There have been a continual increase in the number of small businesses existing in the formal and informal sectors of the economy of Nigeria. This can be attributed to the significant role they play as a driving force of economies and the foundation of many first-world countries around the globe. Under the informal sector, they include vulcanisers, single retail marketers, painters, restaurants, repairers, operators of business centre and market women. In the formal sector, they include law firms, consulting, Fintech, accounting firms, and real estate companies.
Economic activities of small business in Nigeria play an unacknowledged but significant role in the country as they contribute immensely to the development of the non-oil sector, generating employment and creating more sustainable entrepreneurship. For example, the prominent Computer Village in Ikeja, Lagos State, Kano Kurmi Market in Kano State, Aba Ariaria Market in Abia State, and Onitsha Market in Anambra State all have multitudes of nano and micro business with massive economic engagements, having little of no intervention of the government.
Self-employment gives independence and self-reliance.
A report by the Nigeria Bureau of Statistics (NBS) reveals that in Nigeria and across its 36 states, there are 41.5 million enterprises. The report further showed that of all Small- and Medium-sized Enterprises (SME), 99.8 percent (41.5 million) consist of micro enterprises. Research has it that the reason why Nigeria has a massive number of this form of business is because there are many advantages that accompanies self-employment. A survey carried out by owners of these enterprises shows that being self-employed provides independence and self-reliance.
Operating a micro enterprises gives the owner control over business without intimidation from external investors. Also, setting up this kind of business is easy as there are usually little or no mandatory regulatory requirements, compared to large enterprises. Usually, it is made up of one to three people with not up to N50,000 initial capital outlay for operation. In most cases, self-employed owners offer direct services like hairdressing, dry-cleaning, fashion designing, event planning and so on; by doing this, they get fast patronage and seamless payments.
It is possible to change business model to align with new opportunities.
Administration in self-employment is not considered a tedious task. This is because the issue of coordination and communication which is usually an impediment to activities in large firms is solved without difficulty in small firms. Unwavering interest and personal attention is easily paid to the specific needs of their customers, who in some cases pay extra fees for urgent and special services rendered to them. Due to long-term relationship and personal attention enjoyed, some customers stick with these firms.
Also, the process of decision-making and taking is advantageous because most owners of the enterprises are the operators of managers. There is less bureaucracy in this set-up, unlike large enterprises where decision processes take a lot of time. Agility and flexibility is enjoyed in owning a small business because of the seamlessness with which capital can be transferred to other sectors in case of an opportunity. As a matter of fact, they have the liberty of changing their business model for the purpose of aligning with new opportunities.
Government should support sustainability of small firms.
Additionally, the survey revealed that focus is another merit of operating a small firm because the operator’s focus will be relatively narrow. Therefore, it was advised that the Nigerian government have more involvement in the development, growth and sustainability of small businesses across the country to aid reduction of high case of mortality and non-performance. It is necessary that the government realise that small enterprises are significant to creation of jobs, innovation, wealth creation, economic diversification, poverty reduction, and redistribution of income.
Lumen learning: Website