How to protect your SME from inflation

 

Prices of goods and services have risen across the nation, and this is the same around the globe. Small and medium-scale business owners are feeling much of the scourge, and Many have been forced to downsize or go down the drain.

This year most especially, has become a tough one for Nigerian, and other African countries. The inflation rate is at its highest peak and there’s no sign of it abating soon.

Businesses are on the verge of collapse, while business owners are racing again time to stay afloat.

It’s a tough reality for many because the signs are everywhere.

But the truth is that inflation is common to all businesses. Be it a small and medium scale business or a large corporation. In reality, everyone grapples with it.

The presence of inflation has influenced the operation, planning, and pricing of organizations for decades and in recent times.

And so, while the high and inflated cost of things has spelt doom for many, especially those SMEs, there is a way to protect yourself and your business from its scourging effect.

The good news is that with the right approach, methods, and decisions, inflation can be managed and even mastered, and this is what this article promises.

This article gives true and time-tested ways businesses can manage and master inflation, and have an undue advantage over other businesses.

What is inflation?

                                             

Inflation generally refers to the rate at which the prices of goods and services rise due to bad economic factors and governmental policies.

The rise of goods or services in a sector of an economy can cause a ripple effect on the other sectors, and when this happens, it’s said that inflation has set it.

In Nigeria, two main factors that have caused so much inflation within a short time are the fall of the Naira against the dollar. Also, the removal of fuel subsidies from fuel consumption.

These two factors cause a ripple effect on everything ranging from basic commodities to the cost of goods and services.

And by the basic law of economics, inflation will always affect the chains of production, laying off of workers, and downsizing the organization. On the consumer side, it led to low demand for goods and services, especially luxury goods. 

This means sales will be less and the profit will be reduced, while the running cost for organizations increases.

This of course has spelt doom for several, especially the SMEs.

Let’s take a good look at what constitutes small and medium-scale enterprises.

Is your business a small and medium-scale enterprise?

Small and medium-scale enterprises make up the majority of businesses around the globe. They are independent organizations or firms with less than 50 employees.

However, the maximum number of ranges for SMEs differs around the world. For example, the UK defined small and medium-scale enterprises as those with 500 employees or less.

In Nigeria, the Small and Medium Industries Enterprises Investment Scheme (SMIEIS) defines small and medium-scale enterprises as any firm or orga

with a maximum asset of two hundred million naira, excluding land and working capital, with at least 10 or more than three hundred staff.

Now you have a grasp of what an SME is all about.

How does inflation affect SMEs?

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With rising inflation, every element that constitutes your small and medium-scale enterprise becomes affected. Businesses begin to feel the effects of the procurement of raw materials, the cost of lighting, and so on.

Again, because we live in a world that has to do with the survival of the fittest, incorporating these high costs in your business, seeking to maintain quality and deciding to increase the cost of goods or services becomes very challenging.

Inflation affects every facet of the business. employees may look for their so-called secured Jobs during inflation, while others may demand an increase in wages and salaries. 

Causes of inflation 

Inflation is an effect of a cause. The cause of inflation ranges from several economic factors, and political factors and also can be caused by war, drought, and other natural consequences.

For example in Nigeria, the cause of inflation is the depreciation of the Naira. Since Nigeria is an import-dependent nation, it relies so much on the dollar. This has led to an increase in the dollar, ultimately causing increases in goods and services.

Another pivotal cause is the removal of fuel subsidies. And since the price of petrol has a direct effect on the cost of goods and services, the high became one of the major causes of inflation in Nigeria.

The ongoing war in Ukraine has also caused the price of wheat to increase. This has a direct effect on the cost of bread and pastries.

4 ways to protect your business from inflation 

1. Reduce any fixed costs that are not indispensable to business

Inflation is a good opportunity to reevaluate running costs and reduce any costs of running the business that is not critical.

Determine whether your subscription, consumables, and other less critical operations are necessary.

This is very important. Having taken the inventory, you may find a huge chunk of cash that can be saved from this evaluation.

