fairprince:
yes what you said is true. But then, I would suggest you allow an experienced businessman tell you exactly how finances help businesses. None of the factors, finance inclusive shld be taken in isolation. However on paper, our theories work well. But in practice, finance is key. You need finance to fight the competition war, to edge out competition with price war, to key into promos by supplier with lower prices, to even stock up for hoarding or in anticipation of price increases and to get what customers want always. But like I said other factors are important. To me from experience, finance is my number 1 issue.

You still don't get it. Being active in business the past 20yrs. Both trading and hospitality which all grew from nothing to something to the glory of God. It's from that perspective as an experience entrepreneur am saying all these. In fact it was to find answers to such argument I embark on that thesis. Tnx

freshdude99:

All the information you seek all there for you to see. Sample size was well above 100, all of them actively in business. Target sample covered the six area councils in Abuja. Just go there, the work is there for you to have a feel. Tnx

That's a starting point although the sample size is way too small.

Pls call me or whatsapp 08076593305. Let's discuss a proposal

InvertedHammer:

/
Everything you mentioned is secondary.

High cost of doing business is the problem. From registration, bribery, poor infrastructure, levies, taxation to extortion.The government fails to provide enabling environment for business to thrive. Financial conflict resolution is almost nonexistent legally. Two sets of people start businesses in Nigeria: 1). people who have no other options .2) Degenerate gamblers who have play money to risk.

Chance of survival long term is slim.
/

While I agree with you on the issues of high cost of doing business in Nigeria and the Govt failing to provide the enabling environment for start-ups, but I don't agree on your assertion that people who start businesses in Nigeria fall in the two categories you mentioned. For a start the informal sector is the largest employers of labour in the country; they created 71% of all jobs created in the first quarter of 2015. (http://lightednation.com/2015/07/469070-jobs/). People are making it in business today despite the odds. I have friends who while in school started their businesses and have continued even after school and they are doing well.
I believe we should keep encouraging each other to seek these paths; its one of the ways to make Nigeria better.

erico2k2:

I will disagree with number 1.reasons are.every lo at ion has its type of biz.even the desert and the deep blue sea has its kind of biz.

When I said "Poor Location", i didn't mean poor places, i meant poor location choice for your business!!!

GboyegaD:


That's a starting point although the sample size is way too small.

Way too small? Oh come on...
Precisely 142 I think.
So getting 142 family businesses in and around Abuja is too small? Bros you should ask yourself how many family businesses Abuja has first before even going in to other challenges encountered during questionnaires distribution.
In social sciences, the higher the sample size the more precision your work will have but in this sort of research, 142 samples is more than ok

Other factors may include;
Improper planning.
Lack of viable feasibility study before startup.
Poor location.
Failure to define ones product and market.
Inadequate data analysis for market research.
Unavailability and unaccessibility of infrastructures that facilitates investment such as lack of good road network, power outage, govt levies, duties and taxes, etc.
High cost of operation. Eg rent, limited assets, etc.

CUM4WHAT:
[size=28pt]NONSENSE NONSENSE NONSENSE BIG BUSINESSES ALSO FAIL[/size]

For the same reasons too!

i use my car as power, bought a car charger for my laptop. www.yinklinks.com

Johnpaul2k2:
POWER SUPPLY IS THE ONLY PROBLEM

the major failure of small businesses is the failure to differentiate ur product or service offering. they keep doing the same thing their counterparts or competitors are doing and yet expect to succeed.
3 of ur neighbours are selling cement bags all at the same price, u too now carry ur head n start ur own cement business in the same place hoping for customers to come. lol u go old for there. if u cant offer something unique, the odds of failing are so high.

stanodi:


While I agree with you on the issues of high cost of doing business in Nigeria and the Govt failing to provide the enabling environment for start-ups, but I don't agree on your assertion that people who start businesses in Nigeria fall in the two categories you mentioned. For a start the informal sector is the largest employers of labour in the country; they created 71% of all jobs created in the first quarter of 2015. (http://lightednation.com/2015/07/469070-jobs/). People are making it in business today despite the odds . I have friends who while in school started their businesses and have continued even after school and they are doing well.
I believe we should keep encouraging each other to seek these paths; its one of the ways to make Nigeria better.

\
We are talking about the odds.
No one needs my opinion to start a business if he/she already has his/her mind on it.
/

When your customers don't pay.

