Small Business Sustainability – 5 Ways The Government Can Help
The true meaning of the word “sustainability” is two-fold. It means the ability to maintain a certain growth rate or level. It also refers to the avoidance of the depletion of natural resources to maintain an ecological balance. Business sustainability, therefore, focuses on meeting the economic needs of the present without compromising the ability of future generations to meet their own needs.
As far as the Nigerian economic development goes, big businesses may dominate the stock market, but it’s the SMEs that keep the economy moving. Small businesses are the backbones of world economies because they play the biggest roles to fulfil daily life, social, and business demands. Small businesses in Nigeria and beyond bring a great deal of innovation to any field. They are closer and usually in more direct contact with consumers and the general population.
They contribute to local economies by bringing growth and innovation to the community in which the business is established. Small businesses also help stimulate economic growth by providing employment opportunities to people who may not be employable by larger corporations. None of us, government, bigger companies, political leaders can survive without small businesses. They are the first party who solve the problem of customers/people before bigger companies. That’s why every nation desirous of an increase in the rate of development works hard to ensure that small business sustainability in their regions is at an all-time high.
This survey by PWC reveals that SMEs in Nigeria account for 96% of businesses and 84% of employment. According to the Nigeria Bureau of Statistics, small and medium scale enterprises (SMEs) in Nigeria have contributed about 48% of the national GDP in the last five years. With a total number of about 17.4 million, they account for about 50% of industrial jobs and nearly 90% of the manufacturing sector in terms of the number of enterprises.
These small businesses have made it possible for us all to depend less on imported goods or materials, provide the opportunity for the commercial training of various indigenous entrepreneurs while also catering to our native communities at large. There is still much to be done to ensure small business sustainability in Nigeria, such as:
Operational/Financial Assistance
Usually, the challenges most felt when establishing and developing an SME in Nigeria are the financial ones. It is challenging for small businesses to receive loans because their operations are on such a small scale that they constitute financial risks for funding institutions. Their potential lenders frequently demand financial requirements that are rarely realistic for SMEs, leaving them out of the game. Barriers could be in some specific cases. Additionally, governments often delay payments, which might be tolerable to big business but could be disastrous for some SMEs.
Governments could assist in this issue in so many different ways. They could provide occasional grants, lessen the tax burden on the small businesses and act as their guarantors when these SMEs apply for loans to richer companies to achieve some of their operational goals. The government can also supply various forms of subsidised training for SME employees to increase their productivity and ease the investment required by the small business founders.
Marketing Aid
Top on the list of challenges that SMEs in Nigeria face -and right after their financial and operational challenges- lies the challenges concerning marketing and selling their products. This is a more complex domain because it is an amalgamation of so many crucial issues such as logistics challenges, infrastructural deficiencies, especially where products are in need of hood storage, market exposure, the issue of revenue generation and the real costs of same.
A few SMEs owners here understand a good number of the issues at hand but know little of how to tackle them. However, the vast majority of these small businesses largely lack knowledge in this area and do not understand, for example, the difference between sales and marketing and their importance. Business consulting is expensive, and even when it is affordable, many of these small business owners aren’t necessarily sure who can be trusted. This is where the government can step in to ensure small business sustainability.
The government can provide marketing consulting services for small and medium businesses, free or at a relatively low cost, to address this challenge. The government can also help organise and subsidise networking, conferences and other collaboration events, and trade shows where SMEs can participate at a much lower cost than a regular commercial event. Whether industry-specific or general, such government-sponsored platforms are very effective in helping SMEs attract customers and business partners.
Inclusion Into The Export Sector
More and more governments worldwide are taking steps to help SMEs enter export markets to expand and diversify. Exporting allows firms to reach bigger markets, learn new skills that increase their profitability, and raise consumption for firm owners, workers, and their families. By learning new skills from intermediaries and foreign buyers, SMEs in Nigeria can increase the quality of their products and their efficiency.
A viable way for the government to help in this regard is by offering assistance to SMEs that have export potential. This could include offering international exposure opportunities, introducing them to foreign investors, and engaging in as many programmes as possible to enable the businesses to enter the export markets and expand their activity. SMEs founders may be invited to join ministers and other government delegations when travelling abroad to participate in events that attract media and partnership opportunities.
When SMEs in Nigeria move up the value chain this way, their growth will translate into more jobs, higher salaries, and higher GDP per capita, leading to a higher standard of living. The goal here is to motivate these small business owners to learn how to generate revenue on a massive scale, compete with the international players, and become more profitable.
Policies to boost SME trade need to address the often high costs and barriers to finding and matching buyers and sellers. Such approaches can lower costs by facilitating connections between buyers and sellers, increasing access to information about regulations and export opportunities, and introducing measures to ensure the quality of goods and services.
Encouragement of Local Buying
SMEs thrive when they are integrated into meaningful value chains, and in Nigeria, this is no exception. The pandemic has disrupted supply chains and international trade, and many SMEs in developing nations like ours don’t have the resources to rebuild the broken connections on their own.
To ensure small business sustainability, the government should prioritise local buying at the heart of any national plans of recovering from this pandemic. A 2017 analysis of foodstuffs, for example, found greater localism associated with more resilient and sustainable local economies. Encouraging consumers to “buy local” is a pillar of regional development strategies, and the Nigerian government should take this step seriously.
Easing The Burden of Administrative Bottlenecks
Minor accidents, ergonomics problems, old and outdated machinery, and lack of awareness have created a need to implement various administrative rules as part of the safety practices for SMEs. The problem with this though, is that most of these rules have become unnecessary and now only constitute serious barriers to a smooth operation of the SME ecosystem in Nigeria.
The average time it takes to open a small business varies dramatically worldwide, with developed countries taking the least amount of time possible. For instance, in New Zealand, with an average of half-day and one official procedure.
The condition in Nigeria is quite different, but facilitating the registration process and lowering associated cost could improve formalisation levels and the overall business environment. By easing administrative processes, governments can increase SME participation in assistance programs and help them grow.
Conclusion
The government needs to take an interest in SMEs’ problems. This is perhaps the heart of the matter. Government must respond quickly to repair the economic damage that has been done. What we must do right now is figure out what to do to save struggling businesses – restaurants and bars, hotels, barbershops and nail salons.
Only when they are aware of how difficult it is for SMEs to carry out certain business tasks and understand which SMEs and sectors are worth investing in can effectively help spur economic growth.
