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The Rising Costs, Reduced Revenue and the Way Forward for SMEs 

Rising costs and reduced revenue can be significant challenges for Small and Medium-sized Enterprises (SMEs). These challenges can arise due to various reasons such as economic downturns, increased competition, changes in consumer preferences, rising input costs, and other external factors.  SMEs often have limited resources and financial flexibility compared to larger businesses, making it harder for them to absorb these types of challenges. As a result, they may need to take proactive steps to manage their costs and increase their revenue.  Here are some strategies that SMEs can consider to address rising costs and reduce revenue:  Overall, SMEs need to be proactive in managing their costs and revenue to stay competitive and sustainable in the long run. 

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Strategies to Penetrate International Markets

Exporting is one of the strategies that Small and Medium-sized Enterprises (SMEs) can use to penetrate international markets, thus expanding their businesses beyond the domestic market. Nigerian SMEs can export their products to various countries around the world. However, accessing primary export markets for Nigerian SMEs can be challenging due to various factors such as trade barriers, cultural differences, language barriers, and transportation costs, among others. One of the primary strategies to penetrate international markets is to focus on quality. Quality is critical in today’s global market, where consumers have access to a wide range of products from different parts of the world. Nigerian SMEs must ensure that their products meet international standards and are competitive in terms of quality. Another strategy for Nigerian SMEs is to leverage technology. Technology has revolutionized the way businesses operate globally, making it easier for companies to reach customers beyond their borders. Nigerian SMEs can take advantage of technology by using e-commerce platforms such as Amazon or Alibaba to sell their products internationally. They can also use social media platforms such as Facebook, Instagram and FATE Foundation’s Alumni Hub to promote their products and reach new customers. Collaboration is another essential strategy for Nigerian SMEs looking to penetrate international markets. Collaboration with other businesses can help SMEs gain access to new markets, technologies, and resources that they may not have otherwise been able to access on their own. For example, partnering with a foreign distributor or supplier can help an SME gain access to new markets while reducing costs associated with distribution. In addition, networking is crucial for Nigerian SMEs looking to penetrate international markets. Networking allows businesses to connect with potential partners, suppliers, distributors or customers who can help them expand into new markets or improve their existing operations. Attending trade shows or conferences related to your industry is an excellent way for entrepreneurs in Nigeria’s small business sector network with other professionals from around the world. Furthermore, building strong relationships with customers is vital for Nigerian SMEs to penetrate international markets. Customers are the lifeblood of any business, and building strong relationships with them can help SMEs gain a competitive edge in the global market. Nigerian SMEs must focus on providing excellent customer service, responding promptly to inquiries, and addressing customer complaints quickly. Finally, Nigerian SMEs must be willing to adapt their products and services to meet the needs of international customers. The global market is diverse, and what works in Nigeria may not necessarily work in other parts of the world. Therefore, it is essential for Nigerian SMEs to conduct market research and understand the needs of their target audience before entering new markets. In conclusion, penetrating international markets is crucial for Nigerian SMEs looking to grow their businesses and contribute significantly to Nigeria’s economy. To achieve this goal, they must focus on quality, leverage technology, collaborate with other businesses, network effectively, build strong relationships with customers and adapt their products or services to meet the needs of international customers. By adopting these strategies and taking advantage of government policies that support small businesses’ growth in Nigeria, the economy will continue its upward trajectory towards becoming one of Africa’s leading economies.

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When is it Safe for a Temporary Distress Price?

