Is there any business that thrives without any financial support?

A lot do survive without it, but not for long. Finances pay the business bills and attract valuable products and services for businesses.

How does Financial Support Stimulate Innovation in Businesses?

Innovation fosters new perspectives in the development process and for a business to be able to stand out amongst its competitors or even become a reputable brand, it must invest financially to make it work.

The development of a product or service usually starts with leveraging the minimum personal resources, and as growth and demand begin, there has to be an investment in acquiring assets that will help create a formidable brand.

Here are some of the benefits of financial support for businesses:

1. Innovation of Marketable Products and Services

Not every product or service is likely to gain ground in an emerging or saturated market. For a business to succeed in building a marketable product or service that will eventually become a household name or align with the needs of its targeted clients, the business must invest heavily in  financial resources especially for operational needs for its success.

2. It helps the business to raise seed funds

There is no business without a startup capital. New businesses, especially startups, always source for seed funds from angel investors, friends and families, venture capitalists or debt financing.

Most times, the investors prefer to go with equity financing so that it will be easier to monitor how the funds will be utilised.

3. Providing financial support helps to bring in high-end profits for the business 

When businesses have adequate financial backing, they are able to leverage on always providing the needs of their customers. They can stock up or even resolve customer complaints immediately without hesitation because they have the right team working with them. Customers would always want to trade with a business that can easily provide their needs. So when there are high demands of their products and services, it leads to more revenue.

4. Financial support always helps grassroot businesses to thrive

Most of these grassroot businesses obtain loans from cooperative societies and microfinance banks. These financial institutions sometimes go as far as providing them with the necessary business tools that will enable the growth of their businesses. This is what is referred to as supporting local markets.

Without financial support, local markets will never be a beehive of activities because they mostly deal with the cash economy.

Leveraging with Non-Financial Support 

A new business owner also needs  non-financial support when growing a business from scratch.

What Is Non-Financial Support?

A form of supportive effort that does not involve financial help.

So, here is how non-financial support leads to innovation.

1. Mentorship 

Business owners, especially new founders and already existing businesses in the marketplace, should always look for mentors that will help them to improve their skills.

The marketplace does not remain static and if a business does not receive the right mentorship programme, it could end up without cash flow therefore staggering the growth of the venture.

Business mentors provide insight on critical aspects of running a business. Business mentors teach small businesses on how to use growth strategies for their own benefits. Business mentors will teach a business owner the factors to put in place in order to avoid bankruptcy.

2. Networking 

Networking is one of the crucial parts of business growth. A business must actively participate in business networking with the right network.

The right network involves great industry leaders that have made a name in the same line of business. The best way to seek a new face of business is to align with the right people.

Networking helps a business to build up wealthy knowledge.

Conclusion

Financial support and non-financial support must go hand-in-hand in order to stimulate innovation in businesses. Businesses must understand that every step of growth involves financial backup and also the right network and knowledge to produce new marketable products and services for their business.

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Nigeria has seen a sharp increase in unemployment over time, with a current estimate of 33%.

All age categories in Nigeria are affected by a serious unemployment problem, with young people bearing a disproportionately high share of the burden.

When people don’t have work, it makes life difficult for them and their household. Note that this causes labor migration, as people leave the country in quest of better opportunities and income sources abroad. Unemployment is one of the key reasons why its citizens migrate their labor to other countries.

Nigeria’s economy has struggled to produce enough jobs to accommodate this expanding workforce due to the country’s high population growth rate, which causes a large number of job seekers to enter the labor market each year.

SMEs could be essential in reversing this trend and creating jobs, but they face challenges such as restricted access to capital, inadequate business support services, and a challenging business climate.

Additionally, highly qualified individuals leave Nigeria in quest of better opportunities abroad, depleting the country’s talent pool and widening the skills gap in critical industries.

It is important to emphasize that because of the interdependence of these factors, a multidimensional and all-encompassing approach is required to address labor migration and unemployment.

To mitigate unemployment and labor migration in Nigeria, a variety of actions can be taken. A few of these include:

Job Creation and Economic Diversification: 

Nigeria is extremely vulnerable to variations in the price of oil because of its dependency on the fuel. Through the promotion of companies and sectors other than oil, economic diversification can boost job chances and reduce dependency on a single industry.

In Nigeria, it is crucial to increase the variety of employment options. The establishment and growth of various businesses and sectors can also encourage the emergence of new occupations and positions. There is a higher chance of employment for people when there are more businesses.

Provision of Adequate Infrastructure: 

Infrastructure improvements have the potential to boost economic growth and draw in industries that can employ workers. For businesses to invest in and create jobs, they need a strong infrastructure that includes a dependable power supply, efficient transportation systems, and digital connection.

Support for Small and Medium-sized Enterprises (SMEs): 

Encouragement of entrepreneurship and assistance for small and medium-sized enterprises (SMEs) can promote innovation, generate job opportunities, and boost economic growth.

Agriculture is a sector with a lot of SMEs. It has a great deal of potential to boost food security, minimize rural-urban migration, and create jobs.

By giving farmers access to funding, cutting-edge farming techniques, and market connections, production can be increased and jobs created throughout the value chain of agriculture.

Programs for training, mentoring, and access to financing and business development services also support these businesses.

Changes in Business Policy: 

The development of many successful firms, especially SMEs, has been hampered by culpable policies and deregulation laws. Business owners, producers, and other market participants take advantage of policy gaps to perform arbitrary functions.

Therefore, reviewing and updating corporate policies, regulatory frameworks, and labor laws can help to foster a climate that encourages investment and job growth. In addition, employment prospects may increase as a result of streamlining administrative procedures, lowering corruption, and guaranteeing fair competition for all enterprises.

Conclusion

Although it is a difficult problem to solve, mitigating unemployment and labor migration is crucial for Nigeria’s economic progress. Another strategy for this development is to strengthen the institutions of the labor market, lower company costs by streamlining regulations and lowering taxes, improve the business environment, and improve education, safety, job accountability, and security. By doing this, employment opportunities will be generated, and the general public’s professional development will be encouraged.

Lastly, addressing societal issues, attracting investment, enhancing skill development and business climate should be the government’s main priorities for sustainable solutions.

About the writer:

Emmanuel Otori has over 10 years of experience working with 100 start-ups and SMEs across Nigeria. He has worked on the Growth and Employment (GEM) Project of the World Bank, GiZ, Consulted for businesses at the Abuja Enterprise Agency, Novustack, Splitspot and NITDA. He is the Chief Executive Officer at Abuja Data School.

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