Professional Documents
Culture Documents
A Paper presented at the Nextzon Stanbic Ibtc SME Breakfast Seminar By Augustine Edet Co-Founder & ED/COO, NEXTZON
June 2013
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Outline
Background and overview of SMEs Issues Facing SMEs
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There are 17.284m of such business in Nigeria. 17.261m (99.87%) of these are Micro business, 21.264k (0.12%) are Small businesses and 1.654k (0.01%) are medium SME is a critical sector of the economy. However the problem in Nigeria is that there is a dearth of information about this vital sector 3 of the economy
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A Similar 10% increase (effort) in Corporates will only generate a 3.5% benefit to the GDP The SME Sector employs a total of 32 million Nigerians and contributes 46% to GDP 42% of the entrepreneurs in the Micro businesses are women 86% of entrepreneurs in the small and medium enterprises are men
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Lack of Operating Business and strategic Plan Most lack strategy, business plan, marketing strategy, proper accounting systems and some do not run their transactions through the banking system especially those in retail sector Lack of Corporate Governance Require change in mindset; they have refused to separate ownership from management Below optimal Capacity Utilization Most are operating below capacity Human Capital Capacity SMEs are not able to access enough qualified personnel enough to satisfy their human capital requirements Need to position to attract qualified personnel and to manage businesses in a professional manner Structure and Processes Most SMEs do not have their process documented and structures clearly defined and communicated
*See Recent Survey Report by National Bureau of Statistics (NBS) and SMEDAN 5
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These are the ingredients of institutionalization. They make a business built-to-last, they make your business an institution
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Why Institutionalization?
To leave a legacy for the next generation and ensuring succession To unleash the full potential of the business To professionalise the business To be ready for intensified regulation To be ready for opportunities and growth in the capital market To be well positioned to attract good people as talent becomes more scarce To be positioned for better competitiveness To become more attractive to investors, fund providers and lenders. To guarantee sustainable growth
An institution is defined as any familiar, long established person, thing, practice .an established or organized society or corporation.
Institutionalization is a process of transforming a business into a company that emphasizes best practice; a company that will survive generations and increase shareholder value; a company where management, systems, procedures and culture can be sustained with little or no intervention from the founders".
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June 2013
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A Process of Evolution
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Develop and document policies, processes and procedures that ensures transparency in financial transactions, human resource management and operations 10
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Performance management
Develop performance indicators framework (both financial and non-financial) Set up a reporting system that ensures results can be monitored against target
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Every step adds value Little or no wasted motion plan the work and work the plan Reviews/approvals are not gateposts, but critical enablers that accelerate progress
Unflappable Anticipates most obstacles Deals gracefully with the unforeseen Achieve targeted results, on time, on budget no excuses Appear effortless even when they are not
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Strategy
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It is a frame work of rules and practices by which a board or director ensures accountability, transparency in a company
What you get: Reputation and Recognition The practice of good corporate governance followed by firms will allow them to gain the trust of the investors, bankers, the customers and the community at large This image will help the company prosper in the long run and achieve its goals more quickly The company can attract strategic partners that can be leverage on to grow the business IAS/TNT Due to instituted corporate governance system F.G.N Okoye and Sons was able to acquire 40% stake in IAS (a UK-based Cargo Airline). The company continued to improve its level of transparency and was able to attract world top courier companies as partners. It was at one time A partner for FedEx, and now partner to TNT
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Punch News Paper: Built a culture of commitment through governance. By showing transparency in career path. Employees know they can become CEO. This commitment manifested when the company was shut down by the military for over 18 months, 80% of the staff resumed after it was opened They believed in the vision, they could see through the vision
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Strategy
You must have adequate intelligence about your business in order to create good strategy. You must know your numbers, competition, industry, employees etc.
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GEs strategy to be No1 or No2 in their chosen markets, and to fix close or sell any business that did not fit into this strategy;
Coca-Cola considers its competitors to include water- forcing it to come up with strategies to help it effectively compete
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Jack Welch spent time building his team leadership capacity through GEs Crotonville Academy.
