Friday, January 27, 2023
HomeBusinessDealing with Recession: SMEs Can Adopt Business Sustainable Models to Make Profit

Dealing with Recession: SMEs Can Adopt Business Sustainable Models to Make Profit

- Advertisement -

Adiya Atuluku is a management and sustainability consultant, working on national projects mainly in Information Technology (IT), telecommunications, and environmental industries in multicultural environments. She is a LEAP Africa alumnus where she participated in its Youth Leadership Programme as a youth corp member 10 years ago.

Adiya recently published an e-book on Business Sustainability. She found interesting insights developing her business sustainability series and explains how to balance and deliver on the triple bottom line. Additionally, this article emphasizes how to seamlessly manage profit and create a sustainable culture in organizations.


- Advertisement -
- Advertisement -

What is the common challenge entrepreneurs’ face in attaining business sustainability in Nigeria?

- Advertisement -

These days, a lot of the conversation around entrepreneurship and starting your own business has been less and less about starting to make a profit, but more and more about adding value to people’s lives and communities. People now say you should start your business because of the purpose it will fulfill, and then money will follow. In this way, business sustainability in entrepreneurship is getting easier, especially when entrepreneurs consider sustainability right from the get go.

Where it gets harder is when you try to consider these relatively new factors of planet and people when you’re already running your business, and already used to a certain way of operating. For these entrepreneurs, I find that a common challenge has been seeing business sustainability as a cost which drains their revenue, rather than as an opportunity for profit. This mindset is a big hindrance.

In your opinion, would you say business sustainability is largely hinged on the profitability of an organization?

Ideally, business sustainability should not be hinged on profitability, but instead, is a balancing act between profit, people and planet. There is definitely a way you can operate your business and design your products and services so that you add value to all these three factors.

Unfortunately, organizations are used to trying to maximize their profit and squeeze out every kobo they can. As such, they still think of profitability first and would not attempt to incorporate business sustainability concepts and initiatives if they are not already profitable. You would hardly find an organization that is struggling to stay afloat say they want to start a sustainability initiative. They fail to see that thinking sustainably can be a means of reducing their costs and increasing their profits.

How has entrepreneurs been able to manage growth in their strides towards business sustainability?

Entrepreneurs who manage growth towards business sustainability are those that understand that business sustainability is a journey; it is iterative, with a goal post that is always moving. As long as they can measure where they are now (in terms of sustainability initiatives and goals) with were they were in the past, and with where their competitors are, they can measure their growth effectively.

Needless to say, understanding what measurements to take, and actually collecting this data is key in any business’ growth towards sustainability.

What are the key factors to ensure business sustainability in Nigeria?

Perhaps the biggest factor (in my opinion) is the demand for business sustainability by consumers. As a business, if your clients start refusing to buy from you because you dump your wastes in the stream behind your factory, no one will have to force you into changing your waste management practices. Or if enough of your customers reject your product because you use plastic, you will innovate and find some other way to package. Entrepreneurs have been taught that their customers are king. So these customers dictate how much the entrepreneurs consider people and planet, along with profit.

Two other key factors to grow business sustainability in the country is the growing interests of investors (who would want to see how you manage environmental and social issues even as you make profit before they lend or grant you funding); and of course well enforced government regulation (whether they are incentives or sanctions).

Are there other peculiarities you found that hinders growth for Nigerian SMEs into large organizations?

A key factor that has hindered growth of Nigerian SMEs into large organizations has to do with a major sustainability characteristic – long term thinking! Many entrepreneurs lack this. They are in it for the ‘hustle’ and cannot envision their business being in its 30thyear. This is why they don’t consider the triple bottom line of people, planet and profit in their business operations – because they want to see returns immediately and so they automatically make decisions which will maximize their profit, and profit alone. This is obviously not a balance. Until this mindset is changed, our SMEs will not grow into large organizations.

Unfortunately, this mindset has grown as a result of poverty, where many start a business primarily to meet ends meet, and not because they have a purpose. As such, government has a big role to play in changing this mindset and enabling SME growth if they can uphold their responsibilities of providing enabling infrastructure (power, roads, water, etc.), ensuring welfare and eradicating poverty. You really cannot think long-term if you are hungry. And this continues to present a problem. 

Every business, irrespective of the growth stage of their enterprise should be proactive with implementing sustainability measures that will make money yet met the other two bottom line, the people and planet.

In recession, priority is businesses in Nigeria at this time is to stay afloat. As this article points out, thinking sustainably can be a means of reducing costs and increasing profits.

The 12th CEOs Forum by LEAP Africa is themed Managing Growth for Profitability and presents an opportunity for small businesses in Nigeria to review and adopt best practices on growth and profitability in business. Join the discourse on business sustainability at the Forum and you can download the ebook for free to read 13 interesting topics on this subject.

- Advertisement -

latest articles

explore more

Let us know that you read this post by dropping your comment below. Thanks!

Say something about this post

Say something about this post