Why are Many Small-Scale Businesses Failing in the 21st Century?

The Micro, Small and Medium Enterprises (MSME) ecosystem is often referred to as the engine room of the Nigerian economy as it employs over 80% of the workforce and contributes about 49% to the Gross Domestic Product (GDP). As of December 2020, the number of MSMEs operating within the country stood at 39.6 million compared to 41.5 million in 2017, representing a 4.5% decline. 

According to Investopedia, approximately 20% of small businesses fail in their first year, 50% fail within five years, and 33% make it to 10 years. These failures and eventual collapse are caused by both internal and external factors among which are poor management skills, lack of finance, poor preparation and poor knowledge of the sector and its value chain. The collapse of these businesses can be attributed to a few factors: 

 

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1) Lack of proper business planning: It is essential that a business owner has a good understanding of the business they own. This allows such individuals to be able to effectively communicate with investors and the public. A business plan provides a written-down plan of action, a road map that speaks to both a business's internal and external audience. 

Investopedia outlines the most important components of a business plan as

 An Executive Summary: This is a brief introduction to the business and its internal stakeholders. It also outlines the mission statement of the business.

 

Market analysis: This shows an in-depth understanding of the industry the business operates in, highlighting market leaders and other competitors. Market analysis also portrays the need(s) the business will be addressing.  

Sales Plan: This addresses how the business plans to attract and win market share. This will also require an understanding of the business' competitive advantages and plans around modes and channels of advertisement. 

Service and Product Offerings: This outlines the offerings of the business, their pricing, and their benefits to the customers 

Financial Planning: This will include plans and projections for the business, and

new businesses will have to show all targets and estimates for future years. 

Budget: This shows the cost attributed to each aspect of the business, including staffing, stock purchases, Operational expenses, and miscellaneous expenses. 

2) Funding: In Nigerian society, many people believe the best way to fund an idea is by making use of your savings or by raising funds from friends and family. While this path may not be easy, it is no doubt a good one as little to no interest rate is charged. Another alternative is opting for loans from banks and other financial institutions.  

New entrepreneurs might apply for more money than they need from a bank which then makes it harder to repay within the allotted timeframe.  

Lewis, L.V. and Churchill, N.C. (1983) mentioned five stages a business ought to pass through. 

These stages include the existence stage, survival stage, success stage, take-off stage and resource-maturity stage. Business owners must identify the stage in which their business is before applying for a loan. Many business owners at the existence stage take big loans from banks and other financial institutions and end up not being able to repay. It is therefore appropriate for an entrepreneur to know when to apply for loans, the types of funding available and have a funds management framework to guide how much is needed. 

4) Inability to Adapt to Changes: Businesses operate in a world where consumer behaviour, needs and tastes are constantly changing. Consumers’ behaviour pre-Covid19 has drastically changed and is still changing as they settle into the new world order. There is a need for SMEs to ensure that they stay abreast of new market trends and consumer behaviours and adjust their product offerings and marketing strategy to best align with new market behaviour and requirement. 

5) Lack of Sales: One of the major reasons why SMEs fail is their inability to generate constant revenue through sales of their goods and services. Nothing hurts a business faster than not being able to reach its projected sales goals to enable it to stay afloat. One of the ways that this can occur is when the business has customer concentration risk issues (a situation where too 

much reliance is on a particular customer or few customers). Business owners will have to diversify their customer base by ensuring their marketing strategy is well developed to reach a vast number of their available market size. 

6) Poor/Inadequate Management: This is by far the easiest thing to get wrong and the most important part of owning a business: the ability to manage both the human and material resources at a business owner’s disposal. Failure to acquire the required business acumen on the part of business owners and/or management is a pitfall entrepreneurs should avoid and mitigate.  

 While the owner may have the skills necessary to create and sell a viable product or service, they often lack the attributes of a strong manager and don't have the time to successfully oversee other employees. Smart business owners outsource the activities they do not perform well or have little time to successfully carry through. In areas where the funds available are not sufficient for outsourcing, entrepreneurs are advised to register and attend management training programmes to help improve and develop the required skill. 