You would recall the article on product/service pricing and I hope it is helpful for you in determining the best price for your products/services. It is possible that after determining an appropriate price, you are unable to sell at that price because of the environment, economic situation, demography, social class, user/buyer preference amongst other reasons. However, the focus of this article is how and when to set a Temporary Distress Price (TDP), when the situation calls for it. What is a Temporary Distress Price (TDP)? This is a price below a product’s/service’s target selling price. Target selling price is the determined consumer’s uptake value of a product/service. This distress pricing is a decision to temporarily cut down the target selling price of a product/service to enhance liquidity, keep a significant customer segment and/or meet other urgent business need.     When should you contemplate setting a TDP? I have seen stores sell products at a slightly lower price than the target selling price due to such products nearing their expiry dates. Others quickly run “promos” to sell off the products before expiry. This is a distressed sale not a temporary distress pricing scenario. TDP is triggered when: How to fix a temporary distress price? First, businesses must decide if they are a price taker or a price setter. A price taker has little or no control to determine product/service price due to market conditions, regulations etc., while a price setter has significant capacity to set price due to market coverage, capacity, leverage etc. In (highly) regulated markets, it is almost impossible to set a temporary distress price, hence the focus is on unregulated markets, where businesses can set prices reasonably. As a price taker, the preferred choice is to set a temporary distress price that helps to at least maintain a break-even point (no profit, no loss) or a positive contribution (where selling price is higher than variable cost). For price setters, they can flex their muscles based on shocks from other business units and set a temporary distress price arbitrarily. There is no specific (scientific) method for setting a temporary distress price. Qualitative considerations when setting a Temporary Distress Price How should you respond when your competitor sets a Temporary Distress Price? It is understandable that not all business will need to set a temporary distress price, however business owners and managers should note that a temporary distress price set by a competitor is a slightly higher potential competition for their product. If a competitor sets a temporary distress price that rivals your product’s/service’s price, then your sales might drop, you might also lose significant customers and market share. How then should businesses that may suffer the impact of this distress price respond to a competitor’s? First, be prepared for a price slide. The encouraging thing is that, if it is a TDP, it is only for a short time. If the price reduction continues for a long period, then it is most likely not it. Secondly, increase your market communication output. While doing this, it will be unethical to play dirty especially in online spaces. Finally, look for ways to improve production processes to reduce price, maintain or increase quality and provide excellent customer service. Conclusion Businesses may suffer setbacks for a while, but if it does not lead to death, business owners and managers can strive, thrive, and survive.

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How to Choose your CFO Wisely

