BusinessDay... the voice of business: Yetunde Allen: Taking SMEs out of the woods

Yetunde Allen: Taking SMEs out of the woods
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Patrick Siaka-Momoh on 13 January, 2008 01:00:00
 
BackgroundI studied Economics at University of Ife (now Obafemi Awolowo
University). After that, I started my own business in fashion at 20, and then I
went on to England to pursue my interest in fashion.
I stayed behind in England and worked for a while before coming back home. I
started in the fashion business and eventually moved into interior decoration. I
did this for about 12/15 years. Interior decoration business is a mix of
business and creativity. It is more of business than creativity.
Because if you are in business and you don't make money it is meaningless. From
here, I moved into importation of office furniture. But the government ban on
importation of furniture killed the business, although I moved into furniture
assembly - two years later government lifted ban on the assembled furniture part
of the business, but by then, I had moved on. Business still functioned but just
in a small way.
Early days in business
I have been back now for about 15 years. I went on this journey about 15 years
ago. I couldn't find anyone to help me. I had to seek out an unusual means of
help - I had to go to friends. I lost 50 per cent of my turnover in two years.
At the end of it, I put a little management into it. I found out I was running
around like a headless chicken.
I asked myself what do I really wanted to do. I have been working totally free
helping entrepreneurs for about four years. Eventually, I used part of my money
to set up a private fund which I was also using to bring money at the same time
and it was usually successful. The owners of these businesses were people I
believed in, people of integrity.
I helped them to move their business to the next level. I am talking of even up
to 200-300 million businesses. I was doing up to ten businesses a year. I just
went back to the drawing board, recreated the concept to make room for me to
handle more businesses, businesses of people I do not know, people in all parts
of the country. That is the genesis of what I am doing now.
Got idea from anyone?
No. I just started on my own personal journey. I believe that all businesses
are the same. I am a very systemic person. Across the board, all entrepreneurs
need money, they have accounting problems. I just told myself, 'let me create a
system that every business can use'. It has been a big challenge because I have
to get a lot of people to believe in it.
The SME sector is a very huge sector to work in
Typically, there are no good returns. I had to create an unusual model which
was one, whereby I could make it so creative that I could rely on, to a degree,
for there own vested interest, some degree of corporate sponsorship, some degree
of CSR, of intervention, some degree of multilateral interest. About two and a
half years ago, I needed a World Bank or IFC to join us as participator. In the
last one year, we got a grant, a very small grant from the MSME Project - a
collaboration of the World Bank and the Federal Government. In people's mind,
this gave us credibility, but more importantly, it helped us to restructure.
Support
More recently, we got a referral from another very large organisation - a
strategic research grant from one organisation in New York. And SMEDAN has
endorsed the product. The National Planning Commission has also recently
endorsed it. And we are working very seriously to create a nationwide
distribution channel and make a change and impact nationwide. Every business
development provider can only do 10 to 50 people a year. To me, that is not
going to make a difference in a nation of 140 million people. You've got to do a
million, reach out to a million people, may be 100,000 that is 10 per cent of
that will benefit.
If 100,000 benefit, this will trickle down to their family and several other
people. That is how you make a change. I have a young daughter. I grew up in
this country. I believe I should make myself useful to my country and its
people.
The business
What we do is business consulting services to the SME sector. But rather than
the current practice which is directly from the consultant to the entrepreneur,
this is such that it can embody a network of providers, Fate Foundation - all
the normal people.
They can now receive from this network. We can now deliver high value services
to the enterprise and SME sector, almost free. And in that way, there is a lot
of acceptance, there is a lot of buying, and you have got to deliver it in such
large volume so that you now incorporate the real sector, the not-so-lucrative
sector, and sectors like agriculture - the non-oil sector, the not-so-attractive
sector. And even with a reach outside the traditional commercial centres of
Lagos, Abuja, and Port Harcourt. What happens to people in Kafanchan,
Kotonkarfi, Pategi, etc?
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Uniqueness
SMEDAN is quite different from my own project. SMEDAN is a government body
empowered to create policy, to create structure, to create an enabling
environment for the SME sector. What I am setting out to do is to try to work
with as many stakeholders as possible to deliver a different kind of value.
There a few business people who have actually gone into business without being
an entrepreneur.
I have been there, I have tasted it. I know what it means when the banks shut
their doors on your face repeatedly, when you can't find money, when you can't
write a business plan, when you give somebody money to write a business plan and
he comes back with crap.
When you take your eyes off your business in other to grow it, the business
suffers. You never stop fire fighting. I have created a system - a business
solution- everything from accounting to human resources, to normal business
management, to business plan and business plan financial - all of them with an
appeal to different stakeholders. And I have got something for the banking
sector. It is a tool that can revolutionalize even the way they approach and do
business with the SMEs.
