‘Our target is to have a thousand businesses worth over a million dollars in five years’
In this interview with BusinessDay, Mba Aja, the founder of consulting firm, Resourcity outlines the company’s goals and the role it can play as Nigeria grapples with its worst economic crisis in 25 years.
Can you give us a brief overview of Resourcity?
Resourcity.ng is an advisory and consulting firm.
The company was launched in September 2016 and what we basically do is help Small and Medium-scale Enterprises (SMEs) run their businesses more effectively, in a way it benefits the owners of the businesses and the Nigerian economy at large.
We help SMEs take care of their non-core function, affording them time to focus on their core.
We realized that most SMEs out there are struggling because they do not understand what it means to have the right structure.
However, someone like me who has had over 10 years banking experience knows how organisations should work and what a proper structure looks like. A structure is like a car that anybody can drive, the idea of every business is to create a structure that doesn’t need the owner to be there before it can function appropriately.
Most of the issues most SMEs have are that they do not have any structure. For example, somebody goes into bakery, we know that he knows how to bake a cake but does he know anything about marketing, branding, social media, the legal requirement in stating up a business. The answer is NO.
What happens? It is either the person collaborates with someone else that has those skills or he gets a company to handle that and that was how we came up with Resourcity.
We found that a lot of SMEs were getting things muddled up. For instance, I normally ask SMEs “are you making money, have you been making money” some of them say yes and no. I asked them again “how do you know”. They replied saying “because money enters our pocket”. I told them this was no way to ascertain if you are making profit. The only way to know is if you have been keeping an account for the last five years. Sadly, some do not even understand this.
Most SMEs I have come in contact with do not have proper financial requirement records and if you do not have financial records nobody can actually invest in your organization, so when SMEs complain of lack of access to capital, little do they know that there are their own problems in most cases. I have seen SMEs who have signed contracts without even reading those contracts and they run into a lot of problems because they do not have a lot of legal backgrounds. Although, I am not expecting every SME to have that kind of background, but with our wide range of expertise at Resourcity we can help.
I personally advise companies on what to do to build a sustainable and profitable business, so I act like a business adviser.
What are the cost implications of your services?
Since we are dealing with Micro, Small and Medium-scale enterprises, our costs are very affordable. You can get a full package for as low as N50, 000 monthly.
A full package means you are privy to our accounting, tax, and advisory services for as low as N50, 000 monthly. So you have the services of a chartered accountant, a professional consultant, and tax consultant for as low as N50, 000 naira monthly.
Typically, getting big wig professionals like these on you own could cost you no less than N300, 000 a month. This means you are saving about N250, 000 using our standard package.
What role can Resourcity play amid Nigeria’s economic recession?
The best time to start a business is amid recession and history backs this postulation.
The first role we can play amid recession is the traditional role of helping companies cut cost.
Resourcity has taken advantage of how companies are taking hits on their profit margins. These companies are now looking for cheaper ways of doing business.
Why will a company have 15 staff in the accounting department when you can hand the responsibility over to another company and it is affordable?
Secondly, as companies downsize their staff strength, there will be more people who would want to set up a business to cushion their job loss, but many of them do not know how to do this, we can help here.
Third on our list of roles is that, by helping people set up a business, we are helping to create jobs for Nigerians. The more successful we are in helping businesses stay profitable, the more chances that they will employ people.
So we are actually helping to solve unemployment; I recall unemployment rate was 13.3 percent in the second quarter of 2016, according to the National Bureau of Statistics (NBS).
Resourcity is barely 4 months old, how has the journey been so far?
It has been good. Even before we launched officially, we had gotten about two jobs in two companies.
I recall one client who came to us to help restructure a N15 million facility. I said yes, I can do that but asked what they wanted to use the money for and the company said that they wanted to hire staff and that they have a new project.
After I rendered some advisory services, they saw that they did not need that money and that they even have enough money to complete the project they intended to finance.
Today, they are one of our main customers and I constantly strategise with them. If I did not convince them that time, they would have borrowed that money and they would later be in unnecessary debt.
A lot of businesses are making a lot of losses because they are not knowledgeable.
Take us for instance; we are a small company not because we can’t afford what the big companies can, but because we have to start small.
It is best to start a business at the smallest level and as you grow your client base; your business grows along.
The long term strategy of Resourcity is to get a business when it is young, grow that business, and handle all their affairs and packaging, then get the company ready for funding.
