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/

Very insightful indeed..i'm about starting a small business and have to say this little article has helped..thanks..

Very useful!
Number 5 is wat am facing ryt naw..
I jus realize d best way to get a job done is to do it yaself..
Ve already prepared ma resignation letter..
I gat to run ma biz maself!
Does it mek any sense bin an employer of labour and still b an employee to some freakin bastahdz all in d name of multiple streams of income??

Ewizard:
Very useful!
Number 5 is wat am facing ryt naw..
I jus realize d best way to get a job done is to do it yaself..
Ve already prepared ma resignation letter..
I gat to run ma biz maself!
Does it mek any sense bin an employer of labour and still b an employee to some freakin bastahdz all in d name of multiple streams of income??

Yeah it does'nt.
Wish you success dear. We need more entrepreneurs like you in Nigeria.

You need to do your homework before starting a business. The markets are getting saturated so you need to set yourself apart in terms of quality and service delivery. Never compromise standards to make more profits. And most importantly, commit the business to God's hand. If I'm ever going to go into business (which I hope to in the nearest future), I'll examine the location, what really moves in such an area. I'll prefer to go into consumables as people will run out of it and come back for more.

Excellent points Op.

Hmmmmm. Nepa join

No NEPA light simple

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

black belle too follow join

No 6: Income leakages.

Guy,

Add unfavourable govt policies and harsh business environment

Eeyah

Another reason is Buhari's body language

That was a well articulated write up.

During my school days, I don't joke with WiFi, being connected to people and getting adequate first-class info from the internet (this your piece, for instance) can boost someone's success immensely.

Check this link out (a research on 100 startups, analysed reasons behind the successes & failures and concluded on five major concepts).


Don't worry you can thank me later: www.ted.com/talks/bill_gross_the_single_biggest_reason_why_startups_succeed/transcript?language=en
Add Nigerian situation (enabling envt., power etc depending on your start-up) to it and you'll plan better.

..............

A girl started noticing a guy who stands in front of her home everyday in the evening.
She noticed the guy always comes mostly in the evenings and weekends.
The guy never tried to talk to her nor showed any gesture, he just moves here and there by looking into his mobile phone and occasionally stealing a stare at her.
It went on like that for a year and the girl understood the guy was in love with her but was too shy to express his feelings.
So, she told her parents. They too saw him and liked him. They discussed with her grandparents about a likely marriage. But wanted her to make the first move.
The next day, she went to him and said,
Hi. I'm Jada.
He said, Hi. I'm Smith.
Hearing this, the girl was very happy as the names were matching like Will Smith and Jada Pinkett.
The girl went on and said, I really appreciate your patience and decency.
You have been standing in front of my home everyday for about a year now.
So, I understand that you are in love with me but too shy to say it.
I think i really like you too and would love it if we get married.
The guy smiled and said,
"Forgive me sister!
Actually your home's Wi-Fi doesn't have a password.
So, I come here every evening after work to use free wi-fi to chat with my fiance..."

check ma signature.

stanodi:


Yeah it does'nt.
Wish you success dear. We need more entrepreneurs like you in Nigeria.

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.

6. Witches and wizards 4rm ur vilage

Okay

Lack of money.

Lemme learn..

Following

Johnpaul2k2:
POWER SUPPLY IS THE ONLY PROBLEM

Well I agree but in a much more wider sense.this depend on the type of Biz yoy are into.what is the relationship between a sand and granite supplier and Electricity?

No 6. Relying solely on the "supposed" profits of the business as a form of sustenance... Unless you budgeted into the business to pay you salary say a couple of months, quitting your job and then thinking your business will sustain you is a good reason why businesses fail.

No 7. Finance... Can't stress this enough. Never venture into a business when you don't have proper financial planning in place... You're setting yourself up for failure. Even the small startups at some point sought financing and that's because there's was a plan in place for that.

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.

Good points! However, I have to disagree with some of your points especially your no. one point. A savvy businessman never run away from competition instead he strategize to outsmart his competitors which includes the pioneer of the product-line. Innovations and Effective marketing are the key secret here. Take for instance, a financial company in the US that has plan to grow and succeed cannot afford to be absent in Wall Street.

As for your no. 2 point "Misalignment"...hmm, I think "humility" should be more appropriate word to drop there. Customers are always king, so it is expected of business owners to always drop their pride ( know-it-all ) at the boardroom once it comes to serving the masses. The importance of customers care service cannot never be over emphasized. A business can never go wrong with the rightful workforce - able staffs ( personnel ) will always remain the life-wire of any business just as customers are king to the business. I am still coming.

And mostly importantly, lazy workers with poor ethics who want to suck you dry without adding any value.

Iyaf tired

A very good read. Planning is everything.

the next guy is a hermaphrodite

A few observations.
All new businesses don't have to operate in blue ocean strategy. If you get your business to start off in blue ocean strategy, it's good but remember that after a while copy cats will come in and all will be within porters five forces.
You said it all when you said you and your partner where busy with so many other things. New businesses need nurture and attention until you grow it and it's people to move on. Remember that as leaders your job is to develop and articulate a compelling strategically relevant vision for your team. Until your team members get that vision and begin to live it you can not take your eyes off.