Download 2016: Tough business conditions but could mean

2016:
Tough
business
conditions but could mean
countless opportunities!
31 March 2016
The government has warned it's citizens to
tighten their belts for this year 2016 will be
tough as crude oil (the nation's mono product)
prices are nose-diving on a daily basis. Hence,
another global recession is looming, as the
same signs, like that of the financial crises of
2008, is seen on the skyline of the 2016
business economy.
In this article, Victor
Nwagwu, CEO of VicVanny Ventures, attests to
the fact that there are various pointers to a
probable harsh business environment for
entrepreneurs but other pointers propose
otherwise.
Introduction
The effects of globalization are far reaching and
Nigeria’s economy is not an exception. As economic
powers of the globe thinker with economic factors as
far as the west (US) and the east (China), most
nations will feel its effects.
Today, commodity
prices, as well as crude oil prices, are nose-diving (alltime low) and nations with natural resources and
crude oil are besieged with this strain on their
economies. The present administration has informed
the citizenry of harder times this 2016 but with these
harsh economic conditions come opportunities and/or
benefits for entrepreneurs to soar high.
Harsh conditions
This growing hostile situation can be likened to global
situations in 2008 with the global financial crises
which saw slow growth in major global economies. As
most economies in major continents (Europe for
example) are inundated with recovery challenges,
from the last crises, the efforts of the American
economy recovery process, in recent times, has made
rates surge upwards; hence, investors withdraw their
monies from developing economies like Nigeria.
Nigeria, with a mono-economic product, crude oil, is
seeing its foreign reserves dwindle and its currency
depreciating against the US dollars on a daily basis.
With the decline in foreign reserves, the country will
not be able to support imports; hence, a new boost is
required to ensure economic recovery and growth.
The elections have come and gone, although some
results are being contested, the concession of the
former president to the new party has paved the way
for the so-called "change" mantra; ushering in a new
government with the challenge of providing a stable
fiscal and monetary policies for the economy in these
harsh conditions.
Meaning for SMEs
What does this mean for the entrepreneurs’ business?
With dwindling reserves and currency depreciation on
a daily basis, consumers’ purchasing powers are also
being affected as they go south. Consumers within
the SME service sectors of the economy will grapple
with conditions such as soaring prices, no income rise
as well as increasing bank rates eroding their spending
power and income. SMEs within the distributorship
sector will witness the decline in supplies as major
corporates put in place cost-cutting strategies with
decreasing resources as well as development
strategies are least prioritized. This also applies to
government contractors as the federal and state
budget are being reviewed to reflect present
economic
realities;
hence,
infrastructural
development (though planned to be financed by
borrowings) may be slowed this year.
A consequence of the foregoing state of affairs within
the SME market space includes the proliferation of
competitiveness among SMEs across all sectors for the
dwindling consumer income. Increasing costs arising
from salary increase demands by staff to see them
through these conditions as well as an increase in
resource-cost for raw materials.
…countless opportunities?
I hate to sound religious but the way we see this
recession matters; half empty, half full or filled up
with water and air. Which do you see? There exists
an astonishing amount of prospects during this
recession for SMEs that are equipped and judiciously
run.
Prospective consumers that had previously
patronized other SME players within the market that
gave in to this recession will begin to patronize and
find out about those SMEs that have persisted through
the recession; creating countless opportunities to
surviving SMEs.
However, judicious caution should be exercised when
such prospects present themselves, as a sustained and
lifetime strategic view should be explored. In this
market, consumers’ existing approval ratings are low
with high essential requirement creating these
opportunities for surviving SMEs during the recession.
SMEs that harness these opportunities with hefty
charges and mediocre services will discover their
clientele based drastically reduced as the economy
bounces back.
Conclusion
In conclusion and not being too religious,
entrepreneurs need to be optimistic and play their
sustainable strategies well; as this recession will pass.
The growth opportunities for the country to diversify
its economy and depend on the real sector as well as
other forms of revenue will surface. Nigeria has
enormous human and business capital and as we build
the required skills, the SME marketplace has enough
business owners to steer the ship through the
tempestuous but temporal weather.
Entrepreneurs, in such harsh conditions,
are advised as follows:

Get your homework right & be ready
o A good period to evaluate budget cost outlays
as well as adjust outputs and production
o Stress the budget using several situational
cases
o Do not forget the inclusion of your staff in
these cases to cope with their anticipations

Cash-flow is the key
o Controlling your cash-flow is a vital factor
o Plug the hole in your budget
o Survival also lies with strong debt management
structures

Value-adding services
o With proliferation of competitiveness means
client migration
o Only the SMEs with enhanced services will
survive

The cup may be half empty or half full literally
but it has always been full of water & air
o
o
o
o
o
SMEs have survived past recessions, yours is
not an exception
SMEs are also birth during downturns with new
ideas
There is always a positive aspect for SMEs in
the short-run
View this period with a long-term view
There is always a need to be met as the wants
of man are insatiable don’t forget!