By Timi Olubiyi
The number of small businesses in the formal and informal sectors of the Nigerian economy continues to increase due to the vital role that small businesses play as a driving force of any economy and the pillar of major developed economies worldwide. Despite Nigeria’s reliance on oil and revenues derived from it, the country’s economy is primarily supported by small businesses, including nano, kiosk, micro, and small businesses in particular.
A visible reference within this space includes the vulcanizers, corner shop owners, single retail marketers, repairers, painters, business centre operators, restaurants, market women, and men in the various open markets, among others. And the formal operations such as law firms, accounting firms, consulting, fintech, and real estate companies, and so on in the country.
The
small business economic activities in Nigeria play an unrecognized but
important role all across the country and can equally contribute largely to the
growth of the non-oil sector, employment generation, and the creation of more
sustainable entrepreneurship if well harnessed. For instance, the popular
computer village in Ikeja, Aba Ariaria Market in Abia State, Kano Kurmi Market
in Kano State, and Onitsha market in Anambra State all consist of clusters of
mostly nano, micro, and small businesses with huge economic engagements,
however without much involvement by the government.
As it stands and relying on the Nigeria Bureau of Statistics (NBC) report shows that the total number of enterprises in Nigeria was estimated at 41.5 million, spread out across the 36 states in the country. The breakdown further shows that microenterprises constitute a high 99.8% (41.4 million) of total SMEs. The country enjoys a high presence of small businesses and this form of business predominates any other form of business in the country. Why is that? The simple reason that comes to mind is largely due to the many advantages of being self-employed or having a small business.
From a survey
conducted amongst small business owners, independence is the key driver and
this gives the advantage to entrepreneurs to be their own bosses and be
self-reliant. This singular attribute makes the total financial gain (100%) be
that of the entrepreneur or the business owner. Small business gives the
operator total business control without any form of dilution from external
investors, which is a form of prestige for the operators according to the views
gathered from the survey conducted.
Without a doubt, this form of business is easy to set up and enjoys low or no serious regulatory requirements, unlike large enterprises. In fact, it is usually made up of 1-3 people, with even less than N50,000 initial capital outlay to operate. This form of business structure in most cases provides direct services, what do I mean? Hairdressers, fashion designers, dry-cleaners, artisans, kiosk operators, and event planners to mention a few, provide services directly to customers, and with that, they enjoy quick patronage and easy payments.
The administration of small business services is not cumbersome the problem of coordination and communication which is a major setback to the operations of large firms is therefore easily solved in small businesses. They conveniently give keen interest and personal attention to the particular requirements of their customers who in some cases willing to pay something extra for the special and urgent services rendered. Some customers are tied to these small businesses because of the existing long relationship and personal attention they enjoy in the business.
Further to this is the decision-making
and taking process, because most owners of the small businesses are the
operators or managers, there is hardly any problem in the decision process.
Unlike the large enterprise approval processes, decision processes and dealing
with customers can take a lot of time but with small businesses, the structure
is simple with less bureaucracy.
The vivid truth is those small businesses enjoy agility and
flexibility because of the ease with which the businesses can transmute and
transfer capital to other sectors or industries, just in case the business
operators need to react quickly to opportunities. In short small
businesses can dramatically change their business model to align with new
opportunities, which is the prime driver of innovation and creativity.
The survey also led to the conviction that focus is another
important advantage of running a small business, the focus of the operators is
relatively narrow, and this appears to be a good trait. While large enterprises
have to search far and wide for opportunities, small businesses tend to know
exactly where they have the most competitive advantage.
Therefore,
with all these attributes a well-functioning small business sector would add
more value to the economic fortunes of the country, sustain livelihoods, and
reduce poverty by creating more job opportunities in the economy than any other
sector. Furthermore, these attributes can also give small businesses a
competitive edge over large corporate entities and can help shape their
success.
In conclusion, the government should get more involved
in the growth, development, and sustainability of small businesses within the
country to reduce the high ca case of mortality and non-performance. The
Nigerian government needs to realize and recognize that small businesses are
crucial to job creation, economic diversification, innovation, poverty
reduction, wealth creation, and income redistribution in their policy-making
activities. If this sector is well harnessed in Nigeria it can be a huge
catalyst in transforming the country economically and reduce the high number of
unemployed graduates. On a final note, small businesses can be a great tool to
reduce the increasing unemployment rate in the country. Good Luck!
*Olubiyi
is an Entrepreneurship & Business Management expert with a PhD in Business
Administration. He can be reached with drtimiolubiyi@gmail.com
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