While this is important, it is not advisable to downsize the business workforce. These people are the much-needed capital that is needed in getting you to overcome inflation. Don’t do this, unless it’s extremely critical and unavoidable

2. Diversify your supply chain

As inflation ranges, businesses must become prudent in diversifying their supply chain. By this, we mean that businesses should seek different and multiple channels to get their raw materials. Inflation may cause shortages of these materials, as some vendors may be forced to close up. However, having multiple channels will help you to absorb any effect of such eventuality.

Also, having multiple channels of supply will increase your bargaining power, as you will have more leverage to make bargains that are beneficial to the business. Also, this means that there will be no time for the business to experience a shortage of these materials

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3. Optimize the whole business operations

During inflation, the first capital you must seek to optimize is the staff. Redirect their role, split the group if necessary, remove any bureaucracy within the leadership and let things run as swiftly and fast as they could. 

You must seek to manage the people so that their input produces more than usual. 

Cut any time spent on frivolities, and seek new ways and technologies to speed up processes.  Cut any non-essential trips and retreats, AMD lets the whole team work and strategies more to beat the recession

4. Make the price adjustment

Inflation comes with rising costs of businesses and supply. And one of the effects on your business must be the increase in the price of your goods and services. However, you must be prudent in this regard. It’s noteworthy to state that during inflation, consumers are shocked, they spend less and often seek alternatives.

To beat the businesses, you must increase your prices as slowly as possible, while you do everything to still retain your customers

Conclusion

Managing inflation is critical to business survival. During inflation, you must move quickly to allow for the necessary changes that must be made in the interest of the business. 

Organizational agility is very important in this regard. As stated earlier, downsizing the workforce may not be in the interest of the business in the long run. It must be done only as the last resort.

6 Financial literacy lessons you won’t learn in school

 

Financial education is a very important aspect of our education. Unfortunately, our educational system has robbed us of this very important aspect of our lives. And while the school has made it compulsory to teach subjects like mathematics, English, and other subjects as the basis for success in life, they have neglected the very and most important parameters for success.

Financial literacy is a must for everyone who wants to be successful financially. And if you need this type of education, you must look outside the four walls of conventional schools, because it’s not taught there.

This article deals with the core of money education you may never have heard about, because it’s not taught in schools.

Why you need financial knowledge

Financial education has to do with your ability to grasp and effectively use various financial skills, from budgeting and knowledge-based saving to debt management and retirement planning.

Financial literacy equips you with the understanding needed to make informed decisions, leading to greater monetary freedom, less stress, and a better quality of life.

Financial literacy empowers you to take control of your finances and navigate the challenges and opportunities that arise

Conversely, low financial literacy threatens your financial well-being and that of your family. Without a sound financial education, you will be more susceptible and prone to predatory lending and costly errors in managing your finances and expenses that can lead to lifelong financial deficit and ultimately low quality of life.

When you lack financial knowledge, you are more likely to become trapped in cycles of poverty and debt. 

For example, poor spending habits and unwanted borrowing habits often lead to a frustrating end.

Now let’s talk about some of these lessons and insights that will help you to make informed choices when it comes to financial matters.

6 time-tested financial lessons you won’t learn in school

1. To make more money, you must love money and talk about it often

I know this is contrary to popular opinion, but the truth is that those who are wealthy are those who are money-conscious. They talk about money, they think about money and they see money everywhere. This is very simple and at the same time very logical.

By the law of attraction, you become attracted to what is dominant in your mind, what you always see and talk about. This is a very important rule of money and life generally. So deliberately think about wealth, talk about abundance, and never in any circumstances think about lack or even confess it.

This seems so basic, but it is the root of all lasting wealth and prosperity. And of course, you were never taught in school. 

2. Saving for the short term is good, but saving for the long term is bad

People save for several reasons like buying furniture, rent, and other short-term concerns.

However, saving for the long term or retirement may be wrong for several reasons.

One major reason why this may not be a wise decision is because of the high rate of inflation and currency depreciation.