GE built its rewards around a mixture of team and individual performance; took time to understand its peoples abilities so it could match its star players with areas where there were the biggest opportunities
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The real key in succession management is to create a match between the organization's future needs and the aspirations of individuals. The only way to keep talented people is to provide them with growth opportunities that keep them stretching and finding more promising opportunities they might find elsewhere.
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Keeping accurate records of is a critical and important part of a business process value chain It is the only way to communicate your business with stakeholders (Employees, Bankers, Investors, even customers) Recording keeping is not only important for its primary purpose also, it has become mandatory for all businesses to comply with IFRS starting from 2014 You have to start working on the Roadmap for the implementation of IFRS as early as possible
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A process driven business process Documented policies and processes for alldriven units
Workflow diagrams process manuals Management, Unit and departmental structured meetings Internal control mechanisms Websites and media for information sharing and gathering Customer feedback and Interviews Performance appraisals and benchmarks Use of proper/current software and hardware technologies Microsoft office Enhance communication via use of current tools - e.g. Outlook, internet etc. Data mining and security Note and minute taking at all meetings
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Internal Controls
Budgeting Cashflow management
Reporting (Adoption of
IFRS) Inventory management Etc.
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NEED HELP?
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Some have failed, some have succeeded, some are making progress
We have lost money, we have made money, we have learnt the ropes. We know what works and what does not work See a list of some of our current investments with stakes valued 7/6/2013 at over $20m: 25
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Milestones
Provided business incubation and SME advisory services to over 40 SMEs, directly contributing over N2billion ($13million) in technical assistance to the SMEs; A Franchisee of the IFC Business Edge & SME Tool Kit for capacity development of SMEs.
One of the Nominated Advisors to SMEs on the Nigerian Stock Exchange initiative for the re-launch of the Alternative Securities Market to enable SMEs access the Stock exchange for long term growth funds.
One of the Nominating Partners on the NIGERIA FAST GROWTH 50 which is an initiative to identify the 50 fastest growing companies in Nigeria promoted by ALL WORLD NETWORK (involves renowned strategies Michael Porter) and The Tony Elumelu Foundation.
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Milestones
Directly and indirectly attracted over N7billion ($49million) in cash and sweat investments into these enterprises and has facilitated the creation of over 390 jobs with about 363 sustained and a potential of about 7,000 additional jobs waiting to be created by these enterprises in the next few years Provided Recently commenced a strategic managemen alliance with one of the top ten t consulting global management consulting services to firms based in the United States over 400 of America with 30 offices around clients the world, with a view to collaborating on specific joint projects focused on providing services to organizations and governments Collaborated with other investors and fund providers to promote and Has become one of the very few nurture start up ventures venture companies in Nigeria valued at N337million with a focus on start-up and early ($2.5million) as at 2008, stage businesses. In this regard, which grew to N1.5billion it is noteworthy that based on the ($10.7million) in 2011, with Companys unique and current cumulative value pioneering business incubation of about N2.6billion concept, the World Bank under ($17million). the MSME project donated a takeoff grant in 2006 to support the take-off and capacity building for the Companys incubator.
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Other Areas we can help with Expansion Services. This shall include:
Assistance in setting up new business lines Existing product enhancement Export development Regional & international expansion
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Next Step
Intention
Register Name, email, industry, revenue and headcount
Diagnostic
NEXTZON will help analyse the current business situation And provide a report on areas that need attention
Roadmap development
Nextzon and prospect to agree on urgent and immediate actions Roadmap and steps to be agreed
Contract Signing
Nextzon and prospect agree on service requirement and deliverables.
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33a Bishop Aboyade Cole, Victoria Island, Lagos, Nigeria Tel: 01-279-8256, 0803-705-4504 www.nextzon.com
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THANK YOU!