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What SMEs must do to survive the Coronavirus outbreak

Economic activities are slowing down, businesses need to stop burning cash and start accumulating as much cash as possible. 

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Entrepreneur, Multiple businesses, Nigeria partners UAE to boost SMEs , US technology company deploys software to ease business process in Nigeria, Experts outline what SMEs must do to attract funding, investors in 2020 , Simple ways to prioritize customer service for your small business, What was SMEs must do to survive the coronavirus outbreak , What was SMEs must do to survive the coronavirus outbreak

At a period when economic activities are slowing down, businesses need to stop burning cash and start accumulating as much cash as possible to serve as a buffer through this Coronavirus outbreak.

The following are ways start-ups could reduce spending: 

  • Cut personnel cost: Personnel costs for most businesses account for up to 50% of total expenditure. Attacking this line item becomes very critical for cost-cutting in any organization. I think non-essential staff should be put on temporary leave with a 50% pay cut while essential staff must work from the home network of their transport and feeding allowance which may shave off up to 25% of their salary.
  • Halt all capital projects: Times of uncertainty are the worst times to burn up cash building capital projects. Most capital projects are developed using debt and debt servicing at this time when businesses are shut will be very difficult. For businesses that fund capital projects with equity, the money will be better spend ensuring work tools for Work From Home policy is available for essential employees.
  • Restructure your debt with your bank: Even though you may have the cash to repay your loans this month, it’s best you start talking to a bank to restructure your loan and possibly suspend the payment of principal and interest for the next 3 months. Banks have been given a go-ahead by CBN for regulatory forbearance for customers in sectors who may see their businesses significantly impacted by a coronavirus. If your bank is willing to restructure your loans, it could free up more capital for you in this tough business period.

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(READ MORE: SMEs: How to attract fund from banks, investors, donors)

  • Stop recruitment and hiring: This is the absolute worst time to be hiring. Maximize your team and be quick to fire weak links in this period. Suspend all forms of hiring except it is critical for business continuity.
  • Adjust your sales price to reflect the new business environment: While price gouging to take advantage of the coronavirus is bad, business survival is critical and prices must reflect the new reality for many businesses. Rising inflation, naira devaluation and difficulty in commuting which triggers higher logistics cost are some of the reasons businesses should consider increasing the price of their products and services to cover for rising cost across some big line items in their financials.
  • Keep your eyes open for intervention funds: It’s important for businesses to seek government intervention funds that support SMEs. The fund could be the difference in many businesses staying afloat in this difficult time.

1 Comment

1 Comment

  1. Ebrahiem ADEBAYO

    March 31, 2020 at 10:31 am

    You actually did wrote this yesterday being 30th March with reference to SME’s in Nigeria at a time like this….???
    I doubt if SME’s can do any bit of your outline at the moment as larger firms are already struggling with these…
    It’s a tough one on all sides so would rather advice SME’s to use this period for self development, organizational restructuring, business restrategy and work on new organizational ethics to adjust perception so as to bounce back stronger after all this is over.
    Staff can hold video calls and online meetings, share internal memos and edit documents together via goggle docs, take online courses to improve capacity.
    All the best to us all..
    Stay at home and be Safe.

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Business News

Global oil market to re-balance in 2 months’ time

In the meantime, OPEC+ wants to keep the existing production output cuts beyond the June expiry date as part of efforts to rebalance the market. Countries like Saudi Arabia, the United Arab Emirates (UAE) and Iraq, have all reaffirmed their commitment to this effect.

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Crude oil prices, bonny light

With the uncertainty that still prevails in the global oil market due to the prevailing coronavirus pandemic, analysts have been coming up with different forecasts on the future of the market. The latest forecast is that the market will most likely recover by July 2020.

Crude oil prices and oil demand plunged over the past few months as a result of the pandemic. However, with the lifting of global lockdowns and gradual reopening of global economies, oil prices are expected to rebound. Russia’s energy minister, Alexander Novak, said the global oil supply and the oil demand will most likely rebalance by July.

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In the meantime, OPEC+ wants to keep the existing production output cuts beyond the June expiry date as part of efforts to rebalance the market. Countries like Saudi Arabia, the United Arab Emirates (UAE) and Iraq, have all reaffirmed their commitment to this effect.

In his analysis earlier today, OPEC’s Secretary-General, Mohammed Barkindo, urged OPEC+ members not to flout the output cut. According to him, OPEC+ members must remain committed to production cuts despite signs that oil demand is beginning to recover.

(READ MORE: Oil price gains likely to halt over demand uncertainty, as US-China tension intensifies)

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Global oil market to rebalance in 2 months’ time

On its part, Russia had agreed to cut down its oil production to 8.5 million barrels of crude per day in May and June, down from 10.5 million barrels.  There is a possibility that the country could extend the current level of output cut beyond June, a situation that is expected to serve as a major boost in the rebalancing of the oil market.

Last week, the International Energy Agency (IEA) said that it had seen signs that the oil market would rebalance quicker than originally expected after the United States and OPEC implemented the agreed output cut. The development came as a big relief to Nigeria because the rebound of oil prices and the rebalancing forecast will help reduce the country’s fiscal pressure and boost its revenue.

Note that the Brent crude and Bonny light crude sold for about $36 per barrel and over $33 per barrel respectively. These are above the revised budget oil benchmark of $25 per barrel for the 2020 budget.

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Business

LIRS further extends deadline for filing annual tax returns by one month

“We constantly debated what other measures could be taken as an organization to support individuals and businesses at this time, hence, the additional one-month extension from June 1, to June 30, 2020.” – Ayodele Subair

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LIRS further extends deadline for filing annual return by one month

The Lagos State Internal Revenue Service (LIRS) has again extended the deadline for filing of Annual Tax Returns from May 31 2020 to June 30, 2020.

This is part of the state government’s effort to provide relief to taxpayers in light of the economic impact of the Covid-19 pandemic. With this development, annual returns for individuals, both employees and self-employed persons, can be filed anytime before June 30, 2020.

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In a press release signed by Monsurat Amasa, the head of LIRS’ Corporate Communications Department, the agency urged taxpayers to take advantage of the magnanimity of the government and file their returns. The LIRS’ Executive Chairman, Mr. Ayodele Subair, explained the extension thus:

“As the Lagos State Government keeps abreast of global best practices in containing the Covid-19 pandemic and eases the effects of an economic downturn on taxpayers and residents of the State, LIRS had initially extended the deadline for filing annual tax returns for two months, from the statutory March 31st of every fiscal year to May 31, 2020.  

“We constantly debated what other measures could be taken as an organization to support individuals and businesses at this time, hence, the additional one-month extension from June 1, to June 30, 2020.”

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(READ MORE: COVID-19: Lagos issues new guidelines, considers full reopening of economy)

He further explained that taxpayers can file the annual returns from the comfort of their homes and offices using the LIRS eTax platforms. They can also generate assessment and payment schedule, and other tax administration matters on the same platform. Updates on business operations and alternative payment platforms are to be found on the verified handles, and the LIRS website.

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Podcast: How Covid-19 has birthed a new, vibrant digital economy

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Does Nigeria have a debt problem?, EMM podcasts

Join Adetayo Adesola, Lawretta Egba and Emmanuel Abara as they dicuss what sectors and industries will succeed and fail in a covid-19 world.

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