‘SMEs struggle to attract right talents due to poor structure’
Funke Susan Medun, director at Leapworld Limited, a firm helping micro, small and medium enterprises (MSMEs) access funding and write good bankable business plans, says MSMEs struggle to attract and retain the right talents owing to their poor structures.
“Attracting and retaining talent for MSMEs is a major problem confronting them. Because of the way MSMEs are structured, it is challenging to attract and retain good talents needed to grow the business. At the initial stage of the business, it might be challenging to afford highly skilled staff and retain talents that believe in you and can endure the survival phase looking at the big picture,” she says.
“From the internal processes, a lot of small businesses do not have the system and structure in place to access needed finance to grow their businesses, and this is a huge barrier,” she explains.
Medun says that financial institutions always want a guarantee that small businesses have the capacity to repay back loans, stressing that small business owners need to keep good books.
“You can’t provide what you don’t have. MSMEs need to start keeping proper records and there is a need to also separate the expenses of the owners from the business so that the business can have a life of its own,” she explains.
She adds that information is not available to a lot of MSMEs.
“Lagos state is doing great with the Lagos State Employment Trust Fund (LSETF), and I think other states should emulate them. You would be shocked to know that a lot of businesses that operate in Lagos do not know about LSETF. Some are aware but do not know the criteria needed to access it. Some believe the fund is only meant for businesses whose operators are indigenes of Lagos State.
“Some also believe that it is a national cake so they do not have to meet the criteria to access the fund. There are lots of low-interest funds for MSMEs, even grants, but all these barriers have prevented small and medium enterprises from accessing available funds. MSMEs should constantly seek strategic information to leverage for growth.”
She points out that most start-ups fail to build capacity in the industry in which they operate, which has increased their failure rates.
“You need the right skills to scale up your business and if it is lacking, the growth of the business would be limited. Applying the method you used for your survival stage at your growth stage will not grow the business sustainably,” she counsels.
She does not encourage start-ups to go for high interest loans. She insists that start-ups should source their funds from their family, friends and also seek grants or equity investments.
“There are a lot of grants available for MSMEs such as from the FGN World bank funded growth and employment (GEM) project, and Tony Elumelu Foundation, amongst others. If they have to take a loan, I think a low single-digit interest rate is ideal for them,” she discloses.
On how Nigeria can grow a large pool of entrepreneurs, she says the country needs to overhaul its curricula.
“We need to introduce entrepreneurship to schools and overhaul our curriculum. Entrepreneurship should not be taught or seen as ‘everybody must start their own business’. If we all embrace the spirit of enterprise, whether as an employee (intrapreneurship) or employer we would all help businesses to grow and the economy at large.
“Intending entrepreneurs should seek knowledge and build capacity. Do not rush to start your own business; you can learn first by working for others, serve then learn to lead. I believe there is a lot to learn during apprenticeship,” she says.
“It’s good that the government is making efforts at improving the ease of doing business in Nigeria, putting in place funding interventions and the Made-in-Nigeria initiative is great, but it can do more. We need not just have lots of MSMEs but we need them to cumulatively contribute a good percentage to our GDP as in other emerging economies in the world.”
She says market linkage and access remains one of the biggest challenges confronting most Nigerian businesses.
“Most small businesses complain about sales. The small businesses have fantastic products but do not have access to the right market to sell or export their products. MSMEs can leverage several low- cost sales channels, starting with the social media platforms, e-commerce and the like.”
She further says that access to finance is still a major issue limiting MSMEs growth in the country, adding that huge infrastructural gaps are also negatively impacting business.
“Poor power supply has continued to increase production cost for businesses. Also, government bureaucracy for MSMEs that need regulatory approvals and unfair competition with cheap low quality imports are key issues,” she says.
“Multiplicity of taxes and levies is another major issue confronting small enterprises in Nigeria. There is so much in tax that needs to be addressed. Maybe there should be a graduated tax system or holiday for small businesses. These challenges have made entrepreneurship a daunting task in Nigeria and the government must start addressing them.”
ODINAKA ANUDU