Most of the businesses are not investable because they don’t have any structure.
We want to offer a complete package that solves all problems concerning SMEs and opens up access to capital.
Hopefully, next year we hope to launch our own ERP (enterprise resource planning) software where a consumer gets a bouquet of product apps and it takes care of your accounting, HR etc. It would be very affordable and we are working on that.
SMEs in other economies don’t have the type of issues that SMEs face in Nigeria. Over there, they have credibility agencies and if they want to secure a loan, the bank can look at the credit history and they will access it.
There are good prospects in SMEs, but we need to channel more funds in their direction.
From my experience, banks also have a problem. The banks don’t have the expertise required to channel funds to the genuine SMEs. In other developed countries, banks have specialized departments for entertainment, the stock market, oil & gas, technology etc.
But in Nigeria, there aren’t so many specialized departments. Some bankers don’t even understand the SME market well enough. Most of the loans are given to the wrong people while others are given based on people they know.
The government has to make sure that the small business get required funding to survive but you can’t fund them if you have not educated them and structured them properly.
What is your current client base and what target have you set to grow it?
We have about five clients for now. We are hoping that by the end of next year we should have grown our client base to five hundred. Our target is to have a thousand businesses worth over a million dollars in five years. We are hoping that when our mobile software comes on board, it could boost our client base.
Our move to develop a mobile app is because we found that there are so many SMEs scattered around and outside the Lagos.
You will not be able to manually visit all these companies and we are convinced technology could help us.
The best way to get this scale is when you have good technology. Once the application comes out, you can sit down at home and subscribe for our service by simply downloading our application.
The way our application works, is that you can access your whole business on your smart phone.
Has the exchange rate volatility affected you?
I will say yes and no. Yes in the sense that some of the applications that we are trying to use are foreign applications and that is one of the reasons why we want to develop our own.
This means that we have to be paying in dollars that is the reason why we want to develop our own services. However, to the extent that we don’t import anything we are relatively unscathed.
What role do you think government can play in engendering the growth of SMEs?
Government needs to do so much more, especially in terms of improving the ease of doing business. It takes months to register a company.
Companies should be able to register their business online. Till government get institutions like the Corporate Affairs Commission (CAC), privatized, there may be no significant change.
What is the CAC doing? Why should we have manual registration? Their portal is not working; they are not willing to spend money on technology. If registering your company is so difficult, what about paying your tax, it is so difficult to get your TIN number.
Why can’t we have online tax regulations? Some of the things that we are trying to do is that our accounting software would be able to calculate your tax and meet it automatically at the end of the month. Using our own tax laws to do what we do.
Government has a lot to do in making sure that we business environment enables businesses thrive.
For example, imagine if data costs were ridiculously low and affordable. We can have far better service this way. A lot of businesses will spring up just because they now have access to the internet. These are the areas that the government has to look into; registrations of companies, paying your tax etc.
The government has to find a way to tie all of these things together from your bank account to your company’s registration, your tax number and social security number to ease tax payment. With this more people would also have better access to loans.
It is all about setting up the right environment.
Government cannot say that they want to improve the non-oil sector when all their policies are against SMEs. Government should open business hubs and give them free internet facilities, so businesses can be productive and creative. Government should provide institutions that impart entrepreneurial skills, and then introduce entrepreneurial studies in schools. Let it be part of our curriculum, because the lapses in the education system is part of the challenges the country faces, yet nothing has been done to redress it. Education should be targeted at skills development. Right now, there is a dearth of creativity.
What do you make of Nigeria’s economic recession and what do you think is a viable way out?
This recession is a blessing and we should be rejoicing. The recession is an opportunity. People will be forced to think. People will come with more creative ways of doing things, companies will now start thinking, and government will rigorously pursue revenue diversification.
To get out of recession, I encourage people to export more to boost dollar inflow sine the crux of the recession lies in the heart of dollar shortages due to the collapse in Nigeria’s oil production.
Once people can buy more of the naira, we will not have a high demand of dollar.
Apart from looking to oil to earn us foreign exchange, we can look at other industries like entertainment, sport, IT, technology, so the recession is the best thing that happened to Nigeria, so that people can look inward.
A recession is a good time to reflect and re-strategise. I can assure you that the recession will last for a little period of time if we do the right things. We should try to produce local goods and stop importing from other countries. There should be some sort of import substitution. The local manufacturer should step up his game to meet international standards and government must be more committed to improving the ease of doing business.