Conclusion

In conclusion, business owners should be able to embrace evolution in the business world. A business owner who is not able to understand the continuous improvement and growth in the business world is at the losing end and their business will in no time go into extinction. It is therefore advisable for a business owner to identify and predict the present and future of the business world in order to understand the level of consistency, skill, knowledge, and growth that is needed to sustain the business.

Author- Gbolahan Owoeye

Wema Bank Voted ‘Best Overall Investor Relations’ Brand at NIVA Awards 2022

 
Lagos, Nigeria. Monday, May 16, 2022: Nigeria’s leading innovative financial institution, Wema Bank Plc has again been recognized for its commitment to the highest standards of disclosure, transparency, and fairness in disseminating information to investors and other stakeholders.

The Bank was on Saturday May 14 awarded the ‘Best Overall Investor Relations’ brand at the 8th edition of the prestigious BusinessDay Nigeria Investor Value Awards (NIVA) for its adherence to corporate governance ethics in driving its impressive performance on the Nigerian Exchange – NGX.

Speaking on the award, Head, Marketing Communications and Investor Relations, Wema Bank, Funmilayo Falola, commended the organisers of the award for the recognition, stating that it was an affirmation of Wema Bank’s transparency and commitment to corporate governance and best practices.

“We are grateful to the organisers for recognizing the impact of what we are doing, particularly entrenching firm corporate governance ethics in our corporate culture. This has strengthened healthy relationship across the bank’s stakeholder spectrum whilst instilling trust.

 

“At Wema Bank, we believe in transparency, and timeliness in sharing relevant data with our stakeholders, including our earnings reports. We don’t sugar-coat things but are always upfront about the state of our business, even at the worst of times. This is why Wema Bank remains one of the most credible banks in the country,” she said.

According to the organisers, Wema Bank was selected for the award by the Awards Review Committee and BusinessDay’s Research & Intelligence Unit for its commitment to the highest standards of disclosure, transparency and fairness in disseminating information to stakeholders. The Bank was also chosen for its impressive performance in the Nigerian Exchange despite a challenging macro-economic environment in the past year under review during which its profits grew by 93.72% from N4.58 billion in 2020 to N8.87 billion in 2021, recording a profit margin of 9.71% in the same period.

The NIVA Awards is a survey conducted by BusinessDay’s Research & Intelligence Unit (BRIU), and the Awards Review Committee to evaluate more than one hundred and fifty companies listed on the Nigerian Exchange Group (NGX) in a thorough evaluation process.

businessday niva awards

The Award recognises leaders of public and private companies who have created sustainable alpha-generating value for their shareholders through their strategic priorities, operating efficiencies, organisational values, and market engagement activities.

In the 2021 financial year, the Bank was named ‘Most Innovative Digital Bank’ in Nigeria at the 2021 Digital Banker Africa Awards; ‘Most Outstanding Digital Bank Brand of the Year Award’ at the 2021 Brandcom Awards and KPMG ranked the bank among Customer Experience Leaders. The bank also ranked among LinkedIn’s Top 25 Workplaces in Nigeria some months ago.

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Wema Bank Sustains Momentum By 119% Rise in PBT

 

Following a record-breaking attempt to sign up one million customers in one day on May 2, ALAT By Wema is now the number one ranked finance app in Nigeria. 

As part of its fifth-anniversary celebrations, the digital banking platform powered by Wema Bank, held widespread offline and online activations to onboard new customers, while rewarding existing customers. The impact of the customer acquisition drive saw ALAT move up three places to become number one among the top finance apps in Nigeria on iOS Appstore and Google Play. ALAT also closed the day (May 2) as the number one on the Free App Chart, and number 45 Finance App on the World Top App Chart. 

While much of ALAT By Wema’s new ranking links to marketing activities on May 2, the functionality of the platform is a key reason Nigerians have adopted it. Since its launch in 2017, the bank has helped Nigerians has supported lifestyles with refreshing digital banking offers. It has helped Nigerians build a healthy saving culture through flexible automated saving features. In line with this, the platform recently rolled out a Spend and Save feature to help Nigerians save more money while making transactions.  

 

ALAT also offers collateral free loans, scheduled bill payments, a free debit card and virtual Naira card. Customers can also make bulk payments, open a domiciliary account without visiting the bank and make investments with high-yield interests. The platform also a corporate banking app, ALAT for Business, which supports Nigerian businesses in making bulk payments and carrying out other business transactions. 

