oh

Bank interest rates also is a factor
In saner climes, interest rates isn't more than a DIGIT
But here, 26% that's outrageous!!!

Why do businesses fail in Nigeria?

1. Serious undercapitalization
Most business owners eat their capital to make ends meet. You want to kill your business.... Borrow from the Nigerian Bank
2. Overcrowded Business Environment:
Except your business is not making profit expect all the shops around you selling your product and using your strategies
3. Poor Government Policies:
How can a Nigerian manufacturer compete with Chinese imports..and our Government is comfortable!?
4. General Poverty:
Your market is going poorer by the day, thanks to Buharis recession. They can't afford your quality products (there are junks all around to choose from)

With enough consistency, a business can still survive through the strategy of wearing out your competitors. It takes time and endurance.

Let the struggle continue!

Am currently experiencing this, but am praying and hoping I pick soon.

You can visit: www.creativestudioone.com

Timely article.

The problem is excess funding platform which is distracting

They didn't a reality check on their products or services before seeking seed fund.

pukena:
In one week, I have read about 5 stories of failed Nigerian startups. I could see a pattern and that spurred me to write this article.

Nigerian startups should not mistake investment funding for profitability.

The more money you start off with, the farther your breakeven point.

Jumia and Konga are two of Nigeria's biggest ecommerce sites today, partly due to the huge funding backup they have since they launched. They both have enjoyed over $ in investments. However, both are yet to become profitable. Infact Jumia just lost 61m dollars in the last 6 months.

I believe the business that can work in Nigerian harsh economic climate is a business that should make profit as soon as it takes off.

The Nigerian economic factors would frustrate any startup that wants to sacrifice for some years before making profit. The recession and forex drought cost Jumia and Konga 70% of their sales as most of their goods are imported.

For me, the key is always start lean, make profit as soon as you can. For Pukena, I ensured we scale up with as little capital as we can and make profit organically and from the profits we can scale further. We don't mind going from house to house washing cars and cleaning houses as long as the money keeps flowing in. Our services in Pukena are solutions to everyday needs and our target market are within our reach. We are positioning Pukena to be the go-to for every middle class Nigerian for his daily service needs. But we are starting small. Not biting more than we can chew per time. For now office is not important. Our office is in our client's homes! Little overhead, more profit.

I learnt that as a Pastor in Winners Chapel. We were taught never to spend more than 30% of the income on overhead. So the lower your income, the lower should be your overhead. In winners, your church branch can't talk about spending on capital project if your project account can't afford it. Very strict financial principles.

Right now in Pukena, we are targeting a gross monthly income of *** millions with as little marketing budget as we can. Hence am teaching my team how to get results with little or no money.

You have peace of mind when you build like this. I have used this principle throughout my business career till date. I always ensured I started small so that everything that comes in is a profit. Its not the easiest way to do business. But its the smartest.

You stand to maintain the controlling shares in your company if you follow this path. Even when you open your doors to investors, they are coming to join and scale an already thriving business.

Most businesses that fail, in my opinion, are businesses, whose owners usually start off with so much fiscal liability, and they keep chasing the shadows to just offset the liability before even talking about profitability, which in most cases, they never do. That was the case of etisalat. When you borrow money at a particular interest rate at a particular time, as time roll by, the value of that loan interest increase and the more difficult is it to pay up.

Start small. Make profit at your own pace. Build a great business

Visit www.pukena.ng to be inspired!

Nice business idea. I wish you well. I'm inspired

CHEAP MARKETING LIKE WHAT YOU JUST DID ONLY WORK FOR SERVICE COMPANIES LIKE YOURS. HOW DO YOU EXPECT A MARKETER TO CARRY OUT SALES WITH A LEAN PURSE. JUMIA AND KONGA CANNOT BE WHERE THEY ARE TODAY WITHOUT ALL THE PUBLICITY THEY HAVE PAID FOR. I AGREE IT IS NECESSARY TO CONTROL EXPENDITURE BUT IT IS OF NOT USE IF YOU ARE NOT MAKING SALES.

