Topic: SME's in catering services: A study of innovative means to cushion challenges in productivity
Abstract
This study aims to examine the innovative means that SME’s use to cushion challenges in the course of doing catering service businesses. The main challenges puzzling the operations of SMEs in Nigeria are access to finance and poor infrastructure as stated by the survey conducted by Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS). Others includes inconsistency in government policies, poor support (business development services), access to market, multiple taxation, location, preservation to prevent food wastage, skilled labor and obsolete technology. The results of this research work will disclose viable innovative stands used by SME’s in catering services to increase their productivity amidst uncertainties in the business environment in Nigeria.
Introduction
The challenges of catering services businesses in Nigeria bewilder business analyst. These concerns have left experts puzzled over their survival. Their means of innovation and how they creatively device means to increase their productivity and enhance their profit margin calls for study. Therefore, this research paper will analyze a few problems and probable solutions.
The importance of food to human survival cannot be over emphasized. In this period of recession, when people are cutting down on their expenses as a way of survival, while some are reducing eating out, restaurant business is still considered a lucrative business in the country (The sun newspaper). Everyone needs to eat at least once in a day while most people eat three times or more every 24 hours. It is not new that SME's in Nigeria face a lot of problems, especially in the food and catering business, some of this problems they face are access to finance, poor infrastructure, inconsistency in government policies, access to market, multiple taxation, location, preservation to prevent food wastage, skilled labor and obsolete technology.
Financial innovation:
It is perhaps not surprising given the diversity of small business operations that the economic circumstance in which owners find themselves and the conditions under which they seek external finance vary considerably. Numerous factors affect small firm's financing decisions and debt financing is not an appropriate means for financing SME's. Indirect financing is very important for the development of SME's .When SME's cannot obtain capital/funds through direct financing, commercial banks can earn great profit from the rate gap between savings and loan and going into businesses with large-state-owned enterprise. Loaning to SMEs produces problems like high cost, low rate of return etc. As the profit nature of capital, state-owned banks don't want to go into business with SME's. To solve the financing problems of SME’s, emphasizing on private finance is very crucial and only through legalization and regularization of private finance can we solve fund difficulty effectively. SME's should pay attention to the combination of micro profitability, safety and liquidity. Government financial support system should pay more attention to promote the development of SME’s and pursue lower return than general commercial banks. In addition, banks in many developing countries prefer to lend to the government rather than private sector borrowers because the risk involved is lesser and higher returns are offered (Levitsky, 1997).
Location:
The SME’s location should be where the services they intended to provide are acceptable and match the needs of the environment, provided that the competition is not keen. Firstly, the part of the country where the enterprise would be located should be carefully selected. Location has a great impact on SME's, because location is an indispensable factor that shapes and determines the success or failure of entrepreneurial development and business activities. It determines the effectiveness and level of patronage of the entrepreneurial business activities. For example a restaurant located in an environment that needs the services which they provide and has assessable quality of good roads, clean surroundings and constant electricity, would have a lot of customers. This is because of the convenience; customers like to have what they want and when they want it in a very comfortable environment.
Preservation: The various method of preservation includes; freezing, drying, boiling, pickling and salting. A lot of catering businesses are saddled with preservation problems due to lack of electricity. Take for example freezing, for freezing to take place there has to be electricity, and when food stuff are not preserved, they spoil easily and are no longer fresh . Constant electricity enables vendors to stock large amount of goods for sale, customers like variety and when they are not able to get different goods, they go to a place that offers better value. So preservation affects productivity in a business, in the sense that it decreases number of customers (decline in sales, wastage of goods) etc.
Research objectives
The main objective of this research is to determine
The challenges of SMEs’ in catering services in Nigeria.
Assess means to cushion these challenges of SME's in the catering service business.
Understand how location affects SME's productivity, profit.
Examine innovative means that helps preservation of product to prevent food wastage.
Research questions
The study will investigate how SME’s in catering services use innovative means to curtail productivity challenges. Therefore, the research work will provide answers to the following tentative question:
i. Is the lack of convenience a challenge for SME’s in catering service business?
ii. How will market location influence SME’s productivity in catering service business?
iii. Does preservation determine SME’s productivity?
iv. Why is government policy a challenge for SME’s in Catering business?
v. Can finance ascertain SME’s productivity?
Research hypothesis
Hypothesis One: Ho: Convenience does not influence SME’s productivity
H1: Convenience influence SME’s productivity
Hypothesis Two: Ho: Market location does not influence SME’s productivity
H1: Market location influence SME’s productivity
Hypothesis Three: Ho: Preservation does not influence SME’s productivity
H1: Preservation influences SME’s productivity
Hypothesis Four: Ho: Inconsistent government policies does not influence SME’s productivity
H1: Inconsistent government policies influences SME’s productivity
Hypothesis Five: Ho: Access to finance does not influence SME’s productivity
H1: Access to finance influences SME’s productivity
Methodology
The data used in this research was collected from the survey conducted by Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) and national bureau of statistics (NBS) in 2013. In addition to this, further research was collated from online journals and credible sites.
References
Journal references
The sun newspaper(October 3,2016)
Electronic reference
https://books.google.com.ng/booksid=pVqczpT5tqgC&pg=PA33&lpg=PA33&dq=means+to+cushion+challenges+in+SME&source=bl&ots=J1SicXhLsU&sig=fLQxGXFeXiRa3H_hY49eYuGLYQA&hl=en&sa=X&ved=0ahUKEwj_uM3zt5LTAhXI7hoKHex3BP8Q6AEIUDAH#v=onepage&q=means to cushion challenges in SME&f=false
http://www.arabianjbmr.com/pdfs/OM_VOL_1_(10)/3.pdf
http://nigerianstat.gov.ng/pdfuploads/SMEDAN 2013_Selected Tables.pdf
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.1030.5222&rep=rep1&type=pdf
http://eprints.covenantuniversity.edu.ng/6928/1/SMEs_financing_and_its_effects_on_Nigerian_economic_grow.pdf