The $1 trillion SME

Small &Medium Enterprise in Nigerian is defined as any business concern with less than N100m turnover per annum and has less than 300 employees. The IFC stated that 96% of Nigerian businesses are in this category, compared to US, which has 53% and Europe’s 65%. SMEs in Nigeria contribute 1% of the GDP compared with 40% in Asian countries and 50% in US and Europe.

In comparing Nigeria with other emerging markets, Nigeria has shown lesser effort in developing SMEs in areas of access to finance, providing basic technological infrastructure, ensuring adequate legal &regulatory framework, and building capacity of prospecting and existing small business owners.

Recently, Apple Inc. became a USD $1 trillion company by market capitalization, a company that was started in a garage by just 2 people, an SME you would say! When they started the company in that garage, I am sure they had their doubts, just like any SME start-up.

For Steve Jobs, the goal of the company was not only to create great products, but to build a company that will influence the world for generations to come, and he surely did. Building a company that will outlast the founders takes tenacity and foresight. Apple succeeded in building itself into a global iconic brand through the understanding of customer’s preferences and continuous innovation.

The company started with creating Phone Prank tools for people that want to cut cost on high fees on long distance calls. They later expanded into computer with Apple II. With the world paying attention to the company, Steve Jobs decided to create structure around the business by recruiting John Sculley from Pepsi as CEO.

Steve and John Sculley worked together for 2 years before the relationship went sour. Jobs was asked to resign from the company he founded. The next 15 years saw the fortunes of the company going down, even with the entrance of another CEO, Gil Amelio. At this time, their products were uninspiring. Then the company made a move and bought Steve’s new company, NeXT, the company he started when he left Apple, an enterprise computer company.

The second coming of Steve to Apple, after his company, NeXT, was acquired, made way for him to become the CEO of Apple again. This era witnessed the launch of innovative products, preceded by excellent presentations by Steve himself at product launches. These launchings were always a delight to watch. Steve led the company into music, multimedia, retail, tablets industries, being major players in each, with skilled workforce, long range planning and innovative strategies.

Apple has not been without its own share of business failures with falling stock prices and forty days away from bankruptcy at some point. It just shows that business challenges are imminent, but can be overcome through strategic thinking.

At this point, you will agree with me that Apple Inc. was once an SME that became a $1 trillion company through doggedness, hard work and grit by its founders.

Back home to Nigeria; there are surely many lessons to learn from the $1 trillion SME. The first is the creation of a lasting vision for your business. Small businesses must be sincere and clear about their reason for being in business. People start businesses for different reasons, but like Apple, money was not the sole objective. Apple founders wanted to build a company that will be around for many generations to come and we can see this is coming to reality.

Secondly, entrepreneurs need to understand the place of structure as the business is growing. There should be a threshold where you transition from a “one man” business to a “small corporate”. At this point, the founder might get someone to run it, if he/she is not skilled in running such organized entities. For most SMEs in Nigeria, this is the stage at which their business endeavour begins to fail, because founders don’t want to give up ownership. With increase in revenue and other indicators business cannot be run as it used to be at this growth stage.

Asides building structures, a growing SME needs to be serious about its current and future markets. Though market research should have been conducted before the business begins, there is need to continually follow developments in the markets because market dynamics change at the speed of light. Apple was able to survive due to its proper understanding of changes in its market. Though the company had challenges at some point on its products, they were able to swim to shore!

On branding, Apple from inception has focused on good aesthetics, ease of product use and an excellent understanding of customer experience. This is what makes Apple an iconic brand, and a company to beat in the market.

Nigerian SMEs are plagued with so many issues, namely, access to cheap capital and investors, unavailability of basic infrastructures like road and electricity, multiple taxation and limited knowledge and capacity building initiatives. Existing and aspiring entrepreneurs will have to continue to push and work against these odds. Of recent, development banks like Nexim, Bank of Industries (BOI), Bank of Agriculture and even the CBN, begun the disbursement of some intervention funds though the demand for collateral by these banks remains a major issue.

In conclusion, the challenges experienced by SMEs in Nigeria and Africa should not be a deterrent is producing $1 trillion company from the shores of Nigeria and the continent, because these challenges can be an opportunity for social entrepreneurs within and outside the shores of Nigeria to come up with solutions and resolve these issues, that’s what entrepreneurship is all about.