“Skills make you rich, not theories.” It takes more than vision, planning and branding to become a successful entrepreneur. The skillset palette of the successful business owner is one that is wide and varied, with a number of abilities that take time and commitment to cultivate. You can’t just want your company to be great, you have to make it great, but that takes a bit of internal work first, and it takes developing the skills you need to thrive in a fast-paced world. Success demands more than hard work, resilience, and expertise in your field. In order to succeed, you need to understand and become proficient in a set of fundamental business skills.
Delegation involves assigning responsibility to other people for the completion of work. The ideal position that you want to obtain is one where your staff carry out all the routine activities of your business. Effective delegation involves achieving the correct balance between effective controls and allowing people to complete their jobs effectively. The key element is knowing how to make your business work, with as little input from you as possible.
Communication is an important part of life, though it is often taken for granted. When you think about it, almost everything you do requires improved communications. To be effective in business, you have to communicate well. When you hire a new employee, good communication skills help you select the right person. When you communicate with your various stakeholders, you need to be clear about your expectations and sensitive when dealing with problems. The key is to know how to effectively communicate your vision with passion and conviction.
Almost everyone negotiates informally on a daily basis, without even being aware of it. Formal negotiation is a skill that can be learned through experience and practice. People who negotiate frequently tend to be more skilled at it than people who have not participated in many formal/informal negotiations. Experienced people are more likely to know what to say, when or when not to say it, or make concessions. The key is to know how to develop a win-win approach in negotiations with all parties, while at the same time keeping in mind that you also want to obtain the most favourable outcome possible for yourself.
Strategic planning is a very important business activity. It is a process of defining your company’s strategy or direction and making decisions on allocations of resources of capital and people. The key is knowing how to project your company’s future performance, within a three-to-five-year framework or more, supported by your well-defined business plan.
[READ MORE: Financial skills everyone should master (1)]
Leadership is a process of getting things done via people. Leadership, a critical management skill, is the ability to motivate a group of people toward a common goal. It is also the ability to take charge, assemble, mobilize, and motivate teams. The key is to know how to forge long-term relationships with prospects, customers, suppliers, employees, and investors.
Team building and teamwork skills are essential for an entrepreneur in today’s workplace. People working at their potentials in teams generate better solutions and more productivity than individual members working independently. The key is to know how to build teams of employees, partners, advisors, and investors that will help you take your business to the next level.
Today’s workplace is becoming more technologically advanced and complex. With this rapid increase of technology, the need for analytical thinking also increases. Analytical thinking is the ability to objectively assess the present state of your business, to determine where you want to be in the future, and what to do in order to close the gap between the present and the future growth of your business. The key is to know how to gather, review, and evaluate data that is necessary to formulate and express compelling arguments.
Sales and marketing skills
Establishing successful sales and marketing methods and policies – from pricing and advertising to sales techniques – are essential in growing your business. The ability to analyze your competition, the marketplace and industry trends are critical to the development of your marketing strategy. The key is to know how to craft and communicate a compelling message to the right target audience that generates new business, and in turn, builds profitable revenue streams.
Cash flow management skills
Cash flow is generally acknowledged as the single most pressing concern of the small and medium-sized businesses. In its simplest form, cash flow is the movement of money in and out of your business. Cash flow is the life-blood of all growing businesses and is the primary indicator of business health. The effect of cash flow is real, immediate and, if mismanaged, totally unforgiving. The key is to know how to monitor, protect, control, and put cash to work.
Financial management skills
The activity of finance is the application of a set of techniques that individuals and businesses use to manage their money, particularly the differences between income and expenditure and the risks of their investments. The need for timely budgeting and reporting of financial performance is of the utmost importance. The key is to know how to interpret and analyze your financial statements, in such a way, as to identify the items that are adversely affecting your profitability.
