Topic: Vulnerability and resilience strategies in small business

1.0 Introduction
Small businesses often face challenges that causes them unprecedented disruptions to economic
activities in different countries of the world and Nigeria is no an exception (Sahoo & Ashwani,
2020). Similarly, small businesses was recorded to have experienced high decline in business
operation either full or partial lockdown during Covid-19 as a control measures that was
implemented to savage the wide spread of the vicious disease in the year 2020 (Ogunde, 2020).
This disease outbreak was seen as a vulnerable attack on businesses globally, because it was
reported that corporate offices, businesses, major economic activities, and all forms of events or
gatherings were shut down during the outbreak of Covid-19 pandemic. As a result of the
lockdown, all forms of economic and business activities were mainly shutdown (Ozili & Arun,
2020). These changes in business environmental operations gave rise to changes and disruptions
in small business owners’ levels of poverty as a result of depleted and limited savings or income.
This now brought about the need for small businesses to develop strategies to remain actively
operational in the midst of uncertainty. That is why there is need to investigate the resilience
strategies needed for small business owners to harness in order to stay afloat and relevant in their
business operation each time they face vulnerability issues regarding to their business existence.

1.1 Small Business Vulnerability

Vulnerability on a general note has to do with the quality of being easily hurt or attacked. These
vulnerabilities could be seen as identity theft and fraud. The threat environment of small
businesses are more extensive with both technical and human vulnerabilities. Business
vulnerability on the other hand involves a state of being open to harm, attack, or damage. In the
small business environment, discussions about vulnerability deals with business owner’s
willingness as leaders can openly acknowledge limitations, uncertainties, and mistakes (UNCTD,
2021). Small businesses are more vulnerable for several reasons such as; insufficient start-up
financial development, easy access to Market, ability to negotiate, understanding business
practices, productivity Inadequacy, capability and Skills, resource constraints and instability of
government policies due to political instability (Cole, 2017).
1.1.1 Insufficient start-up financial development - Long-term monetary support are denied
to small businesses in Nigeria due to reasons like credibility, trust and durability of their business
establishment. This is largely why it is so difficult for them to access financial support from
financial institutions in the country. Potential financial lenders, when they do not have access to
public data of small businesses on the risk analysis of such business operation, becomes very
reluctant to offer small businesses credit facilities without solid collateral or landed assets to
back up the loans requested. In the case when they decides to offer them the loan after meeting
up with major criteria’s, the financial lenders often charge near high-prohibitive interest rates
(Udell, 2020).
Small business owners on the other hand lack adequate skills needed to present their proposal
showing their level of business performance to potential investors and financiers. Also, it was
observed from literature that during the daily operation of small businesses, a lot of them are not
aware of alternative financing solutions (like factoring) as soon as they are available, in many
cases they are not often available in many jurisdictions. During period of crisis, with strict
financial rules and credit instabilities, financial corporations could be seen to become reluctant to
handle credit to small businesses (International Monetary Fund, 2020).
1.1.2 Easy access to market - Small business owners often times get confined to some
geographical and or market areas that confine their access to new consumers. At the same time,
their low economies of scale often preclude them from competing with larger, more productive
firms for new customers. In times of crisis, this low market diversification cushion their exposure
to shocks, and their limitations to find and penetrate alternative markets lowers their ability to
cooperate. The acceptance of electronic platforms has given rise to new markets for small
businesses in identified areas, like retail or tourism. Yet, as detailed in ILO’s, Small businesses
are now going digital in their reporting system, as such, they are encountering some barriers that
are related to limited digital technologies, digital skill shortages, and low adoption readiness,
limits small businesses’ ability to fully exploit many opportunities (ILO, 2021).
1.1.3 Ability to negotiate - The ability of small businesses to get easy access to suppliers and
customers when it comes to handling stress and need is limited in the areas of low size and lack
