Olapeju Kukoyi is an SME expert, consultant and founder/CEO of JPPlus Consulting. She has over 10 years of experience consulting for small and medium scale enterprises to help transform their business for sustainable growth.She said she feels most fulfilled when she sees a business she has consulted for blossom. In this interview with NIYI JACOBS, Kukoyi, who holds an MBA in Finance from France’s Grenoble Graduate School of Business, London Campus, and an MSc in Innovation Management and Entrepreneurship from Temple University Fox School of Business, United States, shares her experience, observed issues in the SME space, the challenges and how to navigate them.
Tell us what inspired your journey into the SME consulting field?
I have always wanted to do something in strategy. But when I came back to Nigeria I realised how unique the SME terrain was. So, I pursued my other interests. When I served in Diamond Bank I was doing my best and hoping that I was going to get transferred to corporate banking where they manage mergers and acquisitions, and I could work with corporate entities.
But that didnt happen, so I moved to an SME investment firm. It was in that company that my interest piqued for SME because I noticed several organisational and procedural gaps that if addressed could have made the company perform better.
Now it didnt totally deviate me from wanting to do something strategic, something long lasting so I tried to be an entrepreneur in my career path. The companies I worked for opened my eyes to what I could do differently for SMEs. I can do something different with SMEs, while I can still be a strategy person, managing finance, investment portfolios, etc. That was what influenced my journey around SME consulting.
As an SME consultant, what industries do you primarily work with, and what skills do you require for the job?
Because I am not a technical, my skill cuts across all industry. This is not to say industries dont have their peculiarities, they do, but operation is operation no matter the industry.
You recently wrote an op-ed in Businessday newspaper where you highlighted the high mortality rate of SMEs in the country. Tell us about the SME sector.
The SME space is the highest employer of labour in Nigeria and in any economy; they always create job opportunities. It is shocking that they have that power economically, yet the business often dies with the owner. Or when there is a financial strain. The reason that is so concerning is that if you look at these businesses you wonder what could have been done differently. What I find is that the business owner sometimes is a core technical, a doctor, a teacher, a lawyer, an engineer who has no knowledge of business or human management. For any business to thrive, it must stand on a tripod, the technical, the operational and the management angle. If one of the tripods is not functioning well, the business cannot be successful. For instance, a pharmaceutical company can create all the wonderful drugs it likes but if the marketing team is poor the drugs created will be poorly received and the business may shut down. My experience with SMEs is that as a core technical a business owner doesnt see the benefits of the operational side or believes that the operational side is not as important to the business success. That is why the SME mortality rate is high.
You also argued that Nigerian SMEs suffer mostly from a lack of structure and poor business management. Can you elaborate on that please?
You have an entrepreneur who has never worked in any properly structured environment, where all the functionalities of a business exist. They have a passion for their business, they set it up and then run it aground because the structure that should have been there was absent. When you mention structure to entrepreneurs they are often quick to dismiss it, saying they are not there yet. Im not an engineer, but I imagined that the foundation for a skyscraper is different from that of a bungalow. When you want to build a skyscraper, for instance, you don’t say because I don’t have the money yet you then build a foundation that could only support a bungalow hoping to build the skyscraper on it as you grow. That is courting disaster. What you do is to build a foundation for the skyscraper and start with a floor and then as you grow you keep adding floors to that foundation. That way you are sure your foundation is strong enough to carry whatever you are building. In similar manner, businesses must start out by creating a corporate culture, an organogram, a corporate strategy. You dont start a business with an HR director from day one or a chief financial officer but the allowance for these positions has been made in your corporate strategy. Your business plan should state where you are going, how many years you should stay in one phase before moving to the next. That is what I mean that most of them lack structure from the beginning and a growth plan and that is because of their poor mentality that is focused on the now as opposed to the future.
How do you help SMEs navigate challenges like infrastructure, access to finance or regulatory hurdles
The way I provide service to the firms I work with is that I embed myself in the business to enable me to understand the business end-to-end and then create a tailor-made strategy to solve the noticed challenges and prevent recurrence. I tell my clients, if there is a problem in your company and you focus on a person as the cause then you have missed the plot. There is a problem because there is a policy, procedural or process gap that is causing it. Thus, the best thing to do is review the corporate strategy and create a process that will address the identified gap. I always do my business with scalability and long term in mind. Let us not forget that strategy itself is like a living document. Anything you do you keep finetuning it because the market is ever evolving. I say to business owners you can be jack of all trades and master of none. You have your God-given talent and so do I. I know that the Nigerian government has done a lot to put structures in place for SMEs. For instance, the Bank of Industry is doing a lot, SMEDAN is also working with financial institutions to help unlock single digit facilities for SMEs. There are different hubs like the Tony Elumelu Foundation, Fate Foundation, different ideation hubs that SMEs could get trained on how to run a business. So, you can’t just start a business because you have the funding, you also must get the knowhow, the knowledge of running a business.
The cost of doing business in the country is high now. What strategies do you recommend for SMEs to manage rising operational costs?
