Recession: Expert urges entrepreneurs to consider backward, forward integration

As recession continues to hit Nigerian businesses, especially small and medium enterprises (SMES), an expert has urged entrepreneurs to think of backward and forward integration to improve their bottom-line.

Speaking at the annual general meeting of Paint Manufacturers Association of Nigeria, Olumide Emmanuel, CEO of Common Sense Limited, said businesses should begin to think of doing multiple things to grow margins.

“Look at what I mean by backward integration.  Assuming there is a material or input which you pay a lot for every month or day. All you need to do now is to start producing that to save the huge amount you pay others who do that for you,” Emmanuel, who is a motivational speaker and managing director of nine businesses, said.

“You can also do forward integration. If you are a paint manufacturer and you often hire painters when you have jobs, why don’t you start a painting firm? As an airline, you can think of owning a car hiring business and even hotels, instead of directing your customers to somewhere else,” he advised.

He said now was the time for entrepreneurs to do everything they could to get new customers to patronise their existing products, adding that start-ups needed to bring out innovative products for old customers.

“The third point is that, no matter how the economy is, do your job. There are eight jobs you need to do. The first one is that you need to have a clearly defined goal, while the second point is that you must find the best people and forge them into a team,” he said.

As the fourth point, Emmanuel said that it was the job of entrepreneurs to strengthen their companies on the inside, meaning they must look at the system, beginning with the number of hours the staff spent in the office.

He further urged entrepreneurs to expand their businesses on the outside, while striving to improve their bottom-line.

“Why must everybody remain in Lagos competing with big players? Why not look for a state where you will take a large market share?” he asked.

The next point is that you must invest in research and development. Sit down; look at new technologies as well as innovations. Have a think-thank.  Lastly, you need to be a corporate citizen,” he stated.

ODINAKA ANUDU