Home Economy BUSINESS: The Nigerian SME Survival Guide – Gabriel Eka

PART 1: COOPETITION IS A MUST

Coopetition, from the words ‘Cooperate & Competition’; is the business theory that even while businesses need to compete against each other to stay profitable, they stand to gain more from cooperating and saving money on shared costs and resources before fiercely competing in other areas.

The good news for Nigerian businesses is we face mostly the same challenges, obtaining licenses is stressful, rent is always on the rise, loans are hard to come by and near impossible to repay at rates hovering around 24%, power supply is erratic and the cost of running generators is crippling many businesses, Managers are unprofessional and don’t employ best practices, this vicious cycle in turn affects potential customers and suppliers, who cut corners, delay patronage, payments, and thus further perpetuate the failing business phenomenon. Yes the playing ground is level in our common suffering. The odds are against a successful & sustainable business in Nigeria today, yet some businesses continue to thrive! The Corporate’s and multinationals have an edge over the Small and Medium Businesses (SME’s) because they’ve been doing it longer and are wiser in raising capital and using it as a weapon to ward-off competition, its time Entrepreneurs start to think like them and adopt some of their strategies for more success

Allow me to paint a vivid picture: ‘You’re in the Ikeja computer village in Lagos, searching for a Macbook laptop as you specifically need it for your specialist designs, all around you seem to be only HP sellers calling out, “bros/sister, which won u want? I get the latest HP, latest Dell, anyone you want!” their calling out to you, in their ten’s & twenty’s, you’re quickly scanning their stores as you walk past, no sign of that distinctive white apple packaging anywhere. This is the second time you’ve walked down this same street. Then some calm young man walks up to you and asks “which one you de find?” you answer ‘a Macbook pro’ he says no problem and asks you to follow him to his store. As you enter, you only notice a few Blackberry’s, iphone’s and more HP laptops. He asks you to sit and quickly fires a barrage of Ibo to his assistant in the store, all you pick is “Osiso!” (Hurry up!). He keeps you engaged while asking more questions about what you want and what for, you share, then he starts describing the ideal printer to go with your soon-to-be-purchased laptop, and how a less-mobile, more-desktopish product, the ‘Imac’ is ideal for you. You’re just about to glance at your watch impatiently when his assistant walks back in, as if on cue, with your Macbook in hand…’ Sound familiar? Where he got it from or how much he stands to make from the trade you do not know, but somehow you will remember who got your Macbook pro for you and where.

I imagine there are over 1,000 businesses operating at computer village, each striving for more customers, better margins and higher profits, yet they practice Coopetition. It makes their goods a bit safer, more accessible, easier to store and creates an electronic Mecca of sorts. As long as people come in droves to search for a product or service, they’ll realise there’s more available to take advantage of. It’s something we see often in different industries and businesses. Somehow the Lagos auto-part industry has converged around Ladipo and Owode-Onirin, Electronics at Alaba market and computer village, Car dealers at Apapa and Tin can Island, Banks and Financial institutions at Marina and Victoria Island.

The Banks converge around the same streets so they can share a fibre-optic network to make their systems faster. ‘Virtual offices’ are springing up around Lagos- there is nothing more convenient for the young-upwardly-mobile entrepreneurs and businesses with flexible/seasonal schedules. A fully furnished office, that is serviced with; power, internet, photocopies, meeting rooms, a Secretary etc where you only pay a fraction on what you normally would for rent and other operating expenses.

While marketing professional would single out several distinct actions by the Computer village boys, The rest of us just call it “being Sharp”. Economies of scale describe all the advantages that accrue from doing something on a large scale and in a centralised location e.g., bulk discounts on raw materials, available labour, storage-fuel tank farms in Apapa, close to the port etc. Cross selling refers to when an enterprise sells its goods/services from one product line to customers of another line e.g. The new trend of car washes +bars+ mini restaurants across town. EOQ (Economic Order Quantity) is a logistics concept that requires predicting how quickly stock will be depleted and rather than incurring costs securing and warehousing stock, order them just in time to meet demand. Few people understand this better than spare parts dealers. The popular saying ‘Jack of all trades, master of none’ is often true but Coopetition has a different objective ‘Jack in trade, partner to all’. It is near impossible for a small-struggling business to intelligently employ all the good practices mentioned above on their own, lacking the manpower, finances or skill to do so meaningfully.

SME’s stand to make a lot of money and scale countless hurdles by adopting elements of Coopetition. Entrepreneurs and Business owners must embrace partnerships with their peers as a necessary obligation to move forward. Till the Government can somehow generate more electricity, Generators will not go away. You walk into a business park/shopping plaza and the first thing you notice is each store runs its own generator either in front or out back. The dictates of Coopetition require that occupants of that plaza unite and get a better central generator + fuel it. They all stand to benefit from a steady power supply less the noise and inconvenience. Think of an area today that is hurting your business, light, security, water, staff, parking space, meeting room, Cash handling/POS, Storage…The list is inexhaustible, Work with your neighbours to find a lasting solution to the challenges you face, or be the solution to another businesses problems while they solve yours in turn. In Essence-Cooperate.

Nigeria has made us cold regarding competition, we think everyone is trying to pull a fast one on us. A friend’s status on Blackberry goes: ‘If I teach you how to fish, its only right you find another pond’ hmmm Catchy, but there aren’t that many ponds in Nigeria, instead we can work together and catch bigger, better fish in this pond I say. That there will be competition and it will be fierce is not in doubt. It is in fact healthy and encouraged to bring out the best in businesses and give the most to customers. Customer Service, Advertising, Sales promos, Branding, Staff training, Strong internal systems & Company Style are all viable tools for individual businesses to help get ahead of their competitors.

All Coopetition really needs is an understanding and partnership by Business people that ‘we are better off working together on some issues & when those issues have been resolved satisfactorily to our mutual benefit, we can carry on independently making the most of our business resources’. Creativity will help a business stand out…but only after it can indeed stand and brace the bad winds that blow. It is my sincere hope that more Entrepreneurs & Businesses catch on and embrace Coopetition today.

Gabriel Eka is an Entrepreneur and Business consultant.
He will be speaking at the “Excellence in the Industry seminar” on the 30th of April, 2011. www.9jaopionion.blogspot.com or http://www.facebook.com/notes/lolade-ogunjimi/attention-professional-makeup-artists/10150629274860723 for more details.

Comments

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