Shout out to my friend CMEO who prompted me to share my thoughts.
Early in the year I gave a general investor outlook on 2016 as I saw it:
https://www.nairaland.com/2823697/investor-prospects-2016

Now we have seen how the Naira is turning out. Here are my thoughts for entrepreneurs and business owners on how to stay afloat.

It is settled law that entrepreneurs or business owners earn money by selling a product, service or blend of both.

Let me start by categorizing every entrepreneur and business owner into 4 broad groups:

1. NGN to NGN:
These ones produce their products and/or services using inputs sourced almost entirely in local currency and also sell to consumers who acquire the products and/or services in local currency. I can't go into giving examples of such as you know yourselves. If your raw materials or inputs are imported (hence priced in foreign currency and susceptible to forex scarcity and exchange rate volatility) you are not in this group.
2. NGN to FX:
These are entrepreneurs or business owners who price their products and/or service in Naira but source raw materials or vital inputs for production in foreign currency. Importers firmly belong here as do manufacturers whose raw materials are sourced abroad.
3. FX to NGN:
This group's products and/or services are made locally (using locally priced materials) but sold in Foreign currency as they sell to the international market. For instance, the exporters belong to this group as do some service sector entrepreneurs such as packaged tour operators.
4. FX to FX:
This group produces or renders service using inputs sourced in foreign exchange and still sell to the international market earning foreign currency. The Internet businesses, bloggers, web developers etc belong to this group.

Having done this intro, let's reflect on each group based on what each is going through now and how to adjust.

1. NGN to NGN:
Bad:
- you are noticing a general drop in demand for your products/services. This is normal because there is a general tightening in the economy. Fewer people have the disposable income to buy. Eg reflect on the number of states owing or paying partial salaries.
Good:
- you are still in business since you are not exposed to the exchange rate volatility. Your inputs are in Naira and your sales are in Naira (even though your purchasing power has dropped due to runaway inflation)
Way forward:
- because you may still have sufficient cash flow from your sales, this is an excellent time to aggressively capture market share by increasing the visibility of your products/service. Why? Because since imports have dropped due to forex issues, demand is very robust. Hence you need to get customers to see you as a viable and quality alternative to the imported versions of the same products/services you offer.
Also consider partnering with financiers to offer your products and/or service via installments

2. NGN to FX:
Bad:
- you are in big trouble, forex scarcity and high exchange rate means you are nearly out of business or hedging your available stock of products.
Good:
- you can take advantage of increased demand caused by scarcity and low import volumes to hike the cost of your products and/or services.
Way forward:
- depending on your relationship with your suppliers/manufacturers, you can leverage and secure further consignments of products/services in SWAP deals. Or they buy equity in your business in lieu of keeping up supply to you. Hence everyone wins as you all make a whole lot of money riding on the scarcity and increased demand.

3. FX - NGN
Bad:
- your cost of production might have increased while commodity prices stay fixed in the global market. Eg, you process Agro produce for export. The cost of production has risen due to inflation but you can't pass on this cost to the international buyer because the buyer will simply decide to buy from another country. Hence, you stick to your normal selling price and sacrifice a portion of your profit.
Good:
You are earning foreign exchange! Hence, your forex is able to buy a lot more Naira than it used to. Hence your purchasing power surges.
Way forward:
- try as much as possible to keep your production costs as stable as possible. Though you won't succeed 100% since you are part of a larger system that is currently in crisis, try your best to hedge against inflationary pressure by seeking to do more yourself than through the services of others. Never forget that in the international market, you are competing with so many other suppliers so you cannot come and say that because your cost of production in Nigeria has increased, your selling price will increase. Your foreign buyers will just leave you and buy elsewhere.

4. FX - FX:
Bad:
- even if your inputs are priced in forex, your operational expenses to sustain your business are in Naira. Eg, if you pay in forex to host your blog, you still buy fuel, eat and run other expenses required to keep your blog afloat in local currency. Hence right now, you are still losing money now compared to pre-crisis.
Good:
- you are somewhat insulated from the exchange rate shocks. As you produce in forex and sell in forex while getting a lot more value from your forex holdings due to the exchange rate volatility.
Way forward:
- work harder! This is the time to advertise aggressively and try to earn as much forex as you can until the system returns to normal. Be motivated by how much more you will earn in Naira per unit of forex converted and sit up!

