A DISCUSSION FOR THE NIGERIAN ENTREPRENEUR
Every business, whether it is a pure water factory in Edo State or a tech startup in Lagos, lives with two twins: Risk and Resilience. One wants to kill the business, the other wants to keep it alive. You cannot run a business without understanding both.
*WHAT IS BUSINESS RISK?*
Business risk is anything that can make you lose money, lose customers, or even close down. Risk is not just bad luck; it is part of the game.
In Nigeria today, we face several types of risk:
*1. Economic Risk:* This is the biggest for us. Dollar goes from N800 to N1600, fuel goes from N200 to N1,200, light is not stable. You budgeted N50,000 to produce 100 bags of pure water last year, this year the same 100 bags cost you N90,000. If you don't increase your price, you run at a loss. If you increase too much, customers run away. That is economic risk.
*2. Operational Risk:* This is what happens inside your business daily. Your machine breaks down, your staff steals, your delivery truck has an accident, your water treatment filter fails and NAFDAC seals your factory. One small mistake inside can stop the whole business.
*3. Financial Risk:* Many businesses in Nigeria die because of cash flow, not because they don't have customers. You supplied goods on credit to customers and they didn't pay. You took a loan from LAPO or from bank at 30% interest and you cannot pay back. You put all your money in one product and that product fails.
*4. Market and Competitive Risk:* A new pure water factory opens beside you selling cheaper. Or people start buying bottled water more than sachet water. Or your customers move from Facebook to TikTok and you are still advertising only on Facebook. If you don't follow market, market will leave you.
*5. Regulatory and Environmental Risk:* Government policy can change overnight. Ban on importation, new tax from State Government, NAFDAC new registration requirement, flood that enters your shop in Benin during rainy season. These are outside your control but affect you directly.
*6. Reputational Risk:* One bad video of dirty production process posted on WhatsApp can destroy 5 years of your brand building. In the age of social media, reputation risk is very fast.
*WHAT THEN IS RESILIENCE?*
If risk is what wants to kill the business, resilience is the ability of the business to absorb shock, adapt quickly, and come back stronger. It is not about avoiding risk completely - because you cannot - it is about building a business that can bend without breaking.
A resilient business owner does not pray that risk will not come; he prepares for when it will come.
*HOW TO BUILD RESILIENCE - PRACTICAL LESSONS FOR NIGERIAN BUSINESSES*
*1. Don't Depend on One Thing - Diversify.*
If you only produce sachet water and there is fuel scarcity, you will stop production. But if you also produce bottled water and also sell ice block, you can survive. Don't depend on one supplier for nylon, don't depend on one big customer, don't depend on only one marketing channel. The table water business that sells to schools, churches, parties, and offices is more resilient than the one that only sells to one supermarket.
*2. Cash Flow is the Blood of Business.*
Many entrepreneurs focus on profit on paper, but resilient businesses focus on cash in hand. Keep 3 months of operating expenses in a separate account if possible. Don't use all your profit to buy land or car. Keep emergency fund for business. When NAFDAC comes for renewal or machine breaks, you will not be begging around.
*3. Build Systems, Not Just Hustle.*
If your business only runs when you are there, it is not resilient. What if you fall sick for 2 weeks? Write down how things are done. Train your staff. Keep record of your customers' phone numbers. Have a manual for production. System makes your business survive even when you are not around.
*4. Embrace Technology and Information.*
The resilient business owner in Benin today uses WhatsApp Business catalog, uses POS, uses simple Excel to track daily sales, follows dollar rate and fuel price news. Information is a resilience tool. Join your association - like Association of Table Water Producers (ATWAP) - they will inform you before new policy hits.
*5. Strong Relationship Capital.*
Your relationship with your customers, your staff, your suppliers, and even your competitors is a form of insurance. When you are short of nylon, a supplier who knows you will give you on credit. When you are in trouble, loyal customers will wait for you. Treat people well when business is good, so they will stand with you when business is bad.
*6. Adaptability and Continuous Learning.*
Nokia was killed not because they lacked money, but because they refused to adapt. The business owner who says "This is how we have always done it" will not survive. Learn new packaging, learn new marketing, learn how to sell on Instagram, learn how to reduce diesel cost with solar. Resilience is learning faster than the market is changing.
*7. Insurance and Legal Protection.*
Many small businesses in Nigeria ignore insurance. Insure your factory, your vehicle, your workers. Register your business name with CAC, register your product with NAFDAC, have a lawyer check your land papers. These small costs can save you from total loss.
*CONCLUSION*
Risk will never leave business. In fact, the bigger your business grows, the bigger the risk. Dangote takes bigger risk than a small shop in Ring Road. The difference between businesses that die in 2 years and those that last 20 years is not that they avoided risk, but that they built resilience.
For us in Nigeria where the environment is very harsh - no stable power, unstable policies, inflation - resilience is not an option, it is a must. Build a lean business, keep cash, build systems, build people, and stay adaptable.
As the old saying goes: "When the wind blows, some build walls, others build windmills." Resilient entrepreneurs build windmills. They use the same wind that is destroying others to power their own business forward.
What risk is your business facing right now and what step are you taking to become more resilient?