Nigeria is a country with many business opportunities in almost every sector of the economy. This is mostly due to the large population of the country and the abundant human and natural resources available for businesses in Nigeria. Natural resources ensure all the raw materials needed are readily available. Human resources provide the needed human capital required to run the business. The large population provides the market for the products and services developed.
Despite these huge resources in Nigeria, most small ad medium scale businesses run into problems within the first few years of business. A close look at the various businesses reveals some basic issues that result in this early failure in business, some of which we will discuss briefly in this article.
Why do businesses fail in Nigeria.?
- Motive of the business owner
A lot of people go into business with the wrong mindset. Some go into business to be their bosses. Some start businesses with no clear plan and strategy but are just interested in making money. Any business built on a shabby foundation will struggle to survive and will very likely crumble with time. Starting a business should be based on identifying a problem in society or a gap that one has a solution to. The purpose of the business should be to provide a solution to the identified gap and create value for society. It should not center on being the boss of your own or just making money. The goal of the business should be clearly articulated and well laid out in a plan and strategy. It is not enough to have a vision or passion, the actions to actualize the vision should be well laid out in a strategic map.
- Poor Management
Every business owner should possess sound management skills to manage both the human and material resources in the business. Proper planning and execution, project management skills, communication skills, emotional intelligence, human resource management, and so on, are some basic skills a business owner should possess. Failure to have these skills will affect the survival of the business.
- Inadequate funding
Something, some business owners have the necessary skills to manage a business and have the right motive and strategy but lack the adequate fund to finance the business. Lack of funds can lead to business failure.
Every business should run like a separate entity from the owner. This is an important factor that some business owners do not take into consideration, and it goes ahead to rock the business. The cash flow should be properly documented and monitored, and the owner should separate personal expenses from that of the business. It is a big lesson from the Corporate financial accounting course at Lagos Business School (LBS).
- Poor Customer Care and Support
For your business to survive, you must treat your customers as king and provide them with all necessary support as far as the business can carry. You must treat your customers well to have them return tomorrow and recommend your products and services to others through referrals. Some businesses do not take care of their customers as they fail to understand that they are in business because there are customers and so the business fails.
- Unfavorable government policies
Business owners may have all the skills and resources to make a business successful but struggle with government policies and as such, the business fails. The analysis of business problems (ABP), a course at Lagos Business School, (LBS), stresses that business owners should constantly analyze their business strategies to identify possible threats to the business. Part of it could be the impact of government policies on the business. This will help the business to come up with ways to mitigate these impacts and keep them from crystallizing.
- Inability to manage changes to come with growth
Business growth comes with different challenges. The bigger the business becomes; the more challenges confront it. The strategy used to grow a business from
N 5 million to N 10 million, may not be enough to grow the business to N20 million. The business owner must adopt different strategies as the business grows to meet up with the growing challenges to be able to sustain it.
- Inconsistency and lack of passion
Challenges and problems will always come in the way of success in a business, but business owners should build resistance against such distractions and stand firm towards the achievement of the goal of the business. The “why” behind the business should the binding force that keeps the business owner going during such times as some businesses fail because the owner lacks resilience
In conclusion, every business has its peculiar challenges. Business managers should always adopt the analysis of business problem strategies in such situations to deal with the issues for sustainability.