Regardless of age or social class, (almost) every Nigerian appears to be affected by the inflation rate, which rose by 16.82% year-on-year (YoY) in April 2022.
Among the affected groups, small business owners seem to have it worse. Most of them don’t make as much as they used to, as their customers have less purchasing power and supplies are ridiculously expensive.
We spoke to some small business owners to know how affected they are by the current inflation. Here is what they had to say.
“Every time I go to get my baking supplies, it seems the prices have tripled since the last time” — Folake, Caterer
I’m frustrated. Every time I visit the market to get my baking supplies, it seems the prices have tripled since the last time I came. And while increasing my prices to reflect this cost increase is the ideal step, I can’t do that because my customers will think I’m trying to exploit them. They often don’t understand I’m running at a loss when I sell pastries and cakes at my old, “fair” prices.
“This is the worst year for my business” — Kola, Boutique Owner
I really want to give up my clothing line, as this is the worst year for my business. The exchange rate has made clothes very expensive. For instance, there is a particular designer outfit that I used to sell for ₦90,000 in 2021 that now goes for ₦150,000.
The price hike is just crazy, making customers reluctant to purchase the way they used to. I don’t blame them, though; the economy isn’t friendly to anyone. But I’m really tired because this is my only source of income. If it crashes, I don’t know what else to do.
“I live from hand to mouth as my profit margin is next to nothing” — Deborah, Supermarket Owner
I sell foodstuff as a retailer, and I live from hand to mouth as my profit margin is almost next to nothing. Whenever I try to include a price that makes me profitable, customers act as if I’m trying to extort them. It’s exhausting, to be honest. Imagine a bag of beans selling for ₦100,000?! Who could have imagined that? I pray for things to get better because this isn’t sustainable.
If you’re an entrepreneur with a similar experience to any of the above entrepreneurs, consider these tips:
- Stay flexible. With the global economic downturn expected to happen soon, you might want to consider increasing the prices of certain goods (particularly essentials) and save when you can. Remember, the inflation rate won’t always be this high, so stay flexible and make suitable adjustments.
- Invest your returns. The constant surge in prices means a reduction in the purchasing power of your cash savings. For this reason, you need to consider investing your earnings. This doesn’t have to be a huge sum; it could be a bare minimum of cash in your account, depending on your capacity.
- Maintain and expand your network of suppliers. The present inflation is fueled by supply chain disruption. As a result, you need to protect your business by frequently communicating with suppliers to have a sense of the products in highest demand and going as far as having a long-term contract that prevents price instability. This will save you time and cost in the future.
- Think long-term. Inflation is temporary, but your business is forever. So keep thinking about the long-term vision of your business and taking steps to ensure the vision comes true.