[READ ALSO: Financial skills everyone should master (2)]
Time management skills
Time management is a set of related common-sense skills that help you use your time in the most effective and productive way. Time Management is a very important skill to master. Learning this skill will empower you to achieve more and to use your time wisely. The key is to know how to manage your time efficiently and to focus on the activities most likely to deliver value to your business.
Why SMEs wealth is not diversified
Multiple taxes remain a problem as the constitution gives the 3 government tiers distinct taxing powers.
Nigeria became Africa’s largest economy in 2014 when its gross domestic product (GDP) data was rebased but the country lags behind South Africa, the second-largest, in terms of the tax to GDP ratio. That is not all. While Nigeria’s tax to GDP is estimated at about 6%, South Africa’s is 28%, and the average tax to GDP in Sub-Saharan Africa is 17%.
What could be responsible for this disparity? A recent Small and Medium Enterprises survey conducted by PricewaterhouseCoopers (PwC) and obtained by Nairametrics revealed that business owners, especially SMEs would suffer more from the development, as it found that Nigeria probably has more tax authorities than any other country in the World with the exception of the United States. But, unlike Nigeria’s tax administration system, the United States’ tax to GDP ratio is 26% (over 4 times higher than Nigeria’s) with a much more robust database of taxpayers and payments.
Findings of the survey
PwC surveyed over 1600 business owners across 29 states (6 geopolitical zones in Nigeria) to bring more light to reasons SMEs employ over 80% of the workforce but wealth is not diversified.
- 49% of SMEs pay 20% to 40% of their income or profits on taxes and levies.
- 28% of businesses pointed out that the Local government charges, taxes and levies were the most difficult to comply with. The average income tax rate for companies is about 32% and for non-incorporated entities 19.2%. This may mean that the local government actually accounts for the remaining 10% to 20% of the tax contribution from SMEs.
- The percentages are significant when compared to actual contributions by LGAs to tax collection in 2019. Unlike data on Federal and State tax revenues, Local government tax revenues are relatively difficult to ascertain or obtain.
- There is a need for consensus and collaborative dialogue from all public and private sector stakeholders in dealing with the data gaps, issues and challenges at the LG level.
- Multiple taxes and levies remain a bane for tax-paying businesses in Nigeria, especially MSMEs.
- The lack of coordination between federal and state tax agencies is also an issue. There are 36 state tax authorities in Nigeria, in addition to the Federal Inland Revenue Service (FIRS) and the local governments. Each of these entities has constitutional rights to raise taxes and this has given rise to increased tax burden and complaints from businesses.
- Nigeria ranked 159th out of 190 economies on PwC’s ease of paying taxes index 2020.
- The absence of a central technology platform stall ease of payment of taxes.
- It took, on average, 343 hours for entities to comply with tax payments. This was the time taken to prepare, file and pay value-added or sales tax, profit tax, labour taxes and contributions.
- Most businesses made, on average, 48 tax payments to the tax authorities in a year.
Partner & Head, Private Wealth Services, PwC, Esiri Agbeyi, explained that for the nation’s economy to grow at the desired rate, a lot more of SMEs must be unicorns (i.e. a privately held startup company valued at over $1 billion). To achieve such a feat, she recommends:
- Review Constitution and tax laws: Multiple taxes remain a problem as the Constitution gives the 3 government tiers distinct taxing powers. Businesses will continue to struggle with this problem unless something more concrete is done about excluding overlapping powers e.g. with consumption taxes. The tax laws should be reviewed and amended annually through Finance Acts. Over time, Nigeria can lean towards a lower direct tax on income and more indirect tax on spending as we find in developed economies.
- Centralised administrative system: Deploying a single centralised technology platform for tax administration in the country will help to improve tax collection, enhance ease of payment, reduce the cost of tax collection, as well as a plug or eliminate the leakages in the system. The time saved in paying taxes could be put to more productive use by businesses and the nation as a whole.
