How The Current Economic Situation May Be Affecting Your Business, By Anayo Nwosu

I have attempted to categorize various business enterprises, situate their current business challenges in the economic sphere and proffer some practical solutions. I also avoided banking or economic jargons.

Anayo Nwosu

More knowledgeable fellows could extend the frontiers of this discussion to provide more useful insights and panacea.

Group 1. DEALERS  IN IMPORTED ITEMS (BOTH IMPORTER, DISTRIBUTOR &RETAILER).

While some of you battle with inability to source FX to replace your stock, you and your distributors must have noticed that the high rate of dollar has forced you to increase the prices of your goods beyond the purchasing powers of your customers. Therefore, sales have slowed down or non existent. It's not the handiwork of evil hands upon your business but an economic reality. There is always a price limit beyond which a customer of a fixed income can't pay for your goods even at gunpoint.

SOLUTION: Wind down and look at branching into production or distribution of local substitutes of your stock in trade. By so doing, you would be assured of continuous stock replenishment and reduced cost which would make your products affordable.

Group 2. CLEARING AND FORWARDING AGENCY

The nature of your business is that whatever that affects the importers affects you. If he is not importing, you will have no consignments to clear and to forward. In this category are those in Haulage business.  You haul when goods are available. Right now, due to low sales and scarcity of FX, importation has reduced hence the hard time you are experiencing now.

Only those who can clear and dispatch goods on credit for importers (who may not eventually pay) seem to be in business. It is only for a while. Also, in business are your colleagues who cut corners. They will soon go to jail. Don't join them. Just change profession and re-enter when the economy improves.

Group 3. MANUFACTURERS

If you need to import raw materials to produce, you may have noticed that your distributors are complaining of poor sales due to your frequent increases in product prices to recover your FX and other increased production costs.

Poor sales, high bank interest rates and inability to replace depleting raw materials  stocks have conspired to force you to close shop.

You must quickly lay off non-essential staff and join the Manufacturers Association of Nigeria to put pressure on government for some incentives.

There will be a limit when your customers cannot afford to buy your  products as packaged.

Why not innovate and come out with products with reduced quantity and easy to pay prices? Peak Milk has done so with N10 sachet milk, reacting many years after Cowbell did it. People live by meal these days.

Group 4. DOCTORS AND PHARMACISTS

Being that most drugs are imported as many local manufacturers are closing down due to rising cost of production or inability to import raw materials, many patients cannot afford to pay hospital bills and have resorted to churches, mosques and native medicine practitioners for cheap opium or cure.

SOLUTION: You may have to improve your customer service practice to make the few customers or patients who can pay to remember you first and to prefer you to a crowd of competitors.

Hospitals should explore working with health insurance organizations for assured patronage and payment. Sales of generic and effective brand of drugs would attract low income buyers. Volume sales is key.

Group 5. DEALERS IN FASHION AND STATUS GOODS

There are few people who, like lions, wouldn't eat grass no matter the economy of the jungle. But they also have competing needs and may not buy as much as they used to buy.
Therefore, the key to keeping them is excellent customer and after sales services.

The bad news is that instead of increase in your clientele base, it's decreasing as there is a lull in the upward migration within income groupings.

People no longer replace clothes and other apparels as before. It is that bad.
The easiest test is the massive failure of dry cleaning business.

SOLUTION: If you feel the economic pinch, please come down and move into other areas that have wider mass appeal.

Group 6. CHURCH, MOSQUES & FAITH-BASED ORGANIZATIONS

Many penticostal churches and the orthodox ones have noticed a shrunken size and decreased flow of funds from the faithfuls not because they are backsliding but it is  a reflection of the economic realities of the members. Many of the yuppy members have lost their plum jobs and others have had their salaries slashed by 45%. Bonuses are gone as clients' capacity to do more business has dwindled.

SOLUTION: Many churches e.g the Catholic Diocese of Nnewi have started setting up Filling Stations, Commercial Printing Press, Private Schools to cater for the poor and the rich, Portable Water Production, Hospitals etc.to augment offerings. Everybody is now existential and are struggling to survive.

Group 7. HIGH SCHOOL FEES-PAYING PRIVATE SCHOOLS

Following reduced earnings, many children and pupils of many private schools might not return come September 2016. Their parents have made realistic plans to move them to less fees-paying schools. Most catholic missionary schools are their first port of call.

SOLUTION: The private schools may have to review their fees downwards. But this may impact on their standards. The cost of operating a school on commercial basis is very prohibitive. Owners may have to seek foreign foundation or NGO donations or adoptions. That's what catholic schools like Marist Brothers of School and Loyal Jesuits College enjoy.

Group 8. LANDLORDS AND REAL ESTATES

Many landlords are the first indicative victims of the worsening economic conditions. Most tenants are no longer paying due rents and they are not moving out. Even when you evict them, the house would remain unoccupied for months.

Tenants are not really bad but can't just pay. They are overwhelmed by expenses as they now live from hand to mouth with no savings remnant.

SOLUTION: Landlord should reduce rents and should never contemplate rent increase at this time. Unreasonable increase would annoy old tenants into defiance. Many of them think that you, the landlord, has a hand on their economic downturn through spiritual dwarfing arsenal.

Group 9. ALL SERVICE INDUSTRIES

Many people can no longer just pay for leisure but  are ready to consume on credit. There is no free money to patronize businesses of easy virtue.

Funnily, wives misinterpret their husbands' current fidelity and early home coming as a spiritual rebirth. It is not. It is economy induced. They are guilty of the offense in thoughts.

SOLUTION: All people in service industry should improve customer service, practice gratitude and do a lot of promotions.

Generally, please note that things are hard.

Just do a forensic audit of your business, study the value chain and see how you can adjust otherwise you will misread the signs of times.

"It is not my portion", is not applicable here.

Don't be deceived by any person of faith. Ask your banker or economist friend to help you analyze your situation and proffer solutions.

There is no evil hand or spell on your business. What you feel now is economy-induced.