“We have always been number one,” Segun Adeniyi, the Chief Digital Officer of Wema Bank states. “When you look at our track record, we are Africa’s first fully digital bank, we kick started branchless banking in Nigeria, which included the delivery of free debit cards, and have been pioneer enablers of the fintech industry in Nigeria.” 

 

Mr Adeniyi explained that the bank intends to build on this ‘tradition of firsts’ and continue to empower lives through innovation while providing seamless digital banking services to Nigerians both home and abroad. 

 

Click here to open an ALAT account and to enjoy digital banking services 

 

Wema Bank Sustains Momentum By 119% Rise in PBT

 
 

Wema Bank Plc continued its growth momentum in the first quarter of 2022, building on the superlative result it recorded in the 2021 financial year. The bank posted N9.6 billion profit before tax in the full year ended December 31, 2021 as against N5.9 billion in 2020.

The bank which announced the release of its unaudited three-month result ended March 31, 2022 , recorded gross earnings of N29.14 billion, representing a year-on-year increase of 62 percent as against N17.96 billion recorded in the first quarter of 2021.

Other highlights of the bank’s 2022 first quarter result include a qualitative rise in interest income to N23.53 billion y/y, an increase of 58 percent compared to the N14.92 achieved in Q1 of 2021.

Similarly, profit before tax during the review period soared to N3.3 billion as against N1.5 billion made in Q1 of 2021, reflecting a growth of 119 percent. Profit after tax also increased year on year to N2.86 billion in Q1 2022 from N1.30 billion in Q1 of 2021.

The bank also grew its deposit base year to date by 6 percent to N1.022 trillion from N968 billion in FY 2021. Also on the positive side is loans and advances which rose from N418 billion in FY, 2021 to N433 billion in Q1, 2022.

Commenting on the result, the Managing Director/Chief Executive officer of the bank, Mr. Ademola Adebise attributed the impressive performance to the relentless spirit and hard work of the employees.

“Our human capital resource remains the single most important factor in our upward trajectory and improved figures in recent times. They have been cracking difficult business puzzles and providing business solutions that solve business problems amazingly and incredibly”, Adebise said.

Also commenting on the result, the bank’s Chief Finance Officer, Mr. Tunde Mabawonku, explained the bank’s, progressive business development drive and the deployment of cutting-edge technology to deliver superior banking services to their customers.

“We have deployed digital banking assets to optimize customer satisfaction as well as to reduce cost and inefficiency. ALAT has been strengthened and has been well received by the business community as well as the youth segment of the market.

We hope to build on these successes and deliver greater value and services to our esteemed customers and deliver better returns to our shareholders”, Mabawonku said

WEMA Bank Plc Reports Gross Earnings of N29.14billion for 3 Months

FINANCIAL RESULTS FOR THE PERIOD ENDED 31ST MARCH 2022 WEMA Bank Plc.

Reports a Gross Earnings of N29.14billion for the 3 months ended 31st March, 2022. LAGOS, NIGERIA – 5th May 2022

Wema Bank PLC (Bloomberg: Wema NL) (“Wema’ or “the Bank”), announces its unaudited results for the 3 months ended 31st March 2022 . 62% N17.96billion 58% N23.53billion 84% N5.61billion N3.05billion N3.3billion 119% N2.87 Billion

 

Click here to download full press release. 

Managing Rising Energy Costs as a Growing Business in Nigeria through Renewable Energy

 

Dear Business Owner, 

According to the latest Consumer Price Index report of the National Bureau of Statistics (NBS), Nigeria’s inflation rate for March 2022 stood at 15.92%. This represents the 

highest rate recorded in the country since October 2021, when it was at 15.99%. One of the major factors responsible for this spike is rising energy prices in the country and around the world, which can be seen as a direct impact of the ongoing war between Russia and Ukraine. 

The conflict between the world’s second largest exporter of oil, Russia, and its Eastern European neighbour, Ukraine, has created fears in international markets of an impending shortage in the supply of oil due to the economic sanctions and embargoes imposed on Russian exports by NATO member states. As with every other commodity that obeys the law of demand and supply, this market sentiment has increased the demand for oil (and, consequently, its price) as companies around the world position themselves to hedge against any future shortages. 