This is a peculiarity for us. The cost of operating a business is high. I mean you have a lot of multinationals which have left the country because of the rising costs of doing business how much more the small and medium scale business owners. First, I want to talk about coopetition. It is time for businesses to collaborate. We used to be trained on comparative advantage where a business tries to push the area where it is better than competition. In areas a business is not better, can it collaborate with others. A special purpose vehicle can be created for such collaboration where SMEs come together to do business with strict guidelines because it is not a merger or acquisition, it is just an agreement among SMEs to do certain business together to at least cover the cost of their operations. For instance, a bread maker can collaborate with a beans seller, like a 50/50 equity partnership. That may not apply to many businesses, but many can always explore collaborative opportunities.
The world has gone digital and globally smart businesses have digitised their operations. It would appear that Nigerian SMEs, due to financial constraints, are still largely analogue oriented. How would you advise SMEs to approach the digitisation question seeing how important technology is to their survival?
I beg to differ a little. I think many SMEs have embraced the digital world of technology and innovation. There are so many social media apps that Nigerian SMEs are using now to operate a strictly online business. I remember I wanted to buy a dress and this dress maker is online, she gives you a size chart online. All she had invested in was made a few pieces, call some models to model them and post on her online pages. When you want a dress you reach out to her, pick from her size chart and then she makes the dress and sends to you via delivery. What has that done, it has taken away the cost of having a shop, the cost of you having to drive down to a shop to take measurements or delivery of your dress. It has taken away the issue of my dress doesnt fit right because she has a size chart, and she is doing her business strictly online. I know families who live abroad and register their children for online lessons with Nigerian teachers. So, a lot is happening online. We are not as analogue as we used to be. The analogue side of the business is because of our peculiarities. But Nigerians have gone a long way in digitising their businesses.
An expert once referred to SME owners in Nigeria as magicians because some still manage to press on when the odds are stacked heavily against their survival. What do you think are the unique strengths of Nigerian SMEs?
Nigerians are very determined people. They are so determined they are ready to give their business all that it takes to be successful. It is not about magic; it is the passion to push through. When the odds are stacked against you and you know you cannot afford to fail, all you can do is to keep pressing on. That speaks to the Nigerian spirit. When you have invested all your lives savings in a business, you dont give up easily. You try every available solution to ensure you succeed.
Does your consulting cover assisting SMEs in building a strong and capable workforce?
Yes it does. It is one thing to create the processes, it is another to get the right people that will actualise it.
Can you share some of the challenges you face as a business consultant working with SMEs?
Some business owners realise there is a gap but they are unwilling to get a profession to help restructure their business. Many are unwilling to pay; they complain that our charges are too high. Many would take our proposal and try to execute by themselves. Many business owners need repeated coaching before they understand what we wanted them to do to transform their business. Some have fears we want to take over their business so midway into the restructuring process they pull the plug.
Many have argued that government policies or a lack of appropriate ones weigh heavily on SMEs. What policy would you like to see the government enact or rescind to strengthen the SME sector?
Government has actually done a lot to support SMEs. In addition to what the government is doing I would like to see a policy that makes the barrier to entry into the SME space by foreign investors stricter to help limit foreign companies stifling the local SME owners out of business. For SMEs, costs are already high, bank facilities are at double digit and interest rates are high, making pricing also high. But a foreign company that probably got bank facility offshore at single digit interest rate and has support from its home country would likely have lower operating costs and is able to be more flexible with his pricing. This could damage the local SME and when one SME is damaged, five or six others that rely on that one may also shut down, the ripple effect. Government should just make it difficult for foreign companies to come into an SME space and compete unequally with domestic SMEs.
What is the most rewarding part of working as an SME consultant in Nigeria?
The most rewarding for me is seeing the businesses I have worked with become successful, thriving a decade or two after the reforms. Everything we do, we obvious do for economic reasons. But when you have a great passion for something, even when the stakes are down the passion keeps you going, which is why despite the challenges I face, I remain excited when I could help transform a business, even when the payment does not justify my efforts.
If you could offer one key piece of advice to aspiring entrepreneurs, what would it be?
Get the wisdom, knowledge and understanding to run a business. It is good to have the technical knowhow, the financial knowhow, but do business professionally, ethically. Understanding the ecosystem of your business is key. And learn how to lead people. Many business owners dont have that leadership quality so when they talk to their staff, they talk down on them. Never forget that your staff are the lifeline of your business. Let them understand your vision so they see themselves as part owners and thus can function well in their different roles. You dont build commitment by talking down on people. It is important to get tutelage to understand business and human management and relationships.
What lessons have you learnt from running your business?
I have learnt personnel management. We come across different people, so you need to learn to manage up and manage down. You dont run your business like you are doing people a favour. No. Run your business like your employees are doing you a favour because they have a choice. They can go elsewhere or do something else. The customer experience is crucial, both for your internal (staff) and external customers. Maintain quality because if you do not treat your customers well, you are already on the way to closing the business.
