Growing your business: Strategies for Scaling Up
In Nigeria’s dynamic and fiercely competitive market, pursuing continuous growth is not merely a choice; it’s an imperative. Over the past two years, the business landscape has witnessed a remarkable surge, with a 35% growth in new enterprises and a 50% increase in company registrations in the nation’s commercial hub. This heightened competition underscores the need for businesses to strive for excellence, deliver unmatched value to their customers, maximise profits, and stand out within their niches.
Scaling your business can be a formidable yet profoundly rewarding journey, with benefits that range from increased revenue and profitability to a more substantial market presence and elevated brand recognition.
This comprehensive guide will explore the intricate process of expanding businesses in Nigeria, equipping you with invaluable insights, inspiring real-life examples of Nigerian businesses, and actionable tips that are guaranteed to aid in scaling your business.
Challenges of Scaling a Business
Scaling up a business involves expanding its operations, customer base, and revenue. This process can be particularly challenging in Nigeria due to various factors such as:
- Limited Access to Finance: Access to financial resources can often be a major roadblock for scaling businesses in Nigeria. Inadequate capital can hinder brand visibility, customer acquisition, and overall growth.
This is a challenge faced by every single business in Nigeria due to political instability, the constantly fluctuating economy and dwindling costs of operations.
- Lack of Expertise: Successful scaling necessitates specialised knowledge in marketing, operations, finance, and human resources. Without these essential skills, businesses risk missing out on growth opportunities and failing to keep pace with industry trends.
A good illustration of this was seen in Paga who confronted a deficiency in technology and financial expertise. This challenge primarily affected their ability to provide innovative and efficient mobile payment solutions, which in turn had notable repercussions on their business operations and growth prospects.
- Market Competition: Scaling up in a more competitive market can be tough. The strong competition can bring challenges like pressure on prices and customer hoarding, which might make businesses lose customers.
Shoprite, a well-known retail giant in Nigeria, faced competition challenges as it expanded its grocery retail operations and encountered formidable competitors. These competitors brought a wave of pricing pressures and heightened customer expectations, compelling Shoprite to adapt swiftly to protect their position as the preferred shopping destination for Nigerians.
- Inefficiencies in Operations: As businesses grow, operational inefficiencies may arise, causing interruptions, errors, and increased costs.
During the critical phase of scaling to serve millions of subscribers, MTN Nigeria encountered significant operational inefficiencies. These issues primarily revolved around the expansion of their telecommunications network. These challenges not only affected the company’s bottom line but also had noticeable consequences on their customer base and service quality.
- The Business Model’s Ability to Scale: Some businesses may struggle to scale effectively if their existing business model is impractical for expansion.
A good example of this can be seen in the case of Glovo, who initially focused on specific urban areas in Nigeria. To achieve scalability, they diversified their service offerings and expanded to serve more cities and areas, adjusting their business model to meet the growing demands of a larger customer base.
- Managing Cash Flow: Scaling up incurs initial costs and higher expenses, which can strain cash flow and jeopardize financial stability.
Andela, a Nigerian technology company, faced cash flow challenges during its expansion phase. To maintain financial stability, they explored financing options, including strategic partnerships and external investments, ensuring a consistent cash flow to support their growth objectives.
Actionable Tips and Strategies
To ensure a successful journey in scaling your business in Nigeria, consider implementing the following strategies:
Develop a Scalable Business Model: Prioritise a business model that can accommodate growth without compromising quality or efficiency. Scalability should be a core element of your business strategy from the very beginning.
Secure Adequate Financing: Explore diverse financing options such as bank loans, grants, angel investors, or venture capital to support your expansion plans. Craft a comprehensive financial strategy to sustain your scaling efforts. We can see this exemplified in Access Bank’s acquisition of Diamond Bank. The merger expanded their customer base and led to more revenue growth, customer reach and Human Resources.
Invest in Infrastructure: Overcome infrastructure challenges by investing in reliable power supply, transportation, and communication systems. Addressing these issues will streamline your operations and facilitate efficient scaling. A good example of a business that did this is MTN Nigeria by significantly investing in telecom infrastructure. This improved network quality and allowed for offering a wider range of services, from mobile banking to e-commerce, thus promoting scalable growth.
Leverage Technology: Embrace technology to enhance productivity, streamline processes, and reach a broader audience. Employ digital marketing, e-commerce platforms, and data analytics to optimise your operations.
Build Strategic Partnerships: Collaborate with other businesses, suppliers, and distributors to leverage their networks and resources. Strategic partnerships can significantly extend your reach and open doors to new markets. We can see this currently happening with Apple Music, who have invested in securing key partnerships with telecommunication companies such as MTN, and local banks to scale up their reach in the Nigerian market.
Focus on Customer Experience: Prioritise customer satisfaction and retention. Invest in exceptional customer service, gather feedback, and continually enhance your products or services to meet customer needs.
Monitor and Analyse Data: Implement robust data tracking and analysis systems to gain valuable insights into customer behaviour, market trends, and operational performance. Use this data-driven approach to make informed decisions and drive sustained growth.
Scaling your business in Nigeria may be a complex journey, but it is an achievable goal with the right strategies and a determined mindset. Embrace the challenges, leverage the benefits, and apply these actionable tips to ensure your business scales in the dynamic Nigerian market. By following in the footsteps of successful businesses, you can chart a path to sustainable growth and prosperity.