Business environment is ever dynamic because the forces acting on it are neither static nor rigid. Government policies are changing and new ways of doing business are being introduced from time to time. Socialism is giving way to capitalism, and vice versa. The invisible forces also are acting and forcing on entrepreneurs the need to rethink and restrategise. This flagellating influence on public administration will continue to dictate new ways to doing business. For example, not a few businesses could survive Covid-19 effects; and quite a lot are still struggling to regain the lost grounds. The acceptable way of doing sustainable business is fast becoming obsolete and giving way to a new approach. What used to be embraced as standards suddenly became ‘old normal’; giving way to the ‘new normal’ to establish itself.
The signing of the energy sector bill into an Act completed the liberalisation of the two key sectors that propel businesses in Nigeria. The power and energy sectors’ privatisation and liberalisation in the same year means the costs of doing business is fundamentally altered. For instance, effective the signing of the petroleum industry bill to become an act, Nigeria is now in a new regime of petroleum products pricing, with outright removal of subsidy. It is inevitable. With nothing like subsidy again, the first to hit will be pricing of the petroleum products as may be dictated by the laws of demand and supply as may be influenced by costs of production. As I mentioned in my observation note when the bill was signed, the increase in prices of the power and energy products will also shoot up prices of goods and services across board when each business and service provider adjusts prices to accommodate increased costs of value production. Clearly, some businesses will be affected more than the others. For instance, sellers of luxury and non-essential goods and services will be affected negatively because purchasing powers of the people will reduce drastically – and they may not recover in good time. Also, little money in people’s pockets will only be devoted to essentials like foods. Corporate organisations may respond with cost-cutting measures to cope with reduced patronages. The measures may include employee rationalisation and reduced product quality. The outcome of this is quite clear as far as the society is concerned.
In the same vein, there will be higher costs of doing business; and starting new business may require more money. In the light of this, businesses or entrepreneurs need to reappraise their approach to starting, improving and expanding businesses. Without good scaling, profitability will be affected because many micro and small enterprises may find it difficult to cover costs. There will be need for more organising and interventions.
Then what is the way forward or what should be the new approach to doing business that potential entrepreneurs should embrace? Since individualism will suffer as a result of the need for more fund to start new businesses, sole ownership of ventures may no longer be the way to go as far as micro and small scale enterprising is concerned. This new dispensation in Nigeria may give birth to increasing cooperation and collaboration approach to doing business. This will enable business groups to take advantage of scale to circumvent and overcome the impact of higher costs of production, costs of rendering services and lowered customer patronages. If you cannot scale up to enable your business enjoy economy of scale, the business may die prematurely due to the effect of bloated costs that the business cannot carry.
The time we are in is not in support of ‘me-too’ or ‘me-alone’ mentality in business. With constant policy reviews by government, doing business today is going to elevate group activities instead of sole ownership. In other words, it is better for you to own five per cent of a great, thriving business instead of holding hundred per cent of nonsense – a faltering and stumbling business. I am going to explain this better when I shall be discussing ideal structure for your business. What you need to know at this stage is that you must be conscious of what your business environment is throwing up and you are responding appropriately with good paradigm that will enable you enjoy maximum returns with minimal efforts.
Ola Emmanuel is a business planning and cooperative consultant