of influence. The purchasing power of small business owners seems smaller when compared to
the larger competitors', that is the simple reason why some are more vulnerable to their vendors’
risk, and it becomes too difficult for them to get new ones, mainly when they face disruption in
their supply chains. Small business owners often experience a lot of issues when it comes to
understanding the entire supplier on a large scale to optimize their supply chain, which then leads
to poor understanding of market opportunities and challenges (OECD, 2018). Similarly, they are
often underrepresented in business relationships and later in sectorial negotiations that limits
their say in the way shock mitigation measures are designed and deployed along the supply
chain.
1.1.4 Understanding business practices - Small business owners regularly do rely on
inadequate business practices, such as operations, enterprise risk and cash flow management.
Fixed costs takes a huge amount of small business cash, which limits their effort when it comes
to setting aside reserves to cushion the blow of economic disruption. In case when revenues goes
off above normal, rent and utility bills become a challenge, as payroll does, and a business may
soon face financial distress where the business is unable to pay back their debt (Gregory, Harvie,
& Hyun-Hoon, 2002). The management of cash involves a large challenge with small businesses
because they lack the needed ability to project cash flows and to plan for when cash-on-hand
does not meet what needed to be paid. During crisis, plunging demands, delayed payment from
consumers, and limited cash reserves by worsening small business’ vulnerability, which becomes
the leading driver of bankruptcy.
1.1.5 Productivity inadequacy - Most small business owners like to carry out their operations
in low productivity and low-tech areas that includes food & agriculture or retail. Similarly, they
often face challenges that makes them attain a minimum level of performance scale and
economic viability to handle sudden shocks and cope with dynamic changing market
environment. The moment managers become cognizance of their need to harness opportunities to
upgrade their productive methods, the adoption of new technologies that are capable of handling
those changes is expensive and time-consuming, or not even possible given insufficient
technological diffusion. The required experience needed in the areas of technologies is generally
absent, as it is also lacking in the area of funding needed to train employees (Nadyan, Selvia, &
Fauzan, 2021). Becoming transformational in your productivity is mostly difficult for small
businesses, as large enterprises face same challenges but navigate through due to their
workforce, and the needed legal, Human Resource, Information Technology, and accounting
systems could be lacking in majority of the existing small businesses.
1.1.6 Capability and skills - Small businesses normally do lack managerial training and,
further have the need to depend on employees with insufficient expertise in the newest
technologies or market flows. Similarly, they most times do not afford, cases of financial and
productive time resources to engage in learning programs. During period of crisis, it becomes
more difficult for managers to turn around their businesses and adjust too many demand patterns
of operational dimension. Recent, donors, development agencies, and government agencies
themselves have constantly been launching elaborate capability-building systems for small
business employees. Yet, many programs continue to struggle to reach the most vulnerable small
firm workers (Rodrigues, Adachi, Beattie, & MacDermid, 2017).
1.1.7 Resource constraints - Nigerian governments mainly uses lower financial reserves to
handle the aid of small businesses in times of need. During the period when external loans are
made available, they come at the cost of longer-term indebtedness (Suminah, Suwarto,
Sugihardjo, Anantanyu, & Padmaningrum, 2022). Also, it is dependent on macroeconomic
situation and implementation scale, monetary policies that can carry a non-negligible inflationary
risk. While they sometimes benefit from the higher enforcement capacity, the government of
Nigeria could have limited resources and capabilities to develop and distribute larger complex
support measures.
1.1.8 Instability of government policies due to political instability - Small businesses in
Africa, especially Nigeria are mostly facing issues relating to political instabilities, this directly
affect their effort to collect and finish longer-term strategies and supporting regulations to
improve their small business performance. There are few identified policies that support small
businesses but their implementation process are limited in terms of coordination and capacity
administration (Tortato, Renzi, Di Nauta, & Lozano, 2022). This results to issues related to total
reliance on governments often times when crisis hit them and leading to them from scratch or
reliance on other economic players.

