‘Wrong business plan, bane of SMEs’

By IAfrica
In Nigeria News Feed
Feb 8th, 2014
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Mrs. Fayo Williams, a pharmacist by vocation, is Executive Director, Rely Supply Limited, which interest cuts across production of first aid boxes, medical equipments and consumables. Established 23 years ago, the company has gone through one transformation or the other. Mrs. Williams who also doubles as the Chief Executive Officer shared her experience managing the start-up in this interview with Bukola Afolabi

How did you start?

I wrote up a business plan in a very simple way that I could muster about the location, number of patients/customers I may be getting every day, up to what kind of income will be coming on a monthly basis. This made my spouse who is a co-founder of the business decide that for the first three months we have to set aside enough funds to pay the salaries since the business would not likely break even until further down the line. I also administered a questionnaire to ask whether people will need first aid boxes.

I found out that if I should just set up a pharmacy like every other person, there will truly be nothing special about it. So, I decided to embrace this aspect of emergency care. The awareness was very low in the populace and I said that was an area we could play in. I have some experience in that and it helped me to jumpstart the business.

Our first aid kits have found their way into virtually every sector of the economy; from education to the airline industry, to manufacturing, to tourism and even entertainment. I am proud to have the likes of Femi Kuti shrine as one of our customers. We have major air lines like the Aerocontractors, Arik and Mediview airlines as our customers. We also have some of the banks as our customers, and this has been very encouraging to have well-established companies patronising our medium-scale organisation so that the economy can grow.

How much capital are we talking about?

It may be difficult to place my finger on that, that’s about twenty- two years ago but I know that we had some savings and we got money from family members, particularly from my in-laws and also my family, my mother, at least, had to pledge some shares and it was totally an interesting situation because I had to bring her from Ogun State to show her physically to the Registrars and to show her physically at the bank and I hope that all systems now have moved away from having to show physical presence of people to tender collateral.

Where did you start from?

We actually started from Orimolade Crescent, off Adeniyi Jones Avenue. It was like a small lock up shop. It barely met the requirements; because pharmacy stores have a lot of requirements. You must have a minimum of twenty square metres at that time to setting up a pharmacy shop. So, we barely just met that requirements and we had a store, a show room and a little office. I have always believed in using professionals. So, for every aspect I got a friend who was a chartered accountant to set up a primary and secondary books account and I got an architect who was also an old school mate to give us the drawing and get the tilling and others done in the shop. What we did was that along the years we did try to build up a kind of reputation and we repaid our loans and once the money was returned they were able to give us again when we asked – we made sure we returned every penny.

How will you describe your relationship with the banks?

It was not easy but getting support was based on fulfilling certain requirements. For instance, the banks wanted the certificate of incorporation, registration documents of the company and at times they will ask for cash flow statements which we had a consultant coming in from time to time before we had our own in-house officer. He assisted until I learnt how to prepare a cash book myself and I was able to buttress our request for finance with the appropriate documentation. We’ve been able to get non-collateralised loan and we’ve also been able to get some other instruments. Actually, there should be a national policy to strengthen and encourage access to finance by SMEs.

For instance, it took a while for the government to look into fruit juice industry to say we have enough fruit, we have companies manufacturing good juice locally and they should be patronised. By the same token, we are happy to have the local content act now whereby certain kind of businesses related to the oil and gas industry are being reserved for Nigerians.

So, we need this to be in virtually all industries, in health care, particularly pharmaceutical sector. The production capacity for anti-malaria, analgesics, etc, are known – all figures are available from the pharmaceutical manufacturers group of the Manufacturers Association of Nigeria and it will be very good if we can have some items reserved for these industries. For instance, the item we are producing, the first aid kit, there is really no enabling policy that says look you need to look inward and such would really help us a lot.

So, we need to keep on it, continually updating our knowledge and know what our opponents are producing. When these things are published, even when handed over to the Bureau of Public Procurement, they can scout for vendors within the data base to encourage indigenous companies to bid for them so that we can keep our people in good health and give them jobs here in Nigeria.

If you are to advice somebody who wants to start a business, what are the three most important things?

Number one; there must be a viable business idea. It is not enough to wake up on one side of the bed and say, ‘wow, I’ve found it; this is what I’m going to do.’ You must subject it to scrutiny; you must prepare your business plan early and show on paper your business idea. You are actually the one who can find customers who will patronise you, who are ready to pay for that product or services and whether the idea is going to be a viable and sustainable one.

Number two, as an entrepreneur who has the passion, you must have the training, so to stay, in the line of business you want to go in. If you don’t have it immediately, you may have to acquire that training. So, you need to get all the knowledge you can to run that particular business. A lot of businesses have aspects of it which you must be vast in so that you don’t go wrong.

The third thing I will say is you must assemble a powerful team, a good team. You must recruit human resources carefully. Make sure they are those that can contribute positively, share your vision with them and make sure they can run with it. Having a business idea and a good business plan, the entrepreneur must not only be passionate but properly grounded in that line of business.

What are things you must avoid as an entrepreneur?

Number one; lack of documentation, you must avoid that at all costs, right from when you start, you must do that and you need professional advice. So, probably the mistake is not getting professional advice where needed. There is professional advice at a price you can afford if you can look for it. Within your network, within your family, you need to locate a professional in the field that is under consideration whether it’s legal, for you to get any business service which enables you to do the business you want to do. Your day-to-day activities need to be documented and at the end of the month, you need to be able to review, for instance, your profit and loss account. The figures, they tell a lot of stories and you must be able to see whether the business is making money. So, just starting your business with members of your family, people who are there for sentimental reasons, is not enough. Family members can be in your business provided they are adding a lot of value. For instance, we have men setting up businesses with their wives. So, you have a team and the roles and responsibilities that are well outlined and the understanding is there. It has worked for some people. You cannot just start your business for the fun of keeping people on the payroll because it is a sure way of ruining the business. You must identify the task you need people to run with and see who needs to do that task in the organisation.

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