I start by highlighting that while Accounting and Finance share a thin line, it has been argued that Finance is an element or a subset of Accounting. However, their ends are the same – provision of information and insights to enhance decision-making. C-suite execs are appointed/selected based on academic and professional qualifications, exposure, and experience as well as other underlying considerations. This article underscores one of such considerations. The c-suite position of the Chief Financial Officer (CFO) is a high-level cadre with responsibility over the finances of an entity. Other c-suite positions include Chief Executive Officer (CEO), Chief Information Officer (CIO), Chief Technical Officer (CTO), Chief Security Officer (CSO), Chief Operations Officer (COO) amongst others. A CFO may be highly professionally qualified but be overqualified for an entity, while another entity might consider a CFO professionally underqualified. The article delves into intricate character-specialty of CFOs and how to make an informed choice. The CFO albeit has oversight over the accounting functions of an entity is not the Chief Accounting Officer – this is ascribed to the CEO who has overall oversight on the operations of an entity. The responsibilities of CFOs vary largely depending on size, ownership structure, and organisational culture amongst others. In appointing a CFO, by statutory regulation, there are certain requirements for specific organisations especially public interest entities (PIEs) and significant public interest entities (SPIEs). However, generally, a CFO should hold both academic and professional qualifications. I must note that currently in Nigeria, professional qualifications by ACCA, CFA, ICAN – in alphabetical order – are highly sought after. Beyond the professional qualification, is a significantly taken-for-granted phenomenon – “specialty competence”. Broadly, there are five (5) specialties in the Accounting and Finance profession – audit and assurance, performance management, taxation, financial reporting, and financial management. These specialities find relevance in both public and private sectors as well in both local and international markets. A (potential) CFO cannot be “jack of all trade”. Each (potential) CFO by interest, exposure, experience, and training aligns with a specialty and this is the question I address. Who does a business need as their CFO? An auditor? A tax expert? A financial management expert? A reporter? A performance manager? All five specialties are most assuredly represented in all organisations, while some are outsourced. Who should lead the team since we can only have one at the helms at a time. My take is this and quite subjectively – each business should review their peculiar needs and make their choice. This does not resound like a solution, but please follow on. Contingency theory helps us to understand that there is no best approach to a situation especially in different contexts, hence my escapist approach to the question of who should lead. Quickly, I will highlight few significant strengths and weaknesses of each specialty and I hope this should help businesses understand the behaviours of their CFOs too. 1. An auditor is prepped as a compliance officer and is wired for due diligence. As a CFO, they will “over scrutinise” communications that pass through their office. It is likely that the CEO and other management staff will have “issues” with them, and the major complaint will be – “don’t you trust me?”. Funnily, when an auditor hears this, it is a red flag to dig deeper. They tend to be quieter, “very” observant, a good listener and slow to act. They are critics, hence quickly identify errors. Businesses that want to develop their organisational structure will find them helpful in navigating thorny strategic issues. Additionally, given their grasp of regulations, they can ensure compliance, which is significant for businesses to thrive. 2. A tax expert is focused on maximising value for their organisation with respect to taxes. They have very good manoeuvring skills, and they use their skill to help in detecting loopholes in tax legislations and taking advantage of such loopholes. They are skilled planners, very calculative and quickly form relationships. Tax experts have the capacity to be manipulative and argumentative as well. A tax-inclined CFO will help businesses with planning, budgeting, forecasting and value. They understand the importance of value and help significantly in that regard. 3. Performance managers are tactical and strategic; always working towards value maximisation, optimisation, and realisation. They are more interested in results than process. Due to their high computational skills, ability for sensitivity analysis and tact, they are more vulnerable to quantitative results. Hence such a person as a CFO may not ordinarily consider qualitative factors that influence performance. They stick heavily to the numbers and always say that “numbers don’t lie”. A performance-based CFO is more suitable for established businesses. In a new business, they can drive performance but there is evidence that their driving force may be aggressive and inconsiderate. 4. Reporters are very versed, because of the awareness of all transactions and events in an organisation. They are not ordinarily involved in the approval process, but they are the dumping ground for all financial transactions and events. They also understand the implications of a transaction on the outlook of an organisation. It is believed that when an entity winds up, it is likely that a reporter would have resigned earlier. They know about the organisation and understand its financial position. Financial reporters are diligent and have eyes for error detection. They talk less and are confidential. The presentational skills of reporters are top-notch, and they also can be manipulative by presenting outcomes of similar transactions and events differently to different users. Reporters can help businesses to understand the implications of a transaction or event even before they occur. This helps planning and decision making.   5. Finally, but not the least are financial managers in charge of treasury. Their goal is how to raise funds and maximise value. As a CFO, they are more likely to be preoccupied with portfolio (investment) drives. Ordinarily, they are stingy and want justification for each spend. They are highly motivated and are not emotional spenders. A downside about

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Cyber-attacks: What, Why & How

In Q4 of 2021, there were an astonishing 1,353 cyber-attacks weekly in Africa, in comparison to an average of 925 cyber-attacks in the world.  Cyber-attack is a form of digital assault using computers, networks, or devices with access to the internet; directed towards other computers, networks, or devices with access to the internet which threatens public safety, national security, and economic security. Cybercriminals usually compromise systems and steal financial, property, and/or intellectual property such as business or customer financial details, sensitive personal identifying information, customer/employee emails, databases, and so on.  As internet penetration is increasing, and more and more people are interconnected through the digital world, there is an increase in cyber-attacks. Examples of typical cyber-attacks are email compromise, identity theft, ransomware, phishing, online predators, and espionage. These attacks damage computer hardware and network, give unauthorized access to data, and in some cases physically harm people.  In order to protect your business or yourself, it is important to have a comprehensive security plan and infrastructure that offers protection. Out of 182 countries, Nigeria ranks 47th on the 2020 Global Cybersecurity Index with about 84.76% of measures taken to ensure protection. Mauritius, the highest-ranked in Africa and the 7th ranked in the world, has taken about 96.89% of measures to ensure protection.  So what exactly can be done to protect yourself? Use strong passwords that are reviewed and changed at least quarterly  Update your software frequently and/or have automatic updates activated  Turn on and use multi-factor authentication Apply firewalls and IPS Have segmented networks Be cautious before you click on links or download attachments  Most importantly educate yourself, your family, colleagues about cybersecurity Most cyberattacks come from email compromise, if the email sounds too good to be true, it probably is, therefore do not click nor download, just hit delete.  Contact Versa Research your trusted data, research & consulting partner! References https://techpoint.africa/newsletter/techpoint-digest-236/?utm_source=mailster&utm_medium=email&utm_term&utm_content&utm_campaign=techpoint Africa digest https://preview.mailerlite.com/t8e9n4e2t5/1862154675466279540/l5f7/ https://www.fbi.gov/investigate/cyber https://www.ibm.com/topics/cyber-attack https://www.nibusinessinfo.co.uk/content/reasons-behind-cyber-attacks https://guardian.ng/technology/nigeria-lags-behind-mauritius-ghana-others-in-cybersecurity-ranking/