2.0 Resilient Strategies for Businesses

Ojiagu, Akonu, Ezemba, and Unizik (2021) were of the opinion that resilience in business deals
with the ability of any small business to remain operationally active despite the fact that they
might have gone through business disruption. Similarly, business resilience can be the process of
reviving a business from an adverse or multiple problems back into its existence (Williams,
Gruber, Sutcliffe, Shepherd, & Zhao, 2017). In the description of Walker, Holling, Carpenter,
and Kinzig (2004), resilience itself is the ability of a person, small business, corporate
organization, and system to eliminate challenges and restructure to allow improvement to take
shape without losing the business’s identity, function, system, or response mechanism. It further
implies that resilience is the ability of individuals or firms to continue, adapt or transform their
small business operation within the confines of this changing environment (Wieland, 2021).
Another dimension to it is this, business resilience could be seen from the view point of
organizations, people, individuals, or entrepreneurs who survive life and financial threatening
challenges that could have led to closing their business. Hence, business resilience is seen as a
powerful strategy every successful small business owners made use to recover their business
from disturbing environmental shocks, such as experienced during the COVID-19 pandemic in
2020.

2.1 Small business resilience strategies

Studies about vulnerability and resilience methods of small businesses is scarce in reality.
Therefore, this section of the book is to attempts to unlock the resilience strategies that small
businesses can employ each time they are faced with disruptions even after the post COVID-19
pandemic era. Below are some resilience strategies that can be employed by small businesses in
Nigeria: social media and mobile phones usage, using information communication, Government
support and recognition, risk assessment for business resilience, and social networks usage.

2.1.1 Social media and mobile phones usage - Social media has played and is still playing a
significant part when it comes to promoting the functionalities of small businesses in different
economies of the world, especially in Africa at the time of the COVID-19 pandemic. It was
observed that a bakery used their business WhatsApp to create a group that orders bread by their
customers in Soweto area of South Africa and it was delivered to their home (Center for
Development and Enterprise, 2020). This resilience strategy of using social media and mobile
phones together has helped businesses to have their products or services ordered from online
through their phones and delivered in person by pushing a trolley with the residents’ food
requirements and location address with other evidence for verification before item or products
finally collected by the receiver (CDE, 2020).
This strategy is now adopted by fast food vendors as the fastest way of making deliveries of their
foodstuffs ordered even after the Covid-19 era. Also, another observer identified that
communication through phone was used small businesses in Harare, Zimbabwe’s capital, in
order to place orders (Kiaka, Chikulo, Slootheer, & Hebinck, 2021). Cell phones have become a
convenient form of communication even in Nigeria today where many small businesses places
order through online e-commerce platforms Jiji, Jumia, Konga, and Dealdey among others. It is a
known fact that after post Covid-19, many customers are now making use of their mobile phones
with social technologies to shop products and services online form the comfort of their homes.
Additionally, social media platforms are used by small businesses as their best advertising
platforms to reach out their campaigns, offers and products to the general public.

2.1.2 The use of information communication - The use of online marketing as a major tool
for communicating product features to prospective customers can serve the purpose of improving
resilience for small businesses when crisis arises. Small business customer can be notified of
available new products online. Fast means of delivery would be communicated to them in order
to ease demand shortages in times, as experienced during COVID-19 era (Love, Allison, Asche,
Belton, Cottrell, Froehlich, & Nussbaumer, 2021). Many small businesses took advantage of
WhatsApp platform as it played a vital position when it comes to marketing their products to a
larger audience than already been reached, while integration of various online payment systems
was adopted by several of them to enhance coping mechanisms (Belton, Rosen, Middleton,
Ghazali, Mamun, Shieh, & Price, 2021; Manlosa, Hornidge, & Schlüter, 2021).
This made the adoption of digital technology a critical decision when it comes to making small
businesses resilient and to recover from the effect of different environmental crisis. Digital
communication tools has done a lot for small businesses, especially the area of activating
entrepreneurial businesses for their survival during challenging times that always result into
negative results. Resilience strategies for informal businesses are important and must be
implemented to revive businesses following the effects of the pandemic. The survival of these
businesses is largely dependents on their daily operations. Though, small businesses are major
provider of income, employment and improved lifestyle living for majority of people (Connor &
Charway, 2020).