Nigeria is truly not suitable for business if one is to be honest. Of course people are making it in Nigeria but that's only because we be gree die people and moreover half of the jobs in Nigeria are govt jobs, followed by the rich people in govt that are creating jobs, then hawking jobs, and other types of buying and selling jobs.

Is not a mystery. No security of any kind, if your business is open for business you pay taxes to many so called entities, generator to run the business, trust factor between employer - employee, tribalism sabotage, jealousy sabotage, infrastructural sabotage, etc. Nigeria is not yet suitable for business is the conclusion but a better leadership can solve this.

this is not funny oo, I hear people saying Economy this, financial that, Ogbenii have you considered JAZZ factor?? for better understanding: I lost my bukateria to so called spiritual-grandmas doing something similar on small scale. in my opinion this should come first
1. spiritual stability(strong body IP)
you sef jazz up

anochuko01:
I learnt that as a Pastor in Winners Chapel. We were taught never to spend more than 30% of the income on overhead. So
the lower your income, the lower should be your overhead. In winners, your church branch can't talk about spending on
capital project if your project account can't afford it. Very strict financial principles.

The growth of Winners chapel and RCCG from scratch has always been an excellent case study for me.

because the populace contribute to those churches.. use your head

anochuko01:
I learnt that as a Pastor in Winners Chapel. We were taught never to spend more than 30% of the income on overhead. So
the lower your income, the lower should be your overhead. In winners, your church branch can't talk about spending on
capital project if your project account can't afford it. Very strict financial principles.

The growth of Winners chapel and RCCG from scratch has always been an excellent case study for me.

RCCG is not a very good example.. reason being that it operates a franchising business model with a touch of charity (not-for-profit model). RCCG operates a similar franchising model with Mr Biggs, Daviva, KFC, Chicken Republic, etc.

Hadn't it been for the spirituality, it wouldn't have grown so fast like KFC and the likes. I don't see church businesses as good examples of business growth.

What I can decode from this is that more people are making attempts to become entrepreneurs now more than ever before in Nigeria rather than waiting for govt. jobs. It's a good thing if I may add and I think eventually we will understand our business terrain here in Nigeria and how to surmount it. Thank God this buhari admin is taking steps to make doing business in Nigeria easier

The Nigerian business environment has changed dramatically over the past 10 years. Any one who lacks the history of doing business in Nigeria in the last decade is likely to fail in his startup.

In 2007, many millionaires rose from the stock market, money market and sundry businesses like telecoms distribution, cement distribution, FMCG Key distributors. Etc.

In one instance I had a boss who purchased bank shares with N3m and later sold it for N12m under 18 months, he earned 300% profit from the stock market.. There were still others who purchased the same bank shares and got so many share multiplication (bonus shares), and also enjoyed Capital growth but didn't sell off withing same period.

Bonds were offering huge discounts, so were commercial papers. The reality then was that the economy was booming. When I observed, some of us in paid employment also delved into business. First day in business, N85,000 profit. So you can imagine how different the economy was then from now.

The nations economy started falling sick in 2012, from MONOPOLISTS, these men control pricing in key sectors of the economy. They sleep and wake up to change prices of consumables at will. The FG contributed to the sickness of the Nigerian economy. Nigeria is hardly a place where everybody enjoys a level playing ground.

People in power always want to favor one person whom they perceive to be friendly or loyal in preference to banning others operating in the same business. If Adenuga tells you what he went through to obtain the telecoms licence for Globacom, your ear will tingle. Same bad fate was suffered by Ibeto cement, and till date, Ibeto has not recovered.

The same scenario is playing out in 5%, 97% percent body language.

Until our leaders start being OPEN MINDED, development may not come to this country. Development is of the MIND, before it gets to the POCKETS. Our people are naturally parochial, narrow minded, tribal and bigoted.

Mind you, people are still getting rich today maybe 1% of the population at the expense of the rest 99%.

For now, only non oil exports can save the economy. By the time, non oil exports level up with oil exports 50:50, only then can the nation be safe from price volatility in global oil market.

There is so much to write.

I should stop here.

Amastermovic:
This post just weak me..

The reason why business fails in Nigeria op can't figure that out in a simplified manner..

