Growing Small Scale Businesses
Speaking on Friday, the 5th of January, at the Reformers’ Global Prayer Camp at Aba.
According to research, 95% of small scale businesses fail within the first 5 years. However, there are some scale businesses that have endured.
My Master’s Degree research project was on “Sustainability of small and medium enterprises in Nigeria with special reference to akamu (pap) production at Okorodafe Street in Ughelli, Delta State“.
Akamu or Pap production from maize started in 1954 and has been on, continuously, in the same area till date including during the Nigerian Civil War.
Why has akamu production survived for 64 years at Okorodafe Street?
It is a product that is consumed by those at the base of the pyramid, who earn less than 2.5 USD daily and drink pap on a daily basis. Secondly, there is a nearby base of the pyramid costumer at the Ughelli market, which is the the Hausa/Fulani community at Okorodafe Street that drink pap and eat agidi which is produced from pap or corn flour.
There is also a regular water supply from the river and wells. Most of the women who come to the market wean their children on akamu. The growth of the town and the fact that it is surrounded by my small towns that have also grown, too, ensures regular demand. They have a special way of producing their akamu or pap such that it has no offensive odour.
The 30 women in the Akamu Producers Multipurpose Cooperative Society generate about 120 Million Naira every year with a 20-day working month and a 10-month working year. This is apart from the sale of bye-products that are gotten from the production process.
They mill 80 bags of maize daily and a bag of maize was 11,000 Naira as at 2013. This means that 880,000 Naira worth of maize was milled daily. It costs 1,500 Naira to mill a bag of maize. Just calculate how much the millers make.
I used this as a model to let you see how small businesses can generate much wealth.
What are the characteristics of those small businesses that grow and survive?
- They must have products and services that the general public can patronize in small affordable quantities on a daily basis.
- There must be a regular supply of raw materials that do not require foreign exchange to procure.
- The products and services must be such that they don’t change with time. Food, soap, and water or drinks are usually the same from generation to generation.
- The product must be preferred by the poor compared to the alternatives produced by multinationals.
Akamu, has stood it’s ground against custard; Garri has stood it’s ground without advertising against Semolina, etc.
- The price must be affordable by consumers at the Base of the Pyramid.
- There must be a population that buy such a product regularly.
400 people buying a product of 25 Naira daily gives you 10,000 Naira daily. 10,000 Naira in 30 days gives you 300,000. In one year, that gives you 3.6 Million Naira; in 10 years you get 36 Million Naira. All you need to make 36 Million Naira in 10 years is to get 400 people to buy 25 Naira worth of goods or get 25 people to buy 400 Naira worth of products. That is the Philosophy of the Ant. Why are people still poor?
- Pursuit of purpose.
Most people who do small scale businesses have a subsistence mentality. If they have a long-term mentality and delayed gratification to build a future business, then they will manage their businesses and finances better.
It has taken Dangote 30 years to grow to where he is now. It has taken my wife and I 18 years to grow our school from 5 pupils to more than 500 students.
- Pleasantness and pleasure of service.
When you treat men like trash you can’t get their cash. When you treat men like royalty you get their loyalty and this sustains business.
I learnt this from Sir M. Okeya, the CEO of Epini Hotel. You must be present in your business place as a small scale business person because your staff will not give the personal touch you will give to your business in the formative stage. It also helps you maintain standards and prevent leakages and theft.
- You will need a lot of prayers.
You will definitely need a lot of this. When you do business without publicity, you are like a man winking to a beautiful girl in the dark. Only you know what you are doing the “girl” your future customer does not know what you are doing.
A rat that has one hole does not live long according to Boma Erikosima of blessed memory. The more products and the more outlets, the more the chances of survival. I started my book publishing business in 1998 with 35,000 Naira in a company I had a retainership with. It has grown to a good family business.
- Business cluster formation and Cooperatives
When small scale businesses cluster together, their business place becomes a household name. It reduces cost of production and they protect and help one another.
My prayer for you is that your eyes will open to an idea, a product, and a service that you will render to you society. It will grow and your future generations shall grow it to the next level.
God bless you.
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