2.1.3 Government support and recognition – The small business sector is seen to be
responsible for about 85% of employment in the African region, while 70% of the Gross
Domestic Product (GDP) in Sub-Saharan Africa (ILO, 2018). The governments is meant to
recognize the importance of recognizing this sector and help them maintain resilience in the post
COVID-19 era. Findings from past studies shows that small businesses needs to be handled by
the government by using soft loans to ensure the running of their businesses could remain
floating even after they might have encountered any form of disruptions. Though small
businesses, also known as informal sector may lack creditworthiness, they are perceived as the
strong source of socio-economic livelihoods, especially in emerging economies. Ncube (2020)
reported the need for government intervention on the endeavor of informal businesses because
their livelihoods had been negatively affected by the COVID-19 pandemic and had also been
highly compromised by the lockdowns.
Other resilience effort from the government is to initiate policies for social protection programs
which they can use to address the adverse impact of COVID-19 on vulnerable business groups.
The reason is that the most vulnerable businesses are usually omitted in the case of Nigeria
economies (Ragasa, Lambrecht, Mahrt, Aung, & Wang, 2021). Another reason for such omission
is traceable to acclaimed lack of funds, and where there is available funds, the issue of little or
inadequate disbursements of funds and corruption becomes the true experience of small business
owners. It is expected that governments should take active measures to aid small businesses and
enhance their economic impact in the country since the post COVID-19 pandemic period. The
idea of resilience as a strategy to help small businesses survive and prosper despite disruption
should be upheld strongly.

2.1.4 Risk assessment for business resilience - Business scholars has pointed over time the
importance of risk assessment among small businesses so as to help them to easily identify
hazards and risk situations that are targeted towards harming small businesses in different
industry. As this has been identified as an important part of resilience strategy for small
businesses, more effort is needed to drive it deeper into the culture of small business owners,
because of the issue of illiteracy and resources inadequacy needed their business growth analysis.
As noted by Ojiagu, (2021), risk analysis has to do with identifying the areas of risk, risk
scanning or examination and risk evaluation of the business nature. Small businesses who
embrace social platforms are expected to gain and improve their business operations within a
short period of time (International Trade Center ITC, 2020) despite any major environmental
disaster. Research reveals that small business owners need to acquire digital and techy skills,
access channels, and focus more on making service delivery an essential part of their business
model, this would help the sustainability of their business over time (Clara, 2020).
Risk assessment could be essential to small business owners, at the same time, they often find it
difficult to get it achieved, as many small business owners cannot afford the large amount of
money needed. During the COVID-19 breakout, few small business owners managed to conduct
home service deliveries, as prompted by the unforeseen situations. It becomes a little challenging
to gain markets access due to limitation in terms of mobility. This brings about economic losses
since it reduces demand for goods and services (ILO, 2020). Thus, the resilience strategies of
small business owners need to be understood, they are considered as the springboard and the
greatest source of employment in our country Nigeria.

2.1.5 Social networks usage - Business resilience is necessary for small businesses to help
them continually survive. To have abundance of goods and services maintained in good order
during challenging times, small business owners should demonstrate business resilience that is
why social networking was identified as a strong strategy during this post-COVID- 19 era
(Mwema, Crewett, & Lagat, 2021). This enables the establishment of more business skills
through networking with customers to make successful business deals, even in the face of
economic crisis (Raza, Hayat, Zahir, & Muhammad, 2021). Social networks could be seen as an
informal or formal activity. They are responsible for entrepreneurs to attain certain level of
customer acquisition and building strong collaboration with external bodies across multi-sectors
and establish ways to provide the types of goods needed by multi-customers (Khalid et al., 2021;
Khan, 2020). Small businesses that take social networking very important are considered to be
more successful in the post COVID-19 era than their counterparts, as they tend to recover faster
from economic stagnations.
Social networks as a resilience strategy for small business, has helped in the past to assist when it
comes to the speed recovery in the face of market demand by providing direct sales to customers
(Love et al., 2021; Manlosa, Hornidge, & Schlüter, 2021). It is a resilient strategy that small
businesses need to employ to rescue their businesses in the time of environmental or economic
crisis. Social networks have also been hailed for helping to create credit and marketing
connections that offered many people opportunities for market information dissemination in the
difficult days such as COVID-19, which could be necessary in the post-COVID-19 pandemic era
as experienced in recent times (Love et al., 2021)
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