- Single Tax Authority: Most countries adopt the model of a single tax authority for tax administration of both corporates and individuals. This is the case with the UK’s HMRC and South Africa’s SARS. Both countries have significantly higher tax to GDP ratios than Nigeria. Companies are run by individuals. Linking both provides much gain in closing gaps on non-taxation or evasion. The reverse is the case when information is disaggregated across several tax authorities.
- Formalise the informal sector: Multiple taxes may be an issue but what is worse is when tax is paid by a few and the tax net is not widened. Some say the missing piece has been the informal sector. However, players in the informal sector cry that they pay taxes too. The problem is there is no data and some of the taxes collected may only find their way into private pockets. Evening the playing field for all taxpayers would involve relaxing the entry rules and easing the barriers for informal businesses to get into the formal sector.
READ MORE: FIRS to brace up on tax compliance policies
In all, it is important for the nation to consider these recommendations for higher tax revenues and more profitable SMEs, which would translate to a profitable economy. Whichever strategy Nigeria adopts, ensuring the SME sector is free of the burden of multiple taxes is very critical.
How SMEs can reposition businesses for growth amid COVID-19
The pandemic may not leave anytime soon, best way to go about it is to find ways to leave with the virus for the foreseeable future.
The increasing cases of the COVID-19 do not only present an alarming health crisis to Nigeria but also come with human impact, the significant economic, business and commercial impact being felt across the nation, especially among Small and Medium Enterprises (SMEs).
These and how to reposition businesses for growth either Post-COVID or in the new normal were discussed at the recent PwC Nigeria webinar tagged ‘Repositioning your business for growth’.
At the webinar, Taiwo Oyedele, Fiscal Policy Partner, West Africa Tax Leader, explained that the pandemic may not leave anytime soon and the best way to go about it is to find ways to leave with the virus for the foreseeable future.
He said, “SME sector plays a vital role with about 40 million of them operating in all sector of the Nigerian economy, employing over 60% of the country’s workforce and providing a livelihood for the majority of homes.
“Some estimates have it that millions of MSMEs have shut production and they may not be able to open again, as they suffer from lack of liquidity, credit, income among others.”
Back story: Last June, Nairametrics had reported that an overwhelming 94.3% of businesses surveyed reported being negatively impacted by the pandemic particularly in the areas of Cashflow, Sales and Revenue.
“Financially, a good number of the businesses were doing poorly as about 13% reported having enough cash flow to stay operational for 1 – 3 months while about 33% had enough cash flow to stay operational for only 1 – 4 weeks and about 27% for only 1 – 7 days. A number of jobs were also impacted as 82.8% of the businesses reported that they were likely to lay off 1 – 5 employees,” a Fate Foundation report stated.
While almost 50% of the businesses were able to identify opportunities despite the negative impacts of the pandemic along the lines of creating new products and services, expansion and diversification etc, most businesses reported needing support with cash flow and sales and would like support in the area of funding, access to markets and business support.
Recovery opportunities for SMEs
As far as Tara Durotoye, CEO House of Tara International is concerned SMEs owners should be strategic by dissecting the issues affecting their operations into two i.e What they have control over and what they do not.
According to her, Nigeria does not have a government that supports the reality of the challenges the SMEs are going through, advising business owners not to look up to the government but rather find ways to work around issues and find the solutions.
She said, “This is the time to be closed to your customers, time to call them and find out what they want as the pandemic has created a new normal. For instance, in the makeup industry, findings revealed that customers demand products like powder and lipsticks have dropped. What customers want now is to take care of their skin and not just to cover them, we would not have known that except we engaged our customers.”
Technology has become an important part of SMEs operations and operators have to think of the current resources they have and what they can do more about the resources in terms of skill set. There are people who were in makeup that is now doing consultancy, others in Agro and now doing logistics.
She cited an event centre in Lekki corridor, who due to COVID-19 have not been engaged for social gatherings as usual. spoke with its customers using social media platforms and decided to meet their needs by turning the centre to an open market on Saturday.