 

Even before Russia’s invasion of Ukraine, energy prices had been on the increase in the country with the price of petrol surging beyond N170/litre (from N165/litre) in many parts of the country as consumers grappled with fuel scarcity caused by the recall of the adulterated petrol of about 170m litres that was in circulation at the beginning of the year.

The price of diesel has also shot up significantly since the beginning of the year, moving from an average of N288/litre in January 2022 to over N700/litre by the end of March 2022. Many businesses that depend almost entirely on diesel-powered generators have been forced to adjust their operating hours to reduce their operating cost.

 

The National Electricity Regulatory Commission (NERC) also recently revealed that electricity tariffs charged by electricity distribution companies (DisCos) in Nigeria would go up in the coming months following the removal of power sector subsidies by the Federal Government.

These rising energy costs, coupled with inadequate power supply from the national grid,

have made it necessary for business owners in Nigeria to explore cheaper off-grid sources of energy. Renewable energy sources like solar, wind, biomas, hydro, geothermal, tide and wave readily come to mind when the discussion around alternative energy arises. However, of the lot, only solar energy is widely available in the Nigerian market for both residential and commercial use. This is due to the relative advancement in indigenous expertise in solar photovoltaic technology, especially as it relates to the assembly, installation and repair of solar panels. 

SMEs and other businesses looking for more affordable long-term alternatives to fossil fuel energy sources can look towards solar energy. Though the initial outlay on procuring a solar energy system (solar panels, batteries and inverters) may be huge, it doesn't come with the regular purchase of fuel as its source of energy comes freely from nature.

 

Solar energy systems are also substantially more durable than petrol-powered and diesel powered generators. A solar battery can last between 5 – 15 years, while the lifespan of a typical solar panel is 25 years, with both requiring minimal and infrequent servicing. To eliminate the impact of the initial outlay on solar solutions, businesses can take advantage of the various flexible payment plans made available by solar energy companies. Many solar energy service providers in Nigeria have come up with lease-to own plans that enable customers who cannot afford to pay outrightly to pay by installments over a tenor of 1 – 6 years, while others have rolled out usage-based payment models that only charge customers for the units of energy they consume. Low-cost financing options from commercial banks like Wema Bank PLC are also available for businesses and households that want to transition to solar. All in all, the market for solar energy – and other forms of renewable energy – in Nigeria is huge, as many communities in the rural parts of the country still lie beyond the reach of the national grid, while those that have access to it complain of its inadequacy. 

According to the Association of Nigerian Electricity Distributors, Nigeria currently has an electricity supply gap of about 180,000 MW and some of this gap can be filled by renewable energy. The government has thus far played a critical role in encouraging the growth and development of the renewable energy industry in Nigeria by offering various forms of incentives to foreign and domestic investors. It can complement this by offering incentives that will increase the demand for renewable energy by the general public, especially businesses, such as offering tax credits to businesses that transition from polluting and hazardous fossil-fuel-generators to renewable energy sources. Besides its positive impact on the environment and on the bottom line of these businesses in terms of cost savings, the adoption of renewable energy will curb the demand for, and importation of, petroleum products and go a long way in stabilizing the foreign exchange rate. According to the Central Bank of Nigeria (CBN), about 40% of the country’s scarce FX is spent on the importation of petroleum products like gasoline (petrol) and diesel annually.

The adoption of renewable energy has a far-reaching positive impact on both businesses and the society, and it is a strategy that the government and Nigerian businesses should elevate to the front burner. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

This newsletter was prepared by the Wema Bank SME Advisory Services Team. To get free advisory support for your business and also find out more about the bank’s low-cost financing offerings for SMEs, kindly send an email to smehelpdesk@wemabank.com. 

*945# ALAT EASTER PROMO 

We are giving out airtime to forty lucky customers this Easter, read the terms and conditions carefully before you participate. Also do not engage with any account that is not an official Wema or ALAT account. We would never request any funds or personal details. 

 

TERMS AND CONDITIONS 

  • Forty customers will be rewarded on each platform N80,000 will be spent to reward customers on each platform customers can only win a max of N1000.  

 

  • Winners will be selected based on the following.  
  1. Counts of transactions carried on within that period.  
  2. The volume of transactions carried out within that period.  

