Many small business owners sell on credit in a bid to attract and retain customers but this has sounded the dealth knell for some of them, WILLIAMS BABALOLA writes
Many small businesses have sprung up in Nigeria and have disappeared from the business climate, leaving no trace except the debts owed by people who consumed their goods or services on credit. On the list of debtors are close relatives, friends, associates, acquaintances, among others.
Some entrepreneurs, who spoke with Africana Entrepreneur in separate interviews, lamented the impact selling products or providing services on credit has had on their businesses.
They said no fewer than 40 per cent of customers patronised them with the intention to buy on credit. For them, the fear of a strained relationship has made it difficult not to satisfy the customers, even though it is taking a toll on their businesses.
A foodstuff vendor, Mrs Modupe Lawal, was emotional all through while sharing her experience with Africana Entrepreneur in her shop at Ogba, Ikeja.
Lawal told her correspondent that selling on credit had killed the businesses of many entrepreneurs.
According to her, most debtors do not pay on time, thereby making it difficult for the entrepreneurs to restock or pay their service providers and make further investment to grow their businesses.
She said, “It (selling on credit) has ruined so many businesses. When you always sell on credit, you will always find it difficult to reinforce and buy new goods when you have little or nothing left in your store. So, it is tantamount to retrogression.
“Most people buy on credit and will refuse to patronise you for a long time; they start buying from other shops. The reality is that customers don’t always pay on time; it has happened to me several times.”
Lawal said some people would ride on a wave of friendship or familiarity to buy on credit and then would not pay their debts on time or at all.
“The proper way to address buying on credit is to call it a societal attack. Some customers are very difficult when it comes to money matters. They buy on credit but they don’t want to be asked to pay their debts. Selling on credit to such individuals can lead to a strained relationship. And because of the environment we are in, we try to stay away from having strained relationships,” she added.
A fashion designer, Ms Sarah Oluchukwu, bemoaned the situation of things in the country.
According to her, many small business owners tolerate indebted customers mainly because of the fear that they will lose the customers to their competitors.
She said, “I don’t have an another business; I am a full-time tailor. How do you expect me to react to a customer that owes me? At times, I still find myself begging a debtor to bring her materials; we are only hoping things get better.
“Even as tailors, we need money to keep our businesses afloat. When you are in debt or owed by a customer, how do you grow your business? It’s not new; we have seen potentially great businesses liquidate. Have you ever wondered why? Mostly, it boils down to the customers’ continued inability to pay for the service rendered to them.
“Unfortunately, this same debt will make you lose the good customers you have. Whenever you can’t deliver when necessary, probably because of the trauma you are going through, they switch to the next person.”
Oluchukwu added that it would be difficult for an entrepreneur to access new opportunities when in debt.
“When there’s no good cash flow and financial management, you run into debt. Most times, market conditions change and you can’t flow with the tide because of the debts owed. This, therefore, put your competitors ahead of you and, sadly, you remain at a spot,” she added.
Mr Adewale Desco, who owns a barber shop in Ogba, Lagos, condemned the act of selling on credit, saying, “Ahough it is difficult to resist in this part of the world, it is a killer of businesses.”
He said many businesses had closed shop as a result of debts owed by customers.
He said, “Some persons are too close and that has made it difficult to refuse to render services to them on credit. It is a direct way to kill a business. They are killing our businesses by believing they are very good customers or too close to pay at the time of purchase.”
Desco, who decried the poor electricity situation in the country, said, “How do business owners like me cope if we still have to render services on credit.”
He said, “I own a barber shop; I need light for everything I do here. Can I also buy fuel on credit so as to satisfy a customer who wants to have his hair cut on credit? Apart from buying fuel, there are so many other things we need to keep the business running. All these things can’t be purchased on credit. Never!
“There was this certain day I didn’t have anything on me because I just paid my rent. I reserved the little fuel I had so I could use it for two customers and get fuel to continue the business for the day. After rendering the service, the two customers started telling me stories. That was the end of business for that day. How was I expected to get fuel?”
He said sometimes, the people who came without money were people he could not refuse to attend to.
“I have customers who have had their hair cut for four consecutive times without paying. In this part of the world, entrepreneurs are blackmailed with cordial relationship,” he added.
The Vice President, Association of Small Business Owners of Nigeria, Mr Kayode Okarende, likened buying on credit from small businesses to taking loans from them.
He said, “It is a barrier for Small and Medium Enterprises. One of the biggest problems of SMEs is capital. So, buying on credit is like an indirect loan for him. And unfortunately, in this country, everything is ‘cash and carry.’ And most times, a small business owner will have to sell on credit particularly to corporate bodies.
“So, when he is not able to get goods on credit but he has to sell on credit, his capital will be totally messed up at this point. It leaves him with either a struggling business or a dying business.”
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