For example in Nigeria, the inflation rate from 2020 to 2024 alone is almost 80 percent. And the Naira has depreciated more than more than imagined. For one saving for the long term, it becomes so unreasonable to do that, because, in the end, the value of what you have saved would have amounted to nothing. The worth of a million Naira in 2020 is now about 200 thousand naira.

Rather than saving for the long term, you should invest for a long term

3. Have a budget and track all your spending and expenditures

It takes financial discipline to be rich. This testament is true. It takes such a level of discipline to track all your spending and expenditures. This is important as it allows you to know whether you have exceeded your budget or not. 

Tracking your expenses helps you to become mindful of what you spend your money on. And without a budget, everything becomes a surplus. You see yourself spending without a boundary only to realize you have exceeded your financial threshold.

4. Know the difference between assets and liabilities

Most people don’t know assets and liabilities, and they can’t differentiate between the two. Hence they end up prioritizing liabilities over assets, which will ultimately lead to financial failures in the long run.

Assets are things you buy or own that appreciate with time, while liabilities are things you buy or own that depreciate with time. While building a house is an asset, buying a car for luxury is a liability. Investing in yourself on the other hand should be your greatest asset. This means you must take the discipline to invest your finances in knowledge, equipping yourself with the relevant skill set, and necessary education, especially financial education.

On the other hand, going for luxuries and other wishful spending can be termed as liabilities, as they will amount to nothing in the long run 

5. Know the difference between bad debt and good debt

use, that is a good debt, while getting the same loan to get a personal car may be termed bad debt. Bad debt is a loan spent on liabilities, while good debt are loan spent on assets.

Knowing the difference will help you make informed choices on how you spend your borrowed money. The fact remains that it is never wrong to get a loan. But it is wrong to spend that loan on liabilities. Most individuals and corporate entities get loans for their businesses and it will interest you to know that most corporations do that. 

6. Get a Job, but becoming an entrepreneur is better 

While school and society will teach and empower you to get a job, it’s better when you become an entrepreneur.

There is nothing wrong with getting a job, but you must strive to be an entrepreneur, be it on a small scale or a larger scale.

The truth must be told that inflation only affects salary earners, whose earnings are fixed, no matter the inflation.

So taking Nigeria as an example, while the salary earners are groaning for the spike and increment in price of goods and services, the entrepreneurs are adjusting their selling prices to accommodate for the inflation.

So, inflation has little or no effect on the entrepreneur. Of course, inflation causes a decrease in demand, which ultimately may affect their sales, but on a broader view, the average entrepreneur increases the cost of his goods and services to reflect the current economic situation, while the salary earners are at the mercy of their fixed income irrespective of the current economic situation 

Conclusion

Financial literacy will save you from the errors of the naive and uninformed as regards your finances. In this vain, I must state that investing an amount of money or budgeting an amount of money annually for your financial education is a great and wise investment.

While you may agree with me on the aforementioned, I need you to take action now on these very six concepts I have exposed you to. And if in any way you have been complicit, and misunderstood any of those concepts, then it is high time you make the necessary adjustments now.

A few years from now, you will be happy you did.

10 Best Australian universities for Nigerian students

 

There are plenty of study destinations popular among Nigerian students and Australia is one of them.  You can only find unadulterated wilderness and the birthplace of contemporary civilization—including colleges, universities, and schools—in Australia. The contemporary educational system and the outbacks frequently leave the observer in wonder. 

If you’re interested in studying in Australia but you’re feeling overwhelmed by the options, then this article will guide you. In this article, I’ll outline the top 10 universities in Australia for Nigerian students. 

1. The Australian National University

According to the QS Best World University Ranking 2022, ANU is rated 27th.

Australia’s top university and the country’s top employer of recent graduates. It is a public research university located in Canberra, the capital of Australia. It was established in 1946.

In addition to courses in the fields of engineering and technology, life science and medicine, business and management, and the arts and humanities, it provides undergraduate, postgraduate, and professional degree programs.

2. University of Southern Queensland

In 1967, the University of Southern Queensland was founded and is situated in the city of Brisbane. Over 110,000 graduates from the institution have graduated to date, and they are spread throughout 146 different countries.