That I am going to launch in 2008. Now what difference? We are a private
company. We understand the market and we are always working with stakeholders in
the international community and the local community - with educational system,
corporate community, Ministry of Information, Ministry of Women Affairs, with
SMEDAN and anything that impacts on the SME sector nationwide.
Challenge
Mainly funding. Funning enough, credibility is not an issue. I am just in roll
out now. I am credible. May be four years ago when I started, a few people could
have challenged me by saying 'What makes you think you will be able to make it?
You do not have the background that was necessary.' And it was funning.
Because I have worked with a blue chip credit concern in England. I feel their
comment was a bit shallow because they didn't know what I did know. Eventually,
what I say to people is that, I have been an entrepreneur. There are very few
people who actually know what it means to be an entrepreneur in Nigeria.
The terrain is difficult. In England, the statistics is as bad as 85 per cent
of all small businesses fail in the first year. Of the 15 per cent that
survives, a further 35 per cent will fail in the second and third years. Very
few businesses make it to their fifth year.
A handful grows into more than five years. And may be less than ten, a year,
will move from one generation to the next. So you can imagine what it is like in
Nigeria - there is no business support, etc. Part of my work is to try and get
people to improve their business. What I am really after is about drawing a
powerful network. But the key part of what I do is to focus on gathering market
intelligence.
We entrepreneurs are fairly unique human beings. We work with passion. We are
passionate about what we do and when we do this, we forget about one thing -
that business is about bottom-line - is not about I know what to do; I know how
to do it and all that. One requires a better understanding of what business
really is. Like I said earlier in respect of interior decoration business, it is
not all creativity. It is a mix of creativity and business. If otherwise, you
will soon find out you run out of business.
Progress so far
I think it has been outstanding when you consider the fact that our first point
of roll out was the Celtel collaboration which was at the end of August.
Technically for us, this is three months and the business model is working. I
had to make a report to someone the other day and I suddenly realised that from
the income we received, in the affected month period, which was July to
December, only, five per cent of our income came from the SME sector - from the
entrepreneurs themselves.
The business model is working. 80 per cent of the income for that period came
from corporate sponsorship. People said at the on set that they didn't
understand this business model and I kept saying that half of the problem with
the enterprise and SME business right now is that the services that the SMEs
require in order to survive are unaffordable to them.
They are either expensive, or they are out of reach; it would take them too
much effort to acquire the skill set required. They have to travel, leave their
businesses to go somewhere for a training course.
What I am getting at is that, you do this, you take half a million naira worth
of value and you pass it on for N5000 naira. Or better still, you get someone to
sponsor it and you pass it on for N500. Typically, that is the sort of thing
SMEs have to go to two-day training for and pay over N100, 000. So everybody
thinks it is magic. From the point of view of the business model, I have been
able to prove that it does work. Only three per cent of our income, as we are
emerging out in the half year period - July 2 and December 2007 came from
entrepreneurs because the amount we were charging them were so low. And a good
75 to 80 per cent came from corporate sponsorship under the CSR and branding
umbrella. The third area was from grant funding which probably accounted for
about 12 per cent of our income. Now imagine if we had to collect 50 per cent of
that income from the SME sector, it would never have happened.
We had an SME business clinic in November. It was totally free. We placed an
advert in the papers and we got 1200 people for two days. There was one person
from Warri and one from Ado-Ekiti. You know the reason; it was because it was
free. They came out of there, it was very good value, and everyone was saying
'when is the next one'. But one of our SMEs whom we had helped, Mothercare,
donated the hall. It was a lovely hall that you have to rent for N250, 000. We
wouldn't have been able to afford that.
They gave it to us free in appreciation of the services we have been offering
them free. We got another multinational which provided drinks and refreshment.
We funded the rest - the advertising and the equipment we needed. About 10 SMEs
followed us back to the office to know more. Imagine if we had had enough money
to organize it. We are planning to go on a TV show.
There is something entrepreneurs need - they need role models, they need to see
other people having the same problem with them. They need to know that, there is
a community of entrepreneurs out there whom they will look at and say 'Hey, I
didn't know such and such a person had this same problem. I didn't know this
problem was not only mine. I didn't know this was the solution. This person has
tried it this way, okay let me try it'.
There is a huge problem that entrepreneurs are confronted with. The immediate
thing I want to do is to go and draw people from the informal sector to the
formal sector. But you got to develop a lot of incentives.
Nobody will want to pay tax for an instance.
But if you get to know that providing more structures will give more access to
finance and to
money, etc, etc, you will buy into it. We have to keep on creating win wins.