Nigeria’s economy is propped up by 42 million Micro, Small and Medium Enterprises (MSMEs). In many cases, these are solo entrepreneurs, with little formality, no registration, no employees and no significant equity cushion. These businesses underpin around 60 million jobs, that are directly threatened by the COVID-19 crisis and the coming economic recession.
Small businesses, their founders and employees are often the most vulnerable in times like these. Many will face cost pressures, liquidity issues, supply chain challenges, bankruptcies, closures and job losses.
The good news is that small businesses are agile enough to respond to changes in demand faster; to identify opportunities and test ideas quickly. Small business owners also have enough direct control in their businesses. So they can make the bold decisions for survival, including shuttering existing products and services, launching new channels overnight; or even pivoting their businesses where possible.
Companies like yours will be the lifeblood of the retail and restaurant sector in our new “lower-touch” world. Those businesses are being forced to reconsider their distribution channels.
You are likely to benefit from greater delivery volumes in general. Especially in an environment that has relied so heavily on brick and mortar infrastructure so far. Small businesses will need to find delivery capacity at short notice.
But how do you make sure that you capture a disproportionate share of the rise in demand?
There is currently very little differentiation in last mile delivery services or capabilities, and the customer experience is generally poor. Customers are also going to be looking for a higher level of hygiene and health consciousness. This is the time to think about how you differentiate yourself from the competition; how you engage and communicate with existing, new and potential clients. What are the reasons they should pick your company over the next one?
Favourable e-commerce trends also create an opportunity for logistics-tech companies to build platforms that help small businesses roll out delivery options quickly; particularly as the go-to last mile delivery options could face some strain.
Could you build a simple platform that aggregates and fulfils demand, or a system, in collaboration with a group of other small last mile delivery companies, that passes on unfulfilled demand?
Branded snack food producers
If you’re a local food producer, the lockdown and import/travel restrictions are likely to be favourable to you, as long as you are able to guarantee your supply chain, and can further diversify your customer base towards the larger, more stable and trusted retail stores (e.g. Shoprite, Spar, Ebeano, etc.).
Many economies are looking inwards for local production, not only for COVID-19 relief items, but also food and other day to day consumption items, where global supply chains are difficult to rely on.
Because people are spending less time at the supermarket when they do venture out, and focusing on buying more essential items, it’s important that you are front of mind when they do make a buying decision. This could be the right time to invest in building your brand and to focus your marketing messaging on creating a sense of comfort for your consumers. If you can create a word-of-mouth referral loop, that would be fantastic.
Watch your working capital though; your customers are likely to be tighter on payment terms. If you can create a direct to consumer channel and integrate it with your social media marketing and even offer bulk order discounts or create an auto-refill system, you can mitigate the risks to your liquidity against at least some of your business volumes.
Frankly, we’re entering a tough period for non-food retail in general, unless you’re producing health and personal care items, for the most part. Fashion is fickle, and for many brands, it will become harder to convince your customers to make buying decisions.
The good news is, direct to consumer fashion has done relatively well in previous recessions, as customers look for brands that speak to their shifting values: cost-consciousness, simplicity, authenticity. Because more people are engaging online, this period creates an interesting opportunity to identify your core “tribe”, make inventory that responds to their needs and build significant brand equity by executing an excellent digital marketing strategy.
In the short to medium term, export bans in several countries means critical capacity for Personal Protective Equipment (PPE) is being developed locally. PPE manufacture needs factories that can produce, finish and cut fabric, construct gowns, scrubs, face shields and surgical masks. If you can re-purpose some of your garment production capacity, this could help create incremental revenues.
A business like yours does well in a strong economy but tends to be among the first to suffer in more challenging times. It’s fair to say that your business is at little risk of becoming obsolete in Nigeria in the long-term. However, you are at direct real risk of your revenues remaining close to zero after the lockdowns are lifted, regardless of who your main customers are.
The good news is, you will benefit from a backlog of postponed events. If you can keep costs to a minimum until restrictions are completely lifted, you will see a spike in demand eventually. The stronger your corporate/High net worth individual (HNI) client base, the quicker your revenues are likely to return. Make sure you have a strategy to keep your most experienced team-members engaged with the business and well looked after. They will be critical to your ability to recover quickly as demand picks back up.
In the meantime, how can you build trust and create incremental revenue virtually? This could be the right time to launch that event planning academy you have been dreaming about. If your expertise is weddings, you could create content and virtual events that supports brides in their planning processes; and share expert tips, tricks and tools for reducing wedding budgets.
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Culled from: Medium.