Good records are essential for several reasons. The Company needs them to prepare Financial Statements, measure performance, management effectiveness and efficiency, and to obtain required information that aids economic decisions making
By Nwokolo Charles Ike
Micro, Small and Medium sized Enterprises (MSMEs) in Nigeria face enormous challenges that tend to suffocate business growth and development. They affect the performance and financial position of a business. These challenges can be grouped into internal and external environment or controllable and uncontrollable variables.
The uncontrollable variables
The uncontrollable variables relate to economic and business conditions, Infrastructures, Electricity/Power, Foreign Exchange fluctuations, Access to Finance and Funding, Insecurity, Government Policy, and Laws regulating the activities of business etc. These are external environment to business and Entrepreneurs or managers of Enterprises have no control over them.
The way forward is to embrace these variables, identify and have critical analysis of the situations to see how to avoid, overcome, utilize or turn the situation to advantage giving the available resources.
The Government has big role to play here to tackle the structural constraints by prioritizing the development of infrastructures to reduce cost of production of goods and services, distribution and transportation costs in the country. The Government also can exercise fiscal discipline in the allocation and utilization of resources so that the critical sectors of the economy is not starved of the needed capital.
The controllable variables
These involve Quality leadership and Staff, Capital, Bookkeeping, clearly defined Objectives & Goals, Corporate governance, nature or quality of Products and Services, and the level of demand for Products or Services etc. These are assets of the business which are within the control of managers. They can be manipulated using the resources available to develop plan to achieve the desired objectives. These measures can be taken to mitigate some of the challenges:
Setting clearly defined and realistic objectives and goals. Managers should set goals that are achievable to spur them to action and direct organizational effort towards the attainment of objectives.
Employment of best practice in the management of business, and ensuring accountability and financial discipline through the use of budget and budgetary control will help in coping with challenges
Quality Leadership
Providing right leadership is as important as financial resource. With strong leadership team, everyone will get motivated to put in the best and contribute to the success of the business.
Keeping your Overheads low
Maintain a low overhead by minimizing cost if the situation allows it and deploying resources where there is comparative advantage to derive full benefits. Ensure that Cost that do not contribute to profit or add value to project or marketing is brought to absolute minimum.
Anticipation of expenses
In a tough time you have greater need to anticipate and list your expenses. Develop a budget and monitor it to ensure efficient allocation and utilization of resources.
Setting pricing structure for products and Services.
There should be constant and regular review of pricing policy to ensure that pricing and sales volume meet revenue goal.
Access to finance for growth and expansion
Analyze your financial inflows and outflows to determine the net effect and ascertain your financial needs before going out to seek funding. Your financial adviser may come handy to do proper evaluations and ensure viability of projects.
Keeping of accurate Records
Good records are essential for several reasons. The Company needs them to prepare Financial Statements, measure performance, management effectiveness and efficiency, and to obtain required information that aids economic decisions making.
Insurance
Investment in health insurance for Owners, and the key assets of the business insured against adversity will be a wise decision. This will mitigate risk of loss in the event of uncertainty.
Providing emergency fund
It is vital to plan for emergency fund which serve as buffer during period of uncertainty.
Corporate Governance
Employment of best practice in the management of business, and ensuring accountability and financial discipline through the use of budget and budgetary control will help in coping with challenges.
•Nwokolo Charles is a Consultant. He can be reached at cinwokolo@gmail.com, 08030599774.





































