Why Do Small Businesses Fail in Nigeria?

Why do Small Businesses Fail in Nigeria
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An average business in Nigeria kicks off without making arrangements for possible storms. Failure in business is not something to be dreaded. It is in fact a necessary phenomenon for achieving a sustainable success in business.

” An average small business owner does not factor in failure when starting up his or her venture. But findings have revealed that many small businesses fail in a couple of years as a result of various reasons that are often neglected by entrepreneurs. ” – Punch

No business likes to fail, and yet, most do. As a matter of fact, businesses fail quite often. Failure isn’t always a negative part of business, there’s a positive side of failure.  Failure is an undeniable part of success in business.

Also Read: Startups: Free Business Plan Template

“The sweetest victory is the one that’s most difficult. The one that requires you to reach down deep inside, to fight with everything you’ve got, to be willing to leave everything out there on the battlefield—without knowing, until that do-or-die moment, if your heroic effort will be enough. Society doesn’t reward defeat, and you won’t find many failures documented in history books. ” – Success.com

Whether you are about to start a new business or you have tried couple of businesses before and failed, or you have never experienced failure in business before, this post will undoubtedly be of benefit to you as long as you are in business.

Why Do Small Businesses Fail in Nigeria?

The following are some underlying causes of business failure in Nigeria (as opined by experts):

Building the Wrong Product

Invoice.ng believes that Building the Wrong Product is one of the reasons Why Many Startups and New Businesses Fail in Nigeria. Building a product without really validating if that is the right product for the market is a total roadmap to disaster. When building your product, you have to greatly consider who your potential users are, what skill sets do they have and what are the existing solutions they are familiar with.

For most startups, it is almost impossible to build a perfect product from the start. This is why you have to adopt the Lean Startup Methodology that says Build ~ Measure ~ Learn. First, build a Minimum Viable Product (MVP), push this product out to a few users and measure how they interact with the product. From your learnings, you are able to determine what the user really wants and prevent your startup from burning excess cash building a sophisticated product that nobody wants.

Why do Small Businesses Fail in Nigeria
Photo Credit: Pixabay.com

You May Also Like to Read: Five Ways Social Media is Ruining Your Business

Lack of Focus

Abbakin.com also opines that “lack of focus” is a major reason Why Nigerian Businesses Fail among other things. Most young entrepreneurs can easily be distracted with too many minor tasks and wishful offers. As a business owner, if your focus tends to shift, your thinking will also shrink.

A good entrepreneur or business person should never lose focus on what is important and where his/her priorities are. Trying to do it all or being everything for everybody is the worst mistake you would make in business; one that will cost you resources in terms of time and money.

Another weakness is when you got caught up in trivial diligence in the tasks which can and should ordinarily be left to others. Entrepreneurs should therefore learn to delegate tasks and focus on those things they know how to do best – managing and marketing their products

Not Seeking Professional Advice

TheTotalEntrepreneurs.com thinks that “Not Seeking Professional Advice” is one of the main causes of business failure. No matter how informed you feel you are, once you want to start up a new line of business, it is pertinent that you seek professional advice. This will help you ascertain whether or not the business is profitable as you thought. Most times, entrepreneurs start up a business because they find others doing the business and profiting. Yes, they might be profiting from the same business but there might be a secret behind the success. It might be location, good customer service, knowing the right source to get raw materials etc.

It is good you have a mentor that will always put you through to avoid silly mistakes. Another advantage of seeking professional advice is that, you are meeting people that have already done the business and they have made the mistakes and known the best way of doing it.

Unrealistic Business Plan

Informationhive.com opines that unrealistic business plan is one of the reasons why small businesses fail in Nigeria. A Business plan is a written form of how your business will function. Business plans serve as a manual to business owners, once the business plan is faulty the company will crumble. So before writing a business plan make sure all factors are taken into consideration, the market, its consumers and most importantly the right financial forecast. Finances are as important as the business idea itself.

Poor customer services

Yokebay.com is of the opinion that “poor customer services is one of the reasons why businesses fail in Nigeria. From time to time, we do encounter some rude receptionist, clerk or even a telephone customer service assistant who acts as if your inquiries are not important. Do you have such in your organisation? If you do, just one can have a negative impact on your business.

Generally speaking, these type of employees are known as “Toxic Employees”. They bring your business down. Customers employer to your get affected by these employees’ behaviors

In fact, poor customer services has been identified a an influencing factor to “causes of business failure in Nigeria”.

Lack of Managerial Skill

Entrepreneur Platform believes that lack of “managerial skill is also one of the reasons why small businesses fail in Nigeria. One of the most important aspects of succeeding in a business is managerial skill. This is why it is one the reasons why many small businesses fail. When an entrepreneur lacks the ability to manage human and material resources at his disposal, then failure becomes inevitable.

Why do Small Businesses Fail in Nigeria
Photo Credit: Pixabay.com

An entrepreneur must be able to manage the employees, cash flow, production line and other aspects of the business. In the event that he can’t handle all of this, he should hire a good manager to do that for him.

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