This year has probably been just business as usual for you. Maybe it’s actually been brilliant (you’ve shovelled in large profits) or horrendous (you’ve made significant losses). Regardless of how the year has panned out for you, there are a handful of business lessons you must have learnt as you journeyed through it.
Because most businesses across the commercial landscape ideally run with the same basic principles, we find that there’s usually something to learn from an enterprise operating in a different industry from yours. Whether it’s goal setting and achievement, harnessing and deploying resources, or engagement with the wider public, it’s never a bad idea to take a peep into spheres other than where you’re at, to glean good business wisdom.
With this in mind, we’ll be going over some of the business highlights of 2018, and drawing useful enterprise building lessons from them.
Take A Good Look Before You Leap
This advice is valid for anyone wanting to invest in anything. It’s even more important when the said investment is supposed to fetch you returns several times what you’ll be putting in.
This played out with investments in cryptocurrencies this year, as the ridiculously large gains from late in 2017 got wiped out in just a couple of months. People who had bought bitcoins exactly a year ago from now would have lost over 70% of their investment. It’s been a brutal correction of the previous year’s sugary highs when a bitcoin sold for almost $20,000. Now it’s worth just under $4,000. That’s a lot of dry bank accounts, dashed hopes, and worse.
Perhaps fewer tears would have been shed over this if the buyers of bitcoin had seen the red lights blinking as bitcoin prices soared late in 2017. Many who had held their cryptos at that point saw the surge as the sign of an overheating commodity and cashed out before it burned their pockets. Sadly, not everyone could play deftly enough.
Traditional Investments Can Be Risky Too
Nigeria’s stock market has endured a turbulent year. Shares have dipped, taking many a person’s investments with them. Reasons given for the volatile condition of the market include a drop in investor confidence, stemming from fears over the fragile nature of Nigeria’s recovery from its recession, and the uncertainties of the coming elections.
The point is, you shouldn’t be oblivious to the risk of a sustained dip in the value of your investments, whatever they may be. It might not be a Ponzi scheme (which is certain to collapse at some point); but it is exposed to the whims and caprices of the business environment, and that should be enough to make you watch it vigilantly.
Good Work Eventually Gets Rewarded
This year, Connect Nigeria teamed up with Union Bank to recognize Nigeria’s top 100 emerging SMEs. These businesses don’t always get their fair share of the spotlight; news cycles are usually dominated by stories about the billion naira conglomerate or sleek million dollar fund startups. But their work is finally getting the appreciation it deserves, and they are better for it.
The World Still Seeks Technical Competence
We got news of Ngozi Okonjo Iweala’s appointment to the board of Twitter. Yes, she’s worked with the World Bank as well, so this isn’t exactly a ‘rising to the top’ story. But the point is, she’s seen as smart and competent, and that’s why international finance bodies and billion-dollar tech companies want her. She knows her stuff, and she’s gotten good experience. These two things are a force when they’re taken together.
Here’s the moral of the story: be the absolute best at what you do, and the world will beat a path to your door.
Investors Want a Big Share of the Future
This is perhaps the most succinct way to explain Zinox’s rationale for buying an e-commerce company which hasn’t made sustained profits for a long while. Its purchase of Konga in April gave it a bigger share of Nigeria’s relatively small but promising e-commerce space. If this isn’t positioning for the near future, then it’s inexplicable.
The country’s largely youthful population is growing more comfortable with buying things online. Despite the failure of many early pioneers in this burgeoning industry, the global trend towards more e-commerce should eventually lift Nigeria off its reluctant feet and sweep it into a future in which online shopping is the norm.
High Growth Enterprise Get the Most Funding
Besides hacking the future, investors are looking to fund businesses which will generate returns within the shortest possible period. It’s why fintech startups are receiving so much investor funding at the moment. We’ve seen companies like Piggybank, Paystack and CowryWise (to mention just a few) take millions of dollars from funding rounds this year. That’s because fintech firms like these tend to yield much more returns over shorter periods than most other startup types.
You might moan about creditors taking an increasing preference for quick profits. But it’s probably a better idea to work on your business so that it grows faster and attracts the funding you want for it.
There Are No Good Reasons for Bad Debt
Skye Bank needed saving by a publicly funded bridge institution (Polaris) in September after it emerged that it was severely short of liquidity. It is widely understood that the now defunct bank had taken on unsustainable debt in ways that breached existing banking regulations.
Businesses can avoid the embarrassing (and fatal) consequences of bad debt by making and implementing budgets within their income limits, and by refusing to sell on credit or without down payments from their buyers.
Competition Doesn’t Have to Be A Dog Fight
For a good illustration of this, look no further than the bank’s response to the threat of disruption by fintech companies. As we explained here, banks have decided to face up to the challenge of financial technology by trying to shape how that sector develops in Nigeria. They’re able to do this because they possess the financial muscle to build innovation hubs and digital labs and host contests for fintech solutions (which should give them with a pipeline of talent from that space).
The banks aren’t colluding with industry regulators to snuff out the new existential threat they face. They’re changing to adapt to the threat, and smartly trying to steer its development in a direction that’s favourable to them.
Business Tech Works Well When It’s Deployed Smartly
We got a good dose of this advice at the Connect Nigeria Business Fair 2018. Seasoned experts and accomplished business executives relayed this wisdom to over 5,000 delegates present at the Eko Hotels and Suites, Lagos, where the event held. While there was a lot of smart advice for SMEs wanting to grow their businesses with the help of tech, there was also a recurring emphasis on the basics: building processes that worked, making money, and staying resilient in the Nigerian economy.
- Your Business’s Size Matters. Its Health Matters Even More
We recently got news of the purchase of Diamond Bank by Access Bank. The story leading up to this reads like a tale of two contrasting cities. Both were huge institutions by Nigerian standards and were the envy of many in their industry. But one had a healthy balance sheet, while the other was struggling to achieve a fair enough bottom line. In the end, the apparently buoyant one bought its flailing competitor.
As you proceed to expand your business’s reach and take on more responsibilities, be sure that your core strengths are intact, and your finances are in good shape. Your company’s size might be the talk of the town, but it’s not as crucial to the business’s survival as its financial state.