Cracking the Cash Flow Code: Expert Kayode Helps SMEs Master Their Finances

Mr. Kayode Pelemo is a Senior Associate within the Deals Advisory unit of a Professional services firm, where he specializes in mergers and acquisitions (M&A) transactions, financial modeling, valuations, and other financial advisory services.

A chartered accountant and certified Financial Modeling and Valuation Analyst (FMVA) from the Corporate Finance Institute (CFI) Canada, Kayode’s expertise is recognized both locally and internationally. His outstanding contributions at his firm has earned him multiple accolades, including the Most Valuable Professional (MVP) award in 2023 and the prestigious Problem Solver Award in 2024.

In this engaging conversation, finance professional Mr. Kayode Pelemo shares practical insights on the challenges and opportunities facing Small and Medium Enterprises (SMEs) today. From funding struggles to cash management and smart scaling, Kayode provides actionable advice for entrepreneurs navigating today’s economic landscape.

In Nigeria, for instance, SMEs contribute over 48% to GDP and employ about 84% of the workforce. That’s massive. When SMEs thrive, the economy moves forward.

Many SME owners complain about access to funding. What’s really behind this challenge?
It’s a mix of things. On one hand, financial institutions see SMEs as high-risk due to limited collateral, inconsistent cash flow, or informal structures. On the other hand, many SMEs don’t keep proper records or have a clear business plan, making them unattractive to investors. The gap is both structural and informational.

So what can SME owners do to improve their chances of getting funding?
Kayode: Great question. Three key things:
Formalize your operations – register the business, separate personal from business accounts.

Keep records – maintain proper bookkeeping and financial statements, even if it’s basic.
Have a story – be clear on your value proposition, how you make money, and what funding will help you achieve.
Sometimes it’s not just the numbers, it’s how you present them.

Another issue we hear often is that SMEs struggle with managing their cash. What’s really going on there?

You’re right — cash mismanagement is a silent killer for many SMEs. A lot of business owners confuse revenue with profit. Just because money is coming in doesn’t mean the business is making money.
What happens is this: an SME sells a product, collects payment, and immediately spends that cash — sometimes on personal expenses — without factoring in the costs tied to that sale.

Can you break that down a bit more?
Kayode: Sure. Let’s say you sell a product for ₦10,000. That’s revenue. But what did it cost you to deliver that? You might have spent ₦3,000 on materials, ₦1,000 on transport, ₦500 on electricity or fuel, and maybe ₦2,000 on rent and salaries — even though those are monthly costs, they still affect your profit per unit.

If you don’t track those expenses per unit, you’ll assume you’ve made ₦10,000 — when in reality, your profit might only be ₦3,000 or less. Then you go ahead and spend ₦8,000. Over time, the business starts bleeding cash, and you don’t know why.

How can SME owners fix this?

First, separate business money from personal money — that’s non-negotiable. Second, break down your expenses per product or service. Know what each sale is actually costing you. Third, use simple tools — even a spreadsheet or a basic accounting app — to track inflows and outflows. If you don’t measure it, you can’t manage it.

What about scaling — many SMEs struggle to grow beyond a certain point. Any tips?

Absolutely. Scaling is not just about selling more, it’s about building systems. Start by asking: Can someone else run this business without me? If the answer is no, you haven’t built a system yet.
Also, focus on your core — don’t try to do everything. Find one thing you do well and scale that. Then surround yourself with the right people and partners.

The economy can be tough, especially with inflation and policy shifts. How should SMEs navigate uncertainty?

Flexibility is key. Think in scenarios. Don’t just plan for one outcome — ask “what if?” Build buffers into your finances and look for ways to digitize or diversify income streams. Also, stay informed — policy changes can create opportunities if you’re quick to adapt.

Finally, what’s one thing you think every SME founder should hear today?

You are not just building a business, you’re building a brand, a culture, and possibly a legacy. So don’t cut corners. Invest in learning, seek advice, and remember: progress is better than perfection. Just keep moving.