Leveraging Shared Facilities To Cut Operating Expenses

Every economy relies heavily on its small and medium-sized businesses. Lack of access to funding, poor infrastructure, and poor packaging can, however, stifle growth of SMEs, especially, in Nigeria businesses were the one providing, road, electricity, security, water system and so on by themselves.

Providing all these facilities as an SME, always increases operating expenses, hence, affecting negatively, the overall bottom line.

To cut down on business operating expenses, experts have suggested that SMEs operate in a cluster such that it would be easier for shared facilities, hence, reducing, business operating expenses.

Establishing a common facility for businesses can provide the needed support for SMEs to thrive. Such facility is expected take care of the infrastructural challenge, whereby, individual startup businesses do not need to invest in generators to generate power but tap from the same power generating set to bring cost of power generation and so on.

Just like every other entrepreneur in the country, a  baker, Blessing Adamu, complained that lack of ovens and other equipment have hindered her from baking cakes since he is not financially buoyant to buy those equipment.

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For instance, in Idu, Abuja, there is a common facility for furniture and wood enterprises that caters for over 525 SMEs. In Lagos, some private businesses have spaces for clients to use as their offices. Also, at the Ikorodu industrial centre,  there is a common facility for packaging, so, even if you have a good product and packaging is a problem, that can be corrected there. There is also a garment maker’s centre where one can come and monogram bottoms on clothes.

Recently, the director general of the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), an agency saddled with promoting the growth of SMEs in the country, Olawale Fasanya, said, having several common facilities will enhance the growth of the country’s SMEs because “you don’t have to invest so much of your capital in that area, especially for the nano and macro sectors that have slim chances of sourcing loans from the banks.”

According to him, some parts of the country have started having common facilities for a specific sector of business within the country. In Lagos, Abuja, Osun, and Kastina, just to mention four, where there is an industrial development centre, they have created a common facility. “So we are looking at businesses within the value chain and bringing them together to provide a common facility for them, where machines will be provided while the users pay a small amount to maintain the facility,” he pointed out.