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Customer Service: A Customer Retention Strategy

This is a little insight of how customer service has taken the front burner as a customer retention strategy post the Covid pandemic. Let us face it, COVID-19 really opened our eyes to a lot of things and has indeed changed the modus operandi for businesses. 2020 saw a gravitational shift from focusing on just the sale of the product to attending to the convenience of the customer. Two years later there is still an urgent need to use customer service as a pivot for your business and it will be so. We have witnessed the shift of businesses from the usual brick and mortar to the online space such that the cost-benefit of running your business online, so far, has made the cost of having a physical presence pale in comparison. Needless to say that managing your brick and mortar has taken on a new dimension. So have you thought about how applying great customer service can help retain your customers? Your goal should be to ensure that the entire experience of the customer while interacting with your business should be positive, commendable, and memorable. This is achievable if you have a customer-centered mindset which entails creating loyalty magnets at each interaction of the customer within your business. A Simple Customer Retention Strategy Most small businesses erroneously think that it is only when they do the “big things” that customers appreciate them. NO. It is more of a case of moving from doing the “little things right the first time to doing the great things. Whether you agree or not, the size of your business has a way of conditioning the psyche of the customers in their expectations of what your service delivery should be. Aim at getting those mundane things right. Attain the minimum expectations and you will see that it really doesn’t cost much to turn a customer into your brand advocate. The word “PLEASE” as simple as it sounds, possesses the spark to improve your customer retention. Let’s see how….. P – Pay attention to what your customers’ needs are. It could also be what they are telling you, some customers may not even speak at all but will simply act. L – Listen to your customers, your suppliers, your staff, your competitor and your business environment generally. This will help you stay updated and even help you anticipate areas of improvement before your customers tell you. E – Execute on the feedback you have received. If you ask customers for feedback and you don’t do anything with it, what’s the use then? A – Ask questions in areas where you may not be knowledgeable. As business owner, you also need training. Make it a way of life, you are setting a standard S – Serve! This is critical to the success of your business. Also bear in mind that your staff are watching. Let them see you serve not just hear you say it. E – Exceed your customers expectations.  Because customers have a minimum expectation, consistently exceeding that expectation is the magnet to increasing the number of customers who will remain with your business. The Bottom Line Using customer service as a customer retention strategy can be done in varying degrees. However, it is noteworthy that whatever scale you decide to undertake, the focus should be on ensuring that it is maximized for ROI.

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Web 3.0: More power to the people!

Web 3.0. Metaverse. Artificial Intelligence. Machine Learning. NFTs. Cryptocurrency. Internet of Things… – you have to have heard about one of these buzz words, let us break it down In 1989, the internet came into existence. It was called Web 1.0 or the Static Web and provided access to information with absolutely no interaction but importantly it was a decentralized platform where development, ownership, and operation were not controlled by a few. Web 1.0 was the dominant and more reliable form of the internet till 2005 when Web 2.0 was introduced.  Web 2.0 is the internet as we know it today.  It is also known as the social web, it is very interactive and led to the formation of big tech companies that created interactive web platforms such as Twitter, Facebook, Google, iTunes, YouTube, and so on. On Web 2.0, platforms and apps are developed, owned, and operated by big tech companies. These big tech companies created centralized platforms whilst making it easier to connect, browse and transact.  In Web 2.0, these platforms and apps collect data from users and the owners of the apps use the data for what they please. The biggest challenges are that they use users’ data for their financial gain and that they decide what should be on the internet and when it should be on the internet.  But Web 3.0 is shifting things, by giving power back to the people (decentralized like Web 1.0) whilst creating open-sourced interactive web platforms (Web 2.0). Web 3.0 is the creation, operation, and governance of the internet by users, creators, and practically anything online. Ownership is defined by digital tokens and cryptocurrency; the more you have over a network, the more control you have over its operations and governance. This leads to the number one criticism of Web 3.0 whereby early adopters and venture capitalists are more likely to own more tokens and cryptos leading to more ownership of the web.  Web 3.0 is focused on decentralization and ownership. Web 3.0 processes information and data in a human way and interprets the information using artificial intelligence mainly machine learning. This data is generated from various sources; this is where the internet of things comes in. Any device that can be connected to the internet will generate data that you can choose to sell so it can be used to offer more personalized solutions to you.  This is bad for big tech companies as the selling of our data to advertisers is where their revenue comes from. As such many of them are moving to the Metaverse – a digital world where digital assets can be purchased and sold by anyone. These big tech companies are creating digital assets that can be sold.   Although Web 3.0 has not been fully nor officially launched, there are a few early-stage platforms that have already started rolling out Web 3.0 such as Siri and Alexa, which are platforms that collect data from ios or android devices connected to the internet whilst using artificial intelligence to decode the information and understand it in a human way.    Contact Versa Research your trusted data, research & consulting partner! https://seekingalpha.com/amp/article/4480677-what-is-web3?source=acquisition_campaign_google_premium&utm_source=google&utm_medium=cpc&utm_campaign=14926960698&utm_term=128319903825^dsa-1455561509464^^555659366580^^^g&external=true&gclid=Cj0KCQiA95aRBhCsARIsAC2xvfx-IlWBWYeMtKmlyWnCA25LMQSiOn-5j7avDJSiap80Q64P2qLwuWAaAstWEALw_wcB https://www.investopedia.com/web-20-web-30-5208698

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Why You need a Functional Website

The vision of every business is to achieve its set goals, meet the demands of clients and create solutions peculiar to life challenges. Irrespective of the drive of a business, accomplishing more results with less resources is usually an approach most use in achieving these visions. Thanks to the impact of digitization in day-to-day activities, every business ranging from small-sized to large-sized get a chance to be optimized as there are many opportunities to get on with. Ecommerce enables businesses to trade goods and services over the internet in the various levels of business-to-business, business-to-consumer and consumer-to-consumer relationships. Why Online Visibility is Important? Is there a need to put your business online? Of course. Among many reasons, looking for the right audience is a major factor in running a business. Generally, different audiences exist, hence, the need for wider reach to find a niche in the market. Businesses put themselves up online majorly through websites, social media platforms, emailing strategies and mobile apps techniques. As much as it is important to set up a website for your business, it is imperative that you ensure the website is functional and responsive. Facts about online visibility and reputation management: 98% of the audience expect to see visual structures that are appealing. Understand that your audience/viewers have needs for which they seek solutions and would not appreciate unresponsiveness when in search of solution. Gain is the bottom line of businesses. This can be in the form of financial profit and other business support. Competition exists in business. Your business may not be solid, it doesn’t stop the presence of competitors in the market. Residing on the few facts expressed above, a functional business website can go a long way in helping your business succeed as there are many things it can do. On the business side, the cost of operating and managing a business website is minimal compared to setting up physical strategies of reaching target audience and engaging market interaction. Less operational cost with effective results generates more revenue. Why Social Media Presence is Not Enough In a bid to get your business running, creating Ads, posting on social media platforms is not sufficient to maximizing the benefits of digitization in business. These can give publicity to your business but having a website that is effective is more beneficial as it creates an online presence for your business. Having a website for your business gives your business the feel of trustworthiness. The integrity of a business is core in attributing organizational values both from the business team and clients. When a client gets introduced to your business and finds a center to get more resources on what your business entails, it creates a sense of credibility to what you do, hence, confidence to engage in your business. Furthermore, if the website is responsive, customer services available and call-to-action prompt, the impression alone gives the viewer a level of satisfaction. How a Functional Website Provides Significance Having a website that showcases your business and gives you the opportunity to reach a wider customer base. Offline operations may not offer these opportunities as there are mobility limitations and other factors. A functional website helps you identify loopholes, monitor customer interaction, track customer patronage, fetch reviews and give insights to the business. These activities help you in making business decisions in finances, publicity, operations, customer relationship, potential areas in need of your business solutions. Lastly, in a business, market augmentation is such that an expansion in target audience or product line occurs. This is very much achievable when your business is online and has a website that is functional. Effectiveness of a business component has a way of rubbing on the choices of the market audience. What is a functional business website like? A business website that is functional has good content. It is compatible across devices. The creative visual designs attract viewers and make them stay longer on the site. It displays only relevant information. The website is easy to navigate.      

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How to Structure African Startups to Go Global

Africa has recently made significant progress toward realizing its ambition of being a launching pad for most startup businesses. However, Africa’s track record of maintaining and ramping up startups is a different tale. Only few African startups with global impact exist on the continent, the most stemming from the tech industry. In comparison, the Western and Eastern part of the world have countless businesses with global reach which the African continent is a major customer to. Taking an example from the tech space, China boasts of more than 100 pillar startups, the United States can boast twice the count of China. In contrast, African startups with recognition and financial power are few and there are at most a quarter of other continent’s counts. According to Statista (2020), African startups are emerging massively with Nigeria predicted to have over 3,300 startups as at 2020, the largest number in Africa. Following that, in the same year, South Africa and Kenya recorded roughly 660 and 600 startups, respectively. It is evident the African continent is charging up for a universal value creation. Moving startups beyond Africa to meet customers on a global scale requires startup entrepreneurs to put in conscious efforts that will achieve this goal. This is necessary due to existing factors such as migration of native Africans to other continents, needs common to many irrespective of race and color and the need to put Africa at the top of productive continents. The methods to structure African startups for global takeover can be categorized in channels, value and investment strategies. Channels (Mediums) Strategy Utilize tech solutions: There is barely an impact desired lately that does not introduce the role of digitalization. Embarking on a global quest without a remote strategy will result in slow impact and oftentimes costly processes but the involvement of tech in startup activities make operations more efficient and effective from the point of showcasing its solutions to delivery of value to customers. Value Strategy Create a global product: People buy products that satisfy their needs. African startups should envisage offering solutions that go beyond its immediate region as there are demands for solutions across the globe. Bear in mind that target markets are widely spread across the globe. Potential customers could be anywhere be it the least region to the greatest region. Giving value to regions with needs peculiar to proposed value: Unique to some regions are lifestyles, fashion, beliefs people are comfortable with. Therefore, A startup that seeks to expand its customer base can create value that will meet the particular region according to their lifestyle and culture. Seek for areas in need of what a startup has to offer. Removing the “African” clause: On a global level, there is room for cultural diversity and universality. The “African” clause here is holding up to the ideology that a business must stem, build its team, grow and die in Africa alone without spreading it to the world. This way, the African potential resides only within the continent but an expansion to other continents put up African startups for a show. It is important that African startups accommodate international collaboration and publicity. Relationship Strategy Seek international support: Business networking is a powerful tool that helps spread businesses. This technique is tested and proven reliable even in the conventional pattern of running businesses. Power of “Word of Mouth” spreads businesses faster. Likewise, establishing relationships with international and united bodies gives the opportunity to sell business solutions to immediate networks who in turn share to their own network thereby, bringing more customers. Investment (Financing) Strategy Level up through the series of startup funding: In the phases of startup thriving, there are series of its funding and investment sourcing staging from Series A to Series B to Series C. Each stage has requirements peculiar to investors/sponsors, startups excelling through each process demands improved efforts as this strategy is usually competitive. Only a small percentage of African entrepreneurs make it past the Series B investment level which takes a toll on revenue generated through capital investors. African startups can sign up for global investment slots, grants and sponsorship that will expose them to a wider customer base every time they pitch solutions.

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