Do not let failure hold you down, it is better to try and fail than to not try at all and just dream of what could have been, the truth however is that you actually suceeded, you have become top authorities in that section of the economy with valuable knowledge, for future references if you ever go into an already flourishing business sector key to survival is keeping your overheads to a bear minimal that means basicaly buy your shop, or buy land in good location, half a plot, quarter of a plot this is expensive but is the key most important decision for anybody going into retail and services area even if your business plan is bad, or you lack experience in the area you will still suceed becos eventually you will get your business plan right and you will acquire the necessary experience although this means running the business at a lost or just breaking even you can afford to becos the emotional distress of paying monthly rent is non existence.
pls dont give up, your business ideal is solid try and raise money through saving for a year or two then buy a good location dominate existing similar business by provide extra services like a pool room, gaming room, free newspaper, even a barber facilities etc dont give up

PASSION should have been your first point, any business whether small or big needs strong passion to drive it to success.
Secondly, Failure of the business should have been analysed and see if its failure could be turned to another project of sort.
Thirdly, OPTION B and C should have been provided for in your business plan. See my signature for Business plans on all small businesses

freshdude99:

You still don't get it. Being active in business the past 20yrs. Both trading and hospitality which all grew from nothing to something to the glory of God. It's from that perspective as an experience entrepreneur am saying all these. In fact it was to find answers to such argument I embark on that thesis. Tnx

Ok. No problem.

freshdude99:

Way too small? Oh come on...
Precisely 142 I think.
So getting 142 family businesses in and around Abuja is too small? Bros you should ask yourself how many family businesses Abuja has first before even going in to other challenges encountered during questionnaires distribution.
In social sciences, the higher the sample size the more precision your work will have but in this sort of research, 142 samples is more than ok

If it were qualitative then it will be okay but for a quantitative research, it is not.

y teach us what we were taught in economies. there is nobody on dis site who did economic in secondary skul dat does not know y small business fail

Na true u talk,we need more knowledge people like u

sKy007:
No NEPA light simple

I know many SME businesses that failed because of power burden than any of those reasons you mention

They knew the power situation before venturing. its bad planning

stanodi:


When I said "Poor Location", i didn't mean poor places, i meant poor location choice for your business!!!

I was responding to waht you wrote and not what you meant as what you meant was not written there. ,ofcos if you decide to open a marine Biz in teh sahara desert then you are on your own there.

We recycle reasons why businesses fail in Nigeria and elsewhere year in year.
Starting a business is never gotten right via business plan. You have to leave some gaps at the start for switching of action - you learn on the job.

I suggest new entrants start small, think big and grow slowly.
You can always get it right when you have reserve plans. Just like in football match, a coach makes changes that decides his fate.

the business environment is not really conducive for start-ups.

"Look before you leap" is not in the books of most failed small businesses...and those who looked didn't look well enough. Most leap into business with faith... follow your heart....follow your dream.... go for it....then reality hits them in the face. Location. A friend of mine had a thriving business....located very close to a busy bus/train station and shopping strip.Because his rent increased slightly he decided to move to a much cheaper location ....there was like no foot traffic and the people in that residential area were culturally not interested in his product....was like opening a grand squeaky clean very hygienic but low priced Pork Chop restaurant in the middle of an Islamic community. That is a business doomed from jump...and so was his...my bad mouth came to pass real fast. Foot traffic is very important and location determines that. My other reason...is the people employed...what criteria these owners use to hire staff?....seems like family ties, complexion, how pretty or sexy one is or who would accept the slave wages is more important than if the person is crude and rude...dishonest or don't care a damn... the type that act like they are doing the customers a favour. That's also a business killer. I'm done.

..

erico2k2:

I was responding to waht you wrote and not what you meant as what you meant was not written there. ,ofcos if you decide to open a marine Biz in teh sahara desert then you are on your own there.

Noted. Thanks

Taxation is another factor that kills small businesses in Lagos.

MuhdG:


Bakin ciki

wallahi sosai kam..

