₦airaland Forum

stanodi:
https://lightednation.com/wp-content/uploads/2015/09/Why-small-businesses-fail-in-Nigeria-720x340.jpg
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/

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??

Mutuwa:
black belle too follow join

stanodi:
https://lightednation.com/wp-content/uploads/2015/09/Why-small-businesses-fail-in-Nigeria-720x340.jpg
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/

stanodi:
https://lightednation.com/wp-content/uploads/2015/09/Why-small-businesses-fail-in-Nigeria-720x340.jpg
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/

GboyegaD:
Access to funds too is one of the major reason why small businesses fail. Our interest rates are killing.

manny4life:
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.

dominique:
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.

freshdude99:
That's not true oga...
My project was on the challenges and prospects of innovative family businesses in Abuja. You will be surprised what my findings were after using regression analysis on the three parameters I tested: Access to finance, government policies and family business culture.
This thesis got me an A because it was really an eye opener for the doctors and professors present at my defence then.
Business culture ranks far ahead finance in the causes of business failure in Nigeria.
If you need a copy of my work, go to the library of entrepreneurship department Futminna... You will learn alot.

fairprince:
consumables are good, but the margins are thin! Check it well before you go into it... and not just because it is more convenient to set up. Cheers

freshdude99:
That's not true oga...
My project was on the challenges and prospects of innovative family businesses in Abuja. You will be surprised what my findings were after using regression analysis on the three parameters I tested: Access to finance, government policies and family business culture.
This thesis got me an A because it was really an eye opener for the doctors and professors present at my defence then.
Business culture ranks far ahead finance in the causes of business failure in Nigeria.
If you need a copy of my work, go to the library of entrepreneurship department Futminna... You will learn alot.

stanodi:
https://lightednation.com/wp-content/uploads/2015/09/Why-small-businesses-fail-in-Nigeria-720x340.jpg
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/

kolokolobi:
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.

GboyegaD:
I did not say it is the only one. I said it is one of the major ones. Business culture could also be one of the major reasons we fail in small business no doubt.
Oga, I am interested in your research and i would like to know some basics. How many people are in your sample and how representative are they? How many of them are into business? In your sample, did you try to control for family business that were not requiring a loan for start up?

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

drnelson:
stupid article


these are the real reasons.


[b]1) High interest rates from banks. Nonsense, not all small businesses need financing and not all borrow from banks.
2) No power supply from government. Another idiotic statement, seek alternate source of energy or stop relying heavily on electricity.
3) Constant harassment from local authorities.
4) Weak Naira leading to less purchasing power of people and high cost of import. Not all businesses import or export, some survive based on local resources.
5) lack to affordable educated employees. Another misyarn! Nigeria still remains one of the cheapest countries for labor, educated or uneducated. We have minimal labor laws and most people don't even know they have rights! [/b][size=18pt][/size]