1) Branding : since most new startup in Nigeria already as a competitor you will need to introduce branding to yours... If you are original owner of the idea, my brother be ready for better competitors who are ready to rebrand your ideas with better stake

2)Electricity

3)Government policy : The minimum wage is too small, na person wey chop betta dey buy bottle water

4) promotion : new startup need this you can walk around your locality tell friends about your new mula buzz

5) planning : some buzz lacks sales due to weather, place and religion/tribe,
I don't expect you to set up a puck business in the North as a new startup

6) op never you compare a church business with a real time business again or I will ve efcc arrest you.. Na play

guy, this is the real truth you've written above, so remove your last word.

Some of your principles wont work for a business with huge potential. Business is all about risk, the higher your risk, all things being equal the higher your return. There is no problem with investing billions if your forecasted cash flows show inflows enough to breakeven at a time that is considered okay by the business owners. You are just a risk averse individual which is quite normal but you need to understand that most people that make it big in business are risk lovers.

It is perfectly normal for startup companies to make losses initially, what matters is their plans and how it is implemented. In few years they could be having margins doubling their costs. It takes only an action well implemented for a company to become great and successful. Business is not for the faint heart, you need to love risk taking to a reasonable extent or else your business will likely not grow.

High overheads. Mostly amount spent to generate power

With Us, Your Progress Is Guaranteed!!!

Do you live within Lekki / Ajah axis?
Are you good with Photoshop?
Are you computer Literate?
Can you work from Monday to Saturday? (Off on some saturdays)
Are you proactive and can work under minimal supervision?
Do you possess excellent communication skills

Your ability to set clear goals will ultimately help to achieve life dreams. Work hard today to have a rewarding future. We are a startup. We are committed to our vision. We are fearless. We are passionate and most importantly we fear ONLY God.

We will build your confidence, help you to grow and eventually treat you as an important part of our organization.

murphyibiam15:

because the populace contribute to those churches.. use your head

contribution or not...nothing grows without proper planning and right values.
didn't you read the plight of konga despite all the fundings (contributions) in million dollars.

Why most start-ups fail in the Nigerian environment?
Hmm!

AnodaIT:
The most common killer of startup in Nigeria is the failure to itemized the "non-goods/services" expenses.

In simple English, we fail to plan for expenses like phone calls and power supply

Also, startups that focus on profit from day one to survive are likely to fail, part of your plan for at least 3 months is to give out products or services.

Just keep money to keep the business running without profit for at least 3 months

I don't agree with you.

Even large corporations go for profit from the first month.

That is why they develop complex accounting models where essential start up assets, like official cars, office space, rent are amortized every month. So saying one cannot make profit from first day is wrong. If your business cannot pay off for your start up assets in the first two years, of sustained growth, then the business may be on its path to failure. This is talking about highly structured businesses. Unstructured businesses should pay off its initial investment in 6 months.

Bank branches even go for profit from the first month, so do multinationals. Such mindset will help your business to grow.

anochuko01:

contribution or not...nothing grows without proper planning and right values.
didn't you read the plight of konga despite all the fundings (contributions) in million dollars.

Haba bros... be sane na.. how can u compare church business been run by continues draining of people's pockets to an independent investor... your reasoning though

Situation:
this is not funny oo, I hear people saying Economy this, financial that, Ogbenii have you considered JAZZ factor?? for better understanding: I lost my bukateria to so called spiritual-grandmas doing something similar on small scale. in my opinion this should come first
1. spiritual stability(strong body IP)
you sef jazz up

Haha..

It happens to everybody. Once you conquer jealous and envious people in your business, you are on your road to billionaireship.

You will stay on your own, they will use gossip, tale bearing, jazz, exclusion to stop your success.

Its frustration playing out. You will make it worse by noticing them. Just ignore. The average frustrated person spreads frustration to others.

400billionman:


I don't agree with you.

Even large corporations go for profit from the first month.

That is why they develop complex accounting models where essential start up assets, like official cars, office space, rent are amortized every month. So saying one cannot make profit from first day is wrong. If your business cannot pay off for your start up assets in the first two years, of sustained growth, then the business may be on its path to failure. This is talking about highly structured businesses. Unstructured businesses should pay off its initial investment in 6 months.

