6 Key financial skills to grow SMEs in Nigeria

As at December 2021, there are at least 39,654,385 micro, small and medium enterprises (MSMEs) running in Nigeria. According to a report, SMEs account for 96% of businesses and 84% of employment contributing 48% to the national GDP of Nigeria

The report by Moniepoint further explains that over 50% of SMEs fail in their first year of operation.

Additionally, funding, finding customers and infrastructure deficits like electricity are the most pressing problems of SMEs

This blog post wants to focus on the funding aspect of the problems facing SMEs in Nigeria

Lack of financial skills are one of the major problem for businesses to thrive and also raise funding. A business without proper recording keeping and balance sheet cannot raise fund to grow

Getting grants like that of Tony Elumelu Foundation and getting admitted to SMEs Programs like that of

Providus Bank SME Program 5th Cohort, financial skills are required for SMEs and business owners

That is why key financial skills to grow your business are very important to learn and master

6 Key financial skills to grow SMEs in Nigeria

Cash Flow Management Skills

According to SMEDAN, a body regulating SMEs in Nigeria says cash flow is a major challenge for Nigerian SMEs. Most business owners don’t understand their cashflow and how to effectively manage their money

Small business owners should learn how to understanding cash inflows and outflows, creating cash flow analysis, managing their account statement and managing expenses effectively.

Financial Record Keeping Skills

PWC a powerhouse global financial consulting firm says only 30% SMEs in Nigeria keep financial records.

Of course, without proper financial records, businesses cannot access credits, grant opportunities, Government support and so on

Skills like bookkeeping, invoicing, expense tracking, and reconciling bank statements are key financial skills an SME should learn to grow and access different opportunities

Financial Analysis Skills

Globally, businesses are data driven to make informed decisions. SMEs must understand how to make financial analysis in their businesses

Understanding and analysis financial statements like income statement, balance sheet, cash flow statement can help SMEs identify areas for improvement and assess business performance in their businesses

Skills like Data Analysis with Excel and Power Business Intelligence which you can learn from online schools like Upschool Africa can help in calculating key financial ratios (profitability, liquidity, solvency), understanding financial trends, and using data to make informed decisions

Digital Financial Literacy Skills

Understanding digital business payment solutions in this fintech era can help SMEs quickly grow globally and reach larger audience

Many SMEs still don’t know how to accept payment online using fintechs and payment gateways

Fintechs like Paystack and Flutterwave can help SMEs quickly expand across Africa and globally by enabling customers in other countries to make payment seamlessly

Business Plan & Grant Writing Skills

There are so many grant and funding opportunities both locally and internationally begging SMEs to come and take money to boost their businesses

Unfortunately, many business owners don’t know how to write business plan or grant writing. Without these skills, it is difficult to raise funds

Even if you want to get loan from banks, they will ask for business plan

Learning how to write business plan for your business and grant writing can help SMEs quickly access funding for their growth

Talents Investment Management Skills

This is one of the key skills SMEs should learn. How to manage people for better performance in the workplaces

Soft skills, emotional intelligence and productive tools are key to manage different people for collective goals

Understanding when to hire and fire can rapidly skyrocket the finances of a business