Upon acceptance, international students at this institution are eligible for a variety of advantages including on-campus and off-campus housing, counselling services, multifaith support, regular events, and healthcare.

3. University of the Sunshine Coast

Brisbane, the capital city of Queensland, is home to another world-class university, the University of the Sunshine Coast which was founded in 1994. Over 25,000 of the university’s active graduates are now employed in prestigious positions throughout the world.

Admitted international students at the University of the Sunshine Coast benefit from a five-star education, an exceptional study experience, flexible degree options, and first-rate academic skill support.

4. Edith Cowan University

The Edith Cowan University was founded in 1991. The institution now boasts a robust global network of more than 175,000 alumni. Perth, the capital city of Western Australia, is home to Edith Cowan University.

Admitted international students at Edith Cowan University enjoy a variety of benefits, including a welcoming atmosphere, tolerance for other cultures, cutting-edge learning facilities, exposure to business, and employment opportunities. 

5. Charles Darwin University

The Menzies School of Health Research, Northern Territory University, and Centralian College merged to become Charles Darwin University in 2003. The University is located in the northern capital of Australia, Darwin.

The institution has a robust network of 70,000 active alumni in 140 countries as of 2022. Admitted international students at Charles Darwin University are offered a variety of benefits, including a cutting-edge academic environment, chances to discover new interests and talents, and an extensive extracurricular curriculum. 

6. University of Melbourne

The University of Melbourne is the second-best institution in Australia, coming in at number 37 on the QS Best Universities in the World 2022 ranking.

This institution provides a wide range of bachelor’s and master’s level courses in the following areas: business and management, natural sciences, engineering and technology, life sciences and medicine, and arts and humanities. For overseas students, it also provides MBA and Executive MBA programs.

The institution grants scholarships based on several factors in addition to merit. When gifted overseas students enrol in undergraduate or graduate programs in 2022, the institution will provide them with further assistance.

7. Australian Catholic University 

In 1991, Australian Catholic University was founded. Currently, 125,000 students have had the good fortune to graduate from the institution with a degree. The campus has the distinction of being in one of the biggest cities in Australia and is situated in the centre of South Wales, Sydney.

International students who are accepted to Australian Catholic University, or ACU, benefit from a variety of experiences that broaden their perspectives on the world, including diverse worldviews that are very desirable to employers and much more. 

8. The University of New South Wales

The leading research university in Australia, UNSW, is ranked 43rd in the QS Best Universities in the World. According to the QS Graduate Employability Rankings 2022, UNSW is rated 32nd globally and third in Australia.

To prepare its students for real-world experiences in disciplines of study including engineering, medicine and health, law and justice, business and management, and arts, design, and technology, the institution uses hands-on teaching methods. They are well-known worldwide in a variety of sectors, including quantum computing, sustainable materials, solar power, and many more.

With UNSW offering several scholarships and different route programs to get into the desired degree, students may study in Australia on a scholarship. International graduates who meet the requirements of the applicable visa stream may be able to work full-time lawfully. After graduating, master’s degree holders are permitted to remain for a further two or three years to find employment.

9. Charles Sturt University

The Charles Sturt University was founded in 1989. The institution now boasts more than 215,000 active alumni who are dispersed across many nations. Sydney, Australia, the state capital of South Wales, is home to the campus.

After being accepted, international students at Charles Sturt University are eligible for savings on tuition, health and welfare benefits, and a free lifelong membership in the university library.

10. Western Sydney University

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As the name implies, the campus is situated in Sydney, Australia. The Western Sydney University was founded in 1989. By 2022, the institution boasts 200,000 active graduates who are now contributing significantly to a variety of global businesses.

Upon acceptance, international students at Western Sydney University are eligible for a variety of privileges, including career service support, free library use, student discounts, and much more. 

Conclusion

For a very long time, Australia has offered the greatest advantages and experiences for students. Look no further if you’re a Nigerian looking for the best universities in Australia that will cater to your needs academically, as well as provide you with a conducive and welcoming environment.