Over the years, there has been a significant increase in the number of SME businesses in Nigeria. However despite this high increase in startups, also equivalent is the record number failures and debt incurred due to this. In Nigeria, micro, small and medium scale enterprises account for more than 84% of jobs in the country, and this is an indication that MSMEs contribute largely to the GDP of the country in one way or another.
There are many businesses that have failed in Nigeria and have found another way to be revived again. The constant element in business is that it involves risk. if you are not big on taking meaningful risks, then you can't succeed at doing business. Success and failures are inevitable, however here are the five major reasons for business failure in Nigeria.
- Lack of projection: Most individuals venture into business for short term pleasure. They fail to see the big picture. It is a terrible mindset to go into business with, as it can ultimately ruin any chances of success. No matter how a business may seem, there has to be adequate plans and preparations put in place to make it work, not to mention the risk factors that would be involved. With a plan that includes the SWOT analysis, the risk of failure is being reduced to the barest minimum.
- Competition: In all sincerity, no matter how obscure you
thingyour business may be, there competitions lurking everywhere. Competition is a huge part of business success. It is also hasadvantages as it allows for creativity and concise strategies in order to top the game. In Nigeria, there is always this buzz of 'what's trending'. Most Nigerians owners go into business with this mindset, even if they dont have the flair for it. Ultimately this leads to failure as it was a spontaneous decision. If you want to succeed, don't follow the crowd, follow your dreams.
- Wrong location: If most businesses in Nigeria applied the marketing mix in their analytic approach then the rate of failure will be reduced. Most business owners just set up without having a direction about the sales, target audience/market. In the long run, bad decisions would be made about the location and this singular act and eliminate the business completely. Beware of making decisions concerning the target audience, because all products are not for everyone.
- Lack of adequate planning: In Nigeria, there are a lot of businesses that were being started on a huge budget, and are no longer in existence today. This is to show the capital is not the major factor in determining the success of a business. Just because you have invested a lot of money in it doesn't mean that it can't still fail rapidly. With a huge capital investment, comes a lot of