Bank branches even go for profit from the first month, so do multinationals. Such mindset will help your business to grow.

I agree with you but it works mostly in big corporations launching with products, for small and medium scale biz especially retailing and crafts, you need a buoyant capital to pay the overhead for at least 3 months

Pls, can you tell me his facebook ID so that I can learn too? Thanks

1zynnvn:
financial discipline is the word, follow strive masiyiwa on facebook, he always unveils steps he took to grow his business, he taught on this topic in one of his posts..

EmpressT:
Pls, can you tell me his facebook ID so that I can learn too? Thanks

just search the name on facebook, "STRIVE MASIYIWA"

Thank you. I'll do that right away

1zynnvn:
just search the name on facebook, "STRIVE MASIYIWA"

The answer is Business Quadrants Wealthflow Theory. http://mlmdeals.ng

pukena:
In one week, I have read about 5 stories of failed Nigerian startups. I could see a pattern and that spurred me to write this article.

Nigerian startups should not mistake investment funding for profitability.

The more money you start off with, the farther your breakeven point.

Jumia and Konga are two of Nigeria's biggest ecommerce sites today, partly due to the huge funding backup they have since they launched. They both have enjoyed over $ in investments. However, both are yet to become profitable. Infact Jumia just lost 61m dollars in the last 6 months.

I believe the business that can work in Nigerian harsh economic climate is a business that should make profit as soon as it takes off.

The Nigerian economic factors would frustrate any startup that wants to sacrifice for some years before making profit. The recession and forex drought cost Jumia and Konga 70% of their sales as most of their goods are imported.

For me, the key is always start lean, make profit as soon as you can. For Pukena, I ensured we scale up with as little capital as we can and make profit organically and from the profits we can scale further. We don't mind going from house to house washing cars and cleaning houses as long as the money keeps flowing in. Our services in Pukena are solutions to everyday needs and our target market are within our reach. We are positioning Pukena to be the go-to for every middle class Nigerian for his daily service needs. But we are starting small. Not biting more than we can chew per time. For now office is not important. Our office is in our client's homes! Little overhead, more profit.

I learnt that as a Pastor in Winners Chapel. We were taught never to spend more than 30% of the income on overhead. So the lower your income, the lower should be your overhead. In winners, your church branch can't talk about spending on capital project if your project account can't afford it. Very strict financial principles.

Right now in Pukena, we are targeting a gross monthly income of *** millions with as little marketing budget as we can. Hence am teaching my team how to get results with little or no money.

You have peace of mind when you build like this. I have used this principle throughout my business career till date. I always ensured I started small so that everything that comes in is a profit. Its not the easiest way to do business. But its the smartest.

You stand to maintain the controlling shares in your company if you follow this path. Even when you open your doors to investors, they are coming to join and scale an already thriving business.

Most businesses that fail, in my opinion, are businesses, whose owners usually start off with so much fiscal liability, and they keep chasing the shadows to just offset the liability before even talking about profitability, which in most cases, they never do. That was the case of etisalat. When you borrow money at a particular interest rate at a particular time, as time roll by, the value of that loan interest increase and the more difficult is it to pay up.

Start small. Make profit at your own pace. Build a great business

Visit www.pukena.ng to be inspired!

Well said Bro,but this is just your opinion.
starting small is good,but when the competition is huge,you have no choice than to scale up,otherwise the business will never stand.
Etisalat couldn't have started small in a competitive market with the likes of Mtn and glo,considering the fact that so many other small players in the telecommunications industry have since been thrown out of business by the industry giants...

Acidosis:


RCCG is not a very good example.. reason being that it operates a franchising business model with a touch of charity (not-for-profit model). RCCG operates a similar franchising model with Mr Biggs, Daviva, KFC, Chicken Republic, etc

Interesting analysis

pukena:
I learnt that as a Pastor in Winners Chapel. We were taught never to spend more than 30% of the income on overhead. So the lower your income, the lower should be your overhead. In winners, your church branch can't talk about spending on capital project if your project account can't afford it. Very strict financial principles.

Perhaps you forgot to mention you had the right MENTORING.

What if you hadn't learned these financial principles first-hand?

Thanks for sharing