We all know that small business owners in Nigeria face some hard but common challenges. These are well documented and range from lack of financial support, poor management, corruption, lack of training and experience, poor infrastructure, insufficient profits, and low demand for product and services*. While the government is rightly expected to play an important role in solving these problems, they actually create a golden opportunity for technology startups to use their unique skill — ability to innovate with technology. So here are the 3 areas that small business owners need startups to step up to the plate, and make an impact:
Access To Finance
Accepted common knowledge is that banks don’t see lending money to small and medium enterprises (SMEs) as a priority. This poses a big problem since ‘lack of finance’ is regularly cited as the main obstacle, faced by small businesses to growth. Now I’m no banker (and I’m definitely not an apologist for bankers), but surely one of the reasons why lending to SMEs is so poor, is because it’s so risky. Why is it risky? Lack of data. For instance, where’s the reliable data available to gauge the likelihood that loan recipients will repay? On the other hand, how does it make sense that a trader in Alaba Lagos, who has been in business for the last 15 years, is unable to borrow money for 6 months? There has to be a middle ground where a solution can be found. That’s where startups come in. Areas like invoice financing, inventory/goods financing, personal financing etc targeted to SMEs, are ripe for innovation.
Mind you, I’m not suggesting that startups have to be banks before they can step into this space. You think that’s unbelievable? Well, Aella Credit is tackling this problem by providing affordable loans to individuals and their promise is they can get money to your account in minutes. Fast and hassle free loan, if approved. Few banks are willing to do that. We need more startups to provide the needed access to finance.
The average small business owner is still stuck with ancient or no tools. How do you effectively manage a store, employees, suppliers, debtors, customers etc? Depending on the small business, just using ‘pen & paper’ or by ‘I have it all in my head’ process, is likely not sufficient. On the surface, this doesn’t look like a critical problem but once you consider that productivity tools can increase a store’s profit margin by 47%, then you quickly realise that this is a big deal. It’s a no brainer, there has to be better ways of managing a store.
A good example of how to solve this is my startup PrognoStore which is a Point-of-Sale software. It is a 3-in-1 solution as it combines Point-of-Sale, Inventory and Analytics for small business. This is all that’s needed for day-to-day running of a store. PrognoStore is almost ready for you. Make sure you get on the list for an early invite — it’s just around the corner.
Reach The Market
120 million. In theory, this number represents the potential market for every Nigerian small business. However in practice, a trader in Idumota Lagos can’t even send her goods to a customer in Bodija Oyo successfully. Not without the risk of damages, delays, lost or stolen. This is not surprising in a country where roads are bad, streets have no names, houses are not numbered and trust is always set at default of zero. How do you move goods successfully from point A to point B?
ACE is a startup solving this real need for Nigerian small business to deliver goods safely to their customers. They are currently delivering to 5 cities in Nigeria and aim to be the most convenient way to get goods to your customers. We need more of ACE type startups to serve more cities and different verticals.
Looking at faces of people, one gets the feeling there’s a lot of work to be done. — Wole Soyinka
I didn’t say solving these problems will be easy but that’s exactly why we need tech startups, to start tackling them right now. Do you think these are indeed the top 3 areas or you disagree? Let me know your thoughts in the comments.
Photo Credit: Dreamstime | Stefan Dahl Langstrup