Sorry if some things seem complicated. I get bored typing so I try to make it concise. Try and see where your business fits and make necessary adjustments. Share your knowledge with us o let us benefit. For me, I have interests across all 4 categories though I am heavily consolidating my FX - NGN and FX to FX

,

YoungExec:
Shout out to my friend CMEO who prompted me to share my thoughts.
Early in the year I gave a general investor outlook on 2016 as I saw it:
https://www.nairaland.com/2823697/investor-prospects-2016
Now we have seen how the Naira is turning out. Here are my thoughts for entrepreneurs and business owners on how to stay afloat.
It is settled law that entrepreneurs or business owners earn money by selling a product, service or blend of both.
Let me start by categorizing every entrepreneur and business owner into 4 broad groups:
1. NGN to NGN:
These ones produce their products and/or services using inputs sourced almost entirely in local currency and also sell to consumers who acquire the products and/or services in local currency. I can't go into giving examples of such as you know yourselves. If your raw materials or inputs are imported (hence priced in foreign currency and susceptible to forex scarcity and exchange rate volatility) you are not in this group.
2. NGN to FX:
These are entrepreneurs or business owners who price their products and/or service in Naira but source raw materials or vital inputs for production in foreign currency. Importers firmly belong here as do manufacturers whose raw materials are sourced abroad.
3. FX to NGN:
This group's products and/or services are made locally (using locally priced materials) but sold in Foreign currency as they sell to the international market. For instance, the exporters belong to this group as do some service sector entrepreneurs such as packaged tour operators.
4. FX to FX:
This group produces or renders service using inputs sourced in foreign exchange and still sell to the international market earning foreign currency. The Internet businesses, bloggers, web developers etc belong to this group.
Having done this intro, let's reflect on each group based on what each is going through now and how to adjust.
1. NGN to NGN:
Bad:
- you are noticing a general drop in demand for your products/services. This is normal because there is a general tightening in the economy. Fewer people have the disposable income to buy. Eg reflect on the number of states owing or paying partial salaries.
Good:
- you are still in business since you are not exposed to the exchange rate volatility. Your inputs are in Naira and your sales are in Naira (even though your purchasing power has dropped due to runaway inflation)
Way forward:
- because you may still have sufficient cash flow from your sales, this is an excellent time to aggressively capture market share by increasing the visibility of your products/service. Why? Because since imports have dropped due to forex issues, demand is very robust. Hence you need to get customers to see you as a viable and quality alternative to the imported versions of the same products/services you offer.
Also consider partnering with financiers to offer your products and/or service via installments
2. NGN to FX:
Bad:
- you are in big trouble, forex scarcity and high exchange rate means you are nearly out of business or hedging your available stock of products.
Good:
- you can take advantage of increased demand caused by scarcity and low import volumes to hike the cost of your products and/or services.
Way forward:
- depending on your relationship with your suppliers/manufacturers, you can leverage and secure further consignments of products/services in SWAP deals. Or they buy equity in your business in lieu of keeping up supply to you. Hence everyone wins as you all make a whole lot of money riding on the scarcity and increased demand.
3. FX - NGN
Bad:
- your cost of production might have increased while commodity prices stay fixed in the global market. Eg, you process Agro produce for export. The cost of production has risen due to inflation but you can't pass on this cost to the international buyer because the buyer will simply decide to buy from another country. Hence, you stick to your normal selling price and sacrifice a portion of your profit.
Good:
You are earning foreign exchange! Hence, your forex is able to buy a lot more Naira than it used to. Hence your purchasing power surges.
Way forward:
- try as much as possible to keep your production costs as stable as possible. Though you won't succeed 100% since you are part of a larger system that is currently in crisis, try your best to hedge against inflationary pressure by seeking to do more yourself than through the services of others. Never forget that in the international market, you are competing with so many other suppliers so you cannot come and say that because your cost of production in Nigeria has increased, your selling price will increase. Your foreign buyers will just leave you and buy elsewhere.
4. FX - FX:
Bad:
- even if your inputs are priced in forex, your operational expenses to sustain your business are in Naira. Eg, if you pay in forex to host your blog, you still buy fuel, eat and run other expenses required to keep your blog afloat in local currency. Hence right now, you are still losing money now compared to pre-crisis.
Good:
- you are somewhat insulated from the exchange rate shocks. As you produce in forex and sell in forex while getting a lot more value from your forex holdings due to the exchange rate volatility.
Way forward:
- work harder! This is the time to advertise aggressively and try to earn as much forex as you can until the system returns to normal. Be motivated by how much more you will earn in Naira per unit of forex converted and sit up!
Sorry if some things seem complicated. I get bored typing so I try to make it concise. Try and see where your business fits and make necessary adjustments. Share your knowledge with us o let us benefit. For me, I have interests across all 4 categories though I am heavily consolidating my FX - NGN and FX to FX

Thank you boss. I feel really honoured that you recognized my email and started the topic promptly. From the look out of things, almost no one is benefiting from the state of the economy now expect the bureau de change and I also believe their profit will be cut short by sudden change in demand for fx or a govt policy that we surprise them and that may make some of them record losses too, if this happen.

May God bless you boss