I run a business that involves money, time, power and lots of packaging....one thing i understand about entrepreneur or been an entrepreneur is u can't be jack of all trade, secondly u need to be involve yourself 100%plus cos nobody does and understand it more than yourself. Of all the points u mentioned.....point 5 na koko. Don't be afraid to fail cos failure is the start of a new thing coming, keep doing it maybe somebody you will get it right.....am a testimony, ST LOUIS WINE

[quote author=stanodi post=38024231]
Starting businesses is a dream of every entrepreneur. I and a business partner lost some few thousands shy of one million naira just over a year ago. We had undertaken a venture very optimistic of success. We had done the necessary calculations and we were dead-confident that our high-tech viewing centre at Iyana Ipaja would be a hit.
A year and half later; we were folding up. Months of planning and efforts had been wasted, monies had been blown down the drains, our landlord was already on our tails to either pay up as our rents had expired or uproot the structure we had constructed with the hope that it will stand for 10 years at least; we were in a fix. How did it all go wrong?
I will try to outline some of the reasons why I felt our business and other small businesses failed.

5 Reasons why businesses fail in Nigeria

1. Poor location; its been said over and over again; location is everything! We were swamped on every side by other viewing centres who had been in the business way before ours. Because of the way humans are wired, it’s not always easy for the customers to switch to a new brand, or product. Despite the projectors and other unique value propositions we were offering, we were still not making enough to run the business monthly. Its always good to go to a location where you can have the first mover advantage, we didn’t; we had to compete with businesses that had grown there over time and which people are now used to. I highly recommend the blue ocean strategy for small businesses about to start up. This book talks about the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand for businesses.

2. Misalignment with your customers; its imperative to define your customers and to align with them. This means seeing what they see, feeling what they feel, hearing what they hear, smelling what they smell; you need to do unto them as they would want to be done to. But we did the opposite; we did unto them as we would want to be done to. We were educated, we were technologically savvy, so we tried to revamp the way people watch matches in that neighbourhood. We provided them with technology at a little premium, when all they wanted was cheaper options. And we failed! Businesses that fail to align with their customer’s needs will eventually produce products and services that no one wants.


3. No staying power; its common knowledge that you may not make much money in the first few years in business; but you need to break even nonetheless. That means making enough money to cover your running costs for the period of time. We didn’t! Some businesses fold when they don’t make profit in the first few years. Just like we did.

4. Inappropriate business planning and execution. Some people get a fantastic idea and they rush off into production without any planning whatsoever. Without understanding their landscape. Without knowing if someone in their chosen market already is into similar business. There just seems to be lots of gap. Small businesses need to have a solid business plan. A good business plan not only helps when trying to secure finances for the business but it also aids in understanding different areas of the business and answering lots of question that that the business would need answers to later on. We at lightednation.com, can help you package a great business plan for your business. However execution is everything, you may have the best ideas, but when if you fail at execution, the idea amounts to nothing

5. Managerial inefficiencies; to run businesses successfully, the owners need to be actively involved. We were’nt, I and my partner were working 9 to 5 jobs. We rarely had time to monitor the proceeding albeit over the phone. What you don’t monitor efficiently you lose track of. We did.

There a lot of other reasons that I have not called out here. Please share and comment to help others get lighted!.

http://lightednation.com/2015/09/why-small-businesses-fail-in-nigeria/[/quote Very inspiring

Inadequate Knowledge of the Business.

drnelson:
stupid article


these are the real reasons.


1) High interest rates from banks.
2) No power supply from government.
3) Constant harassment from local authorities.
4) Weak Naira leading to less purchasing power of people and high cost of import.
5) lack to affordable educated employees. [size=18pt][/size]

Poor logistics. A lot of people masquerading as logistic solutions are just spoiling a lot medium scale operations with 'delays'...time is money !

Thats if you can afford to pay graduates.

2rutalk1:
It may not be funny if you don't have enough capital to start your business. Don't listen to what business orators tell you in Business School. Most of what they say do not hold in practical terms. Anybody who has tasted the harsh business environment in Nigeria knows its not easy out there despite all these chants about "be your own boss". Your little capital may go into your running cost in the first 2 to 3 years They will ask you to start small but I can tell you categorically that it is only the grace of God that will see you through without adequate capital. Customers patronize big businesses even without price differential. However, the greatest threat to small businesses is unfaithful staff. Infact, if you have money don't employ Secondary school holders especially in Lagos. They are business killers. Look for graduates, maybe OND holders. 90% of these SSCE holders don't know you set up the business to make profit. All they do is to wait till the end of the month to collect salaries, no productivity, nothing.