“It realised that some women in the area were not comfortable going to Balogun or Mile 12 market during the pandemic and decided to create that open market for them.
“Also, there is a Game Centre that has started offering video conferencing services to its clients. It observed a gap in the video conferencing space and explore it. They created a video conference app that would not require much space like Zoom to download and that works on small phones,” Tara said.
She added that this is the time for all business owners to create a will to forge ahead and understand that they do not have a government like Canada or US that would meet their needs as expected.
However, Abubakar Kure, MD NIRSAL MFB in his presentation explained that the Federal Government introduced the TSF and other loans to cushion the effect of the pandemic on SMEs and households when it realised business owners lack the required cash flow to survive the shock arriving from the COVID-19 pandemic.
Kure agreed with Tara that SMEs have to think out of the box and not wait for the government but explained that despite the fact that the government has limited resources, it has introduced several facilities across sectors to cushion the effect of the pandemic on businesses.
Shortly after the July Monetary Policy Committee meeting, Nairametrics had reported that between April when the TSF loan was launched and July 12, 2020, the Central Bank of Nigeria has disbursed N49.19 billion out of the N50 billion Household and SME facility to over 92,000 beneficiaries.
Also, the apex bank disbursed over N152.9 billion to the manufacturing sector to finance 61 manufacturing projects and another N93.6 billion to the Healthcare sector, amongst many other sector-specific facilities.
He said, “The facilities are token but SMEs need to strategies and think out of the box as suggested, The facilities are actually subsidised because they are between 1 to 3 years at 5% for 1 year and 9% subsequently.”
He added that the facilities are actually subsidised for businesses to survive and for people to retain their jobs and for the economy to recover from the shock created by the pandemic.
In conclusion, PwC made in-depth recommendations for government, SMEs and stakeholders on policy and strategies to cushion the effects of the pandemic on the nation’s ailing economy.
Click here to watch the webinar
CBN reserves 60% of N220 billion MSMEs fund for women
The sub-sector is characterised by huge financing gap, which hinders the development of MSMEs.
The Central Bank of Nigeria (CBN) said it reserves 60% of its N220 billion Micro, Small and Medium Enterprises Development Fund for women entrepreneurs.
The apex bank added that 2% of the wholesale component of the fund would be given to economically active persons that are living with disabilities, as 10% is meant for start-up businesses.
This was disclosed by the bank in the guidelines it issued for micro, small and medium enterprises development fund for non-interest financial institutions.
Back story: Last June, the Federal Government of Nigeria had announced it would roll out palliatives to assist women-owned medium and small businesses (MSME’s) recover from the impact of the pandemic.
Minister of Women Affairs, Mrs. Pauline Tallen, explained that the National Survey on the impact of COVID-19 on women-owned businesses in Nigeria captured trends and patterns of the losses caused by the pandemic on women-owned businesses, and will now guide the government’s move to revive the affected businesses.
She said, “The impact of the pandemic on micro, small and medium enterprises (MSMEs) has been quite massive, and resulted in unforeseen losses for business owners.”
Why it matters: The sub-sector is characterised by huge financing gap, which hinders the development of MSMEs.
“Section 6.10 of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, stipulates that ‘a Microfinance Development Fund shall be set up, primarily to provide for the wholesale funding requirements of MFBs/MFIs’.
“To fulfil the provisions of section 4.2 (iv) of the policy, which stipulates that women’s access to financial services to increase by at least 15% annually to eliminate gender disparity, 60% of the Fund has been earmarked for providing financial services to women.”
It added that this informed the decision of the CBN to establish the MSMEDF, which has a take-off seed capital of N220bn.
What it means: The fund prescribes 50:50 ratio for on-financing to micro enterprises and SMEs respectively by Participating Financial Institutions.
The commercial component will constitute 90% of the Fund which to be disbursed in the form of wholesale funding to the PFIs.