industry without having enough time to manage it and knowing which employees are of good conduct, punctual, prudent, fair and committed to the ideals of the organization.
On the infrastructure needed, Kuteyi says it is important to estimate whether factory building will be built or rented; vehicles needed for product distribution and sales canvassing; generating set needed to augment power supply and other facilities such as water, good access roads and telephone.
A small scale industrialist and senior lecturer, Economics Department, Adeniran Ogusanya College of Education, Lagos, Mr. Lateef Olayiwola says hard work and an exemplary leadership are some of the qualities needed to manage a small business efficiently and effectively. He says an industrialist must not only produce or render services, but always satisfy his customers, as statistics has shown that a customer who is satisfied with the services he received would tell at least five people his or her experiences, while a customer that was dissatisfied will tell 10 or more people about the poor services.
He says a good industrialist should come up with business ideas and evaluate them accordingly, adding that he can also broaden his mind by traveling and making new friends who can give him more ideas.However, it is not all ideas that create opportunities. And for an idea to be an opportunity, it must lead to the development of a product or services that will be of value to the consumer and the society in general.