  

FAQs   

  

  1. How do I qualify for the promo?    

Answer: Carry out any airtime or bills transactions between 9 am and 4pm during the Easter period   

    

  1. How can I increase my chance of winning? ​

Answer: Simply increase the number of transactions done within that period.​

    

  1. What kind of transactions count? ​

Answer: Purchase airtime, data or pay for power using our USSD channels or on ALAT  

  

  1. How much do I stand to win?    

Answer: You stand a chance to be rewarded up to 1000 Naira airtime. 

 

WEMA BANK Announces 108.3% Growth In Profit Before Tax and Total Assets Now Above ₦1Trillion

LAGOS, NIGERIA – 4th April  2022 – Wema Bank PLC (Bloomberg: WemaBank: NL) (“Wema” or “the Bank”) announces its unaudited FY 2021 financial results. 

Wema Bank Plc’s resilience was on display as the digitally driven financial institution announced its financial results for the year ended December 31, 2021. The performance which capped a remarkable year showed strong growth in key financial indices especially as the bank crossed the ₦1trillion mark in total assets.

In a statement made to the public by the bank, the Managing Director. Mr. Ademola Adebise said, “I am delighted to announce our performance for the year ended 31st December 2021. The Bank’s FY 2021 results shows robust growth in all key financial metrics despite the challenging macro-economic environment.”

 

“Our year end numbers highlight the strong growth trajectory of the financial institution. We comfortably crossed the 1trillion mark in total assets, with a share of approximately 3% of industry deposits.” 

 

Wema Bank recorded an increase of 108.3% in profit before tax (PBT) to close the year at N12.38 billion. This was driven by a Year-on-Year growth of 15.35% in gross earnings to 92.14billion in FY 2021 from 79.88billion in FY 2020.

 

The Chief Finance Officer of the Bank, Mr. Tunde Mabawonku noted that “a key measure of success for us is a consistent growth in our balance sheet and customer base – and we are glad that we are reporting healthy growth in all these areas.”

 

Deposit Liabilities grew by 15.23% to 927.47billion in FY 2021 from 804.87billion in FY 2020 while Total Asset increased by 20.23% to 1.164.52billion in FY 2021 from 968.58billion in FY 2020.

 

Mr Mabawonku also added that, ” Looking forward, we expect that the strong growth will be sustained despite the tough business climate as we execute our customer experience improvement initiatives built around a digital first banking strategy and become first in class in that sphere. The bank will also continue to focus on our digital business, which is a key boost for customer acquisition, consumer lending and transaction volumes while not neglecting our corporate and commercial play. On our commercial business, we will continue our aggressive strategy to improve our lending business alongside trade and other revenue lines. We have also unveiled our new Mission and Vision statements which underpins our corporate strategy. We want to be the dominant digital platform in Africa delivering seamless financial services.

Income Statement

  • Gross earnings increased by 15.35% (Y-o-Y) to 92.14billion in FY 2021 from 79.88billion in FY 2020.
  • Profit Before Tax (PBT) of 12.3billion in FY’21, an increase of 108.26% YoY from N5.95billion in FY’20 while Profit After Tax (PAT) of 8.93billion in FY’21, an increase of 94.53% YoY from N4.59billion in FY’20.
  • Net-Interest Income grew to 39.87billion in FY 2021from 30.86billion in FY 2020; growth of 29.22%.
  • Non-Interest Income also increased from 16.83billion in FY 2021 to 18.83billion; a growth of 11.91%.

 

Statement of Financial Position

  • Deposit Liabilities up by 15.23% to 927.47billion in FY 2021 from 804.87billion in FY 2020.
  • Loans and Advances to Customers rose by 16.33% to 418.86billion in FY 2021 from 360.08billion in FY 2020.
  • Total Asset increased by 20.23% to 1.164.52billion in FY 2021 from 968.58billion in FY 2020.

 

Key Ratios

  • Return on average equity of 17.26% in FY 2021 (FY 2020; 14.31%)
  • Return on average assets of 1.16% in FY 2021 (FY 2020; 0.85%)
  • Non-performing loan ratio of 4.88% in FY’21 from 4.45% in FY’20
  • Capital adequacy ratio of 15.46% in FY’21 from 12.35% in FY’20

 

Operational Achievements

  • Fitch re-affirms Wema Bank’s National Long-term rating at (BBB)
  • GCR and Agusto re-affirm Wema’s National Long-term rating at (BBB-)

 

Financial Performance Highlights

 

Below is the performance summary of the Bank.

