{"id":45604,"date":"2023-06-13T16:40:37","date_gmt":"2023-06-13T16:40:37","guid":{"rendered":"https:\/\/www.msmehub.org\/?p=45604"},"modified":"2023-06-13T18:39:14","modified_gmt":"2023-06-13T18:39:14","slug":"6-post-subsidy-strategies-for-reducing-costs","status":"publish","type":"post","link":"https:\/\/msmehub.org\/staging\/6671\/6-post-subsidy-strategies-for-reducing-costs\/","title":{"rendered":"6 Post-Subsidy Strategies for Reducing Costs"},"content":{"rendered":"\n

Nigeria has enjoyed fuel subsidies for a long time, as early as the 1970s<\/a>. However, its removal was announced on 29th May, 2023, and implemented afterwards.<\/p>\n\n\n\n

Subsidy removal on Premium Motor Spirit (PMS) is often associated with increased inflationary pressure. This means that every economic agent, from households to businesses will be impacted by its removal. <\/p>\n\n\n\n

As a small business owner, you’ll typically have to deal with higher costs of procurement, energy, logistics and raw materials. Since higher cost of doing business is a threat to profitability, and could increase business mortality rate if not well-managed, here are six (6) post-subsidy strategies for reducing costs: <\/p>\n\n\n\n

1.<\/strong> Inventory optimisation:<\/strong><\/span> Produce and\/or procure <\/strong>just the right amount of inventory required to meet demand for quick turnover and also to avoid wastage, especially for perishable items. <\/p>\n\n\n\n

2.<\/strong> Stockpiling and batch deliveries<\/strong>:<\/span> Encourage customers to consider stockpiling when purchasing non-perishable items to reduce delivery costs. For example, a customer might be unwilling to pay N2,000 delivery fees on an item that costs N1,500. But, if they purchase another item in two weeks, you can send both items together at the same delivery price. <\/p>\n\n\n\n

Also, introduce batch deliveries per location or days so that customers can share the cost of deliveries, thus cheaper deliveries. Customers who want instant deliveries will have to pay the premium price. <\/p>\n\n\n\n

3. Customer retention:<\/span><\/strong> This is critical during inflationary periods because acquiring new customers becomes harder. Maintain cordial relationships with existing customers by offering exceptional customer service<\/a> and implementing periodic loyalty programmes to encourage retention.<\/p>\n\n\n\n

4. Market research:<\/span><\/strong> conduct market research to determine the right pricing<\/a> that’ll keep your business profitable while balancing customer affordability. <\/p>\n\n\n\n

5. Exploring shared resources with other businesses:<\/span><\/strong> Identify sector-specific entrepreneurs within your network and collaborate to purchase raw materials in bulk to reduce operational and logistics costs. <\/p>\n\n\n\n

6.<\/strong> Exploring intervention programmes<\/strong>:<\/span> Occasionally, intervention programmes dedicated to supporting or providing relief to small businesses are launched by the government, non-governmental organisations or the private sector. These programmes might be in form of grants, loans, or access to market opportunities. Get first-hand information about these programmes by joining entrepreneurship networks, industry-specific sector groups, accessing entrepreneurship resources on platforms like MSME Hub<\/a> and keeping up-to-date with business news. <\/p>\n","protected":false},"excerpt":{"rendered":"

Nigeria has enjoyed fuel subsidies for a long time, as early as the 1970s. However, its removal was announced on 29th May, 2023, and implemented afterwards. Subsidy removal on Premium Motor Spirit (PMS) is often associated with increased inflationary pressure. This means that every economic agent, from households to businesses will be impacted by its removal. As a small business owner, you’ll typically have to deal with higher costs of procurement, energy, logistics and raw materials. Since higher cost of doing business is a threat to profitability, and could increase business mortality rate if not well-managed, here are six (6) post-subsidy strategies for reducing costs: 1. Inventory optimisation: Produce and\/or procure just the right amount of inventory required to meet demand for quick turnover and also to avoid wastage, especially for perishable items. 2. Stockpiling and batch deliveries: Encourage customers to consider stockpiling when purchasing non-perishable items to reduce delivery costs. For example, a customer might be unwilling to pay N2,000 delivery fees on an item that costs N1,500. But, if they purchase another item in two weeks, you can send both items together at the same delivery price. Also, introduce batch deliveries per location or days so that customers can share the cost of deliveries, thus cheaper deliveries. Customers who want instant deliveries will have to pay the premium price. 3. Customer retention: This is critical during inflationary periods because acquiring new customers becomes harder. Maintain cordial relationships with existing customers by offering exceptional customer service and implementing periodic loyalty programmes to encourage retention. 4. Market research: conduct market research to determine the right pricing that’ll keep your business profitable while balancing customer affordability. 5. Exploring shared resources with other businesses: Identify sector-specific entrepreneurs within your network and collaborate to purchase raw materials in bulk to reduce operational and logistics costs. 6. Exploring intervention programmes: Occasionally, intervention programmes dedicated to supporting or providing relief to small businesses are launched by the government, non-governmental organisations or the private sector. These programmes might be in form of grants, loans, or access to market opportunities. Get first-hand information about these programmes by joining entrepreneurship networks, industry-specific sector groups, accessing entrepreneurship resources on platforms like MSME Hub and keeping up-to-date with business news.<\/p>\n","protected":false},"author":1333,"featured_media":45630,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center 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