Research suggests that the people who survive disasters are the ones who locate the life jackets and fire exits, followed safety drills or paid attention to cabin crew pre-flight workouts.
It is a sad reality that Nigeria has found itself in Stagflation (Stagnation in economic activities plus persistent increase in prices). This unfortunate situation has led to untold hardship in the economy which has rubbed off on many SMEs.
As if stagflation is not bad enough, the government of Nigeria is far from coming up with any solution to this national problem. The only way to survive is for entrepreneurs to act and think as if they operate in a country that has no government (I am not saying that they should break the law).
Rather, what I mean by saying that entrepreneurs should act if there is no government in Nigeria is that people should put on their thinking and come up with strategic plans made assuming the worst case scenario.
One major positive about the current economic quagmire in Nigeria is that is has been bringing out the creativity in Nigerians. This is the time to really test businesses that knows what they are doing.
The aim of this presentation is to give tips on how to survive the current stagflation in Nigeria.
8 stagflation survival tips (I will keep developing these points with facts, figures and practical things that can be done at soulmate)
- Cost reduction: unnecessary costs add to the overhead of a company. The first thing that a company should do during stagflation is to do a value chain analysis aimed at reducing the number of non-value adding activities to the barest minimum.
- Concentrating energy, thoughts and capital: stagflation period is the time to concentrate efforts to the 20% of things that brings 80% of result or more. Technically it is a time to spine-off and then re-acquire when the dust settles.
- Using Strategy map and other strategic tools (I have already started building this): strategy map is a management tool that is used by the super successful people to ensure that they know the end even before the beginning.
It is all about profitably surviving. A strategy map is that compass that helps business managers navigate the storm and get to the promise land.
- Keeping an eagle eye on cash flow: the phrase “cash is king” is truer during stagflation. The reason for this is simple- the cash quickly worth less in shorter period. Moderately aggressive measures have to be used to ensure that cash is quickly collected from customers and a bit delayed to suppliers (if the number is positive)
- Increasing budget for marketing and advertising: it is true that costs should be cut but not essential costs like marketing and advertising. In fact, the number one strategy of surviving stagflation is gearing all efforts towards increasing vis-a-vis reducing costs. This lets the customer know you will stand by them even in the face of recession.
To cut a long story short, the words of James. R. Adams will come to our aid “advertising is the mouth piece of a business” and therefore should not be shut.
- Running on PAYGO: the idea here is that all miscellaneous expenses should be financed by sales from that period. This is technically known as bootstrapping. If sales are not forthcoming, more effort and resources should be put to generating sales rather than tie it down on things that would not directly impact of a company’s sales figure.
- Constantly innovating through strategic business team: small businesses fail during recession because they act alone. To survive recession, strategy must be team stuff. According to Sam Walton individuals don’t win business; teams do.
- Caring for existing customers: there is only one boss; the customer. And he can fire everybody in the company, from the chairman down, simply by spending his money somewhere else. – Sam Walton.
A company can easily survive any kind of recession if it can simply not lose existing customers. The good news now is that it is no longer as hard as it used to be to keep existing customers happy. The tools to ensure customer satisfaction are continuously becoming sheep on a daily basis.