 

Income statement (’bn)

FY 2021

FY 2020

(∆)

(∆%)

Gross Earnings

92.14

79.88

12.26

15.35%

Interest Income

73.30

63.04

10.26

16.27%

Net Interest Income

39.87

30.86

9.01

29.19%

Non-interest income

18.83

16.83

2

11.88%

Operating expense

44.22

36.00

8.22

22.83%

Profit before Tax

12.38

5.94

6.44

108.3%

Profit after Tax

8.93

4.59

4.34

94.53%

Earnings Per Share

23.2kobo

11.9kobo

11.3

95 %

 

Balance Sheet ()

FY 2021

  FY 2020

(∆)

(∆%)

Total Assets

1,164.52bn

968.58bn

195.95bn

20.23%

Loans and Advances

418.86bn

360.08bn

58.79bn

16.33%

Deposits

927.47bn

804.87bn

122.60bn

15.23%

Shareholders’ Funds

70.36bn

59.14bn

11.22bn

18.97%

Key Ratios (in %)

FY 2021

FY 2020

(∆)

Return on Average Equity

17.26

14.31

2.95

Return on Average Asset

1.16

0.85

0.31

Yield on Asset

14.29

14.49

-0.20

Net Interest Margin

6.18

         5.74

0.44

Capital Adequacy Ratio

15.46

12.35

3.11

Loan-to-Deposit Ratio

46.96

43.86

3.10

Non-Performing Loans Ratio

4.88

4.45

0.43

Cost to Income Ratio

78.12

83.79

5.67

 

The proposed dividend of 8kobo per share is based on the total number of shares that existed as of 31st December 2021. Subsequently, the Bank obtained all regulatory approvals relating to the share capital reconstruction. The implication of this is that the proposed dividend of 8kobo per share would now translate to 24kobo per share as the number of shares would have reduced from 38,574,466,082 units as of 31 December 2021 to 12,858,155,360 units while the amount of dividend declared remains the same.

 

 

Conference Call Invitation

Wema Bank Plc. (Bloomberg: WemaBank:NL) will hold a teleconference call for investors and analysts on Wednesday, April 06, 2022 at 1pm Lagos Time with its senior management, to announce the audited financial results for the year ended December 31st, 2021. There will be an opportunity at the end of the call for management to take questions from investors and analysts.

Kindly send email to pre-register for conference call: Investor.relations@wemabank.com

 

For further information, please contact:

Tunde Mabawonku

Chief Finance &Strategy Officer

Tunde.Mabawonku@wemabank.com

+234 1 4622632

 

Funmilayo Falola

Marketing Communications and Investor Relations

Funmilayo.Falola@Wemabank.com

+234 1 2778627

 

Wema Bank Investor Relations

Investor.relations@wemabank.com

+234 (01) 2778600

 

About Wema Bank Plc

Wema Bank Plc (NGX: WEMABANK) is the pioneer of Africa’s first fully digital bank, ALAT, and one of Nigeria’s most resilient banks. With decades of experience in the business of banking, the Bank has remained innovative in delivering value to its stakeholders. Wema Bank operates a network of over 150 branches and service stations backed by a robust ICT platform. The publicly quoted Nigerian company has successfully built a legacy of trust and resilience that has won it the loyalty of its customers. The Bank is constantly introducing products and services tailored to the needs of its customers at every stage of their lives. It is a proud partner to more than one million individuals, families and businesses across Nigeria, helping them achieve their personal and financial goals.

 

More information can be found at https://www.wemabank.com/about-us/

  

Caution Regarding Forward Looking Statements

Any forward-looking statement contained in this presentation, based on past or current trends and/or activities of Wema Bank should not be taken as a representation that such trends or activities will continue in the future. No statement in this presentation is intended to be a profit forecast or to imply that the earnings of the Bank for the current year or future years will necessarily match or exceed the historical or published earnings of the Bank. Each forward-looking statement speaks only as of the date of the statement. Wema Bank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Wema Bank’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

How To Grow Your Business With The Power Of Branding

Branding is a unique art that is essential for all companies, especially in a crowded competitive marketplace. Creating a brand enables a company to set itself apart from every other competitor by creating a perception of its goods or services beforehand. 

The branding journal defines branding as the process of giving meaning to a specific organization, company, product, or service by creating and shaping a brand in consumers' minds.The objective is to attract and retain loyal customers and other stakeholders by delivering a product that is always aligned with what the brand promises. 

Branding is a very powerful tool that can make the most mundane things outstanding. Water, for instance, is one of the most consumed items in the world. It is also one of the most accessible things in the world. However, through branding, we have seen water bottlers differentiate themselves and charge a premium price for a readily available resource. 

Despite its uncanny ability to make the existence of a company stick in the heart of the audience, there have been questions regarding the importance of branding to SMEs. People often ask, "Is having a good brand important for an SME business?"  

  The answer is yes! Branding matters regardless of the size of the business.  Why does branding matter to SMEs?  As earlier stated, a strong brand allows a company to be differentiated from its competitors in the market. Here are more reasons for you to invest in branding: Strong brands enhance business performance primarily through their influence on current and prospective customers, employees, and investors· Branding has been a part of the marketing strategies that have affected an amazing push and growth on the performance of businesses around the world· 

It provides an opportunity for businesses to build trust by delivering on the promises of their brand. With branding, SMEs can attract top-quality talents by demonstrating what their company offers which a larger corporation might not offer. Note however that branding is one thing, maintaining a strong brand that will keep your company glued to the heart of your customers is another.  

Building your brand when a business is set up, it builds a reputation, whether good or bad. It is at this point that the initiation of branding should come in, to control what the reputation will look like. Hence, it is recommended for businesses, especially SMEs to start branding the moment a business is being set up.   

  

 

 

 

 

 

 

 

Download ALAT For Business

Here are some key considerations for building the right brand for your business: 

Embarking in the branding process is impossible without a branding strategy. This should form part of your overall business strategy.

The purpose and mission of the business must be clear. When this is well defined, the core values to be communicated to the entire world will be well structured and stated. It is necessary to choose a suitable voice that is understood by the audience to register the brand in their minds, thus making yours the preferred brand for your target market.   When a company is set to build its brand, some inevitable questions must be asked to carry on. Questions like; who am I? How do I want my customers to feel? How am I different? How do I come across? What do I want to achieve?  

Who am I?  

This is the kind of impression and picture created in the heart of the customers about the  company.

What do I want to achieve?  

The question of what to achieve can be derived from your vision, mission, purpose, and values. 


These three things must therefore be well defined.

How do I come across?  The techniques to be adopted while communicating your values need to be defined as well. As a business owner, you must be able to pinpoint words and terminologies to be used to describe your industry, products, and services to your customers.

How am I different?  Here, any entrepreneur or business owner should know what uniquely stands the business out. This is where a conclusion on how the customer sees the business distinctively is made. It's essential to identify and develop the key differentiators. These differentiators become a robust set of unique features and benefits that will form the basis for establishing and maintaining the business’ competitive advantage.  

How do I want my customers to feel?  This is also a vital aspect of branding; knowing the feeling your company will evoke while customers interact with you. Right now your brand is making the people important to its success feel one thing or another. The question is, are those feelings helpful or a hindrance? Actions need to be taken to make sure that these feelings are positive.  

What makes a strong brand?  In deploying your brand strategy, below are some of the factors with which to measure its strength: An ability to condense the peak performances of your company, thereby making them tangible over a long period.

Clear brand core values, an unambiguous positioning, and a long-term brand strategy, a  consistent voice creates a memory in the heart of your audience. This voice can be professional, informal, sophisticated, simple, conservative, a bit sketchy, etc., and must be consistent on blogs, sites, social media platforms, emails and even ads.

 

 
 

Conclusion

Branding is a critical success tool for all businesses. If well deployed, it can be the difference between a struggling business and a successful business. Business owners must therefore dedicate resources to building and maintaining a strong brand.

Beyond just building the brand, Business owners must believe in their brand and what it represents regardless of what competition is doing. The company culture must also reflect the brand as staff are the company’s biggest brand ambassadors.  

Do these, and your company just might take over the market!  

  

 

  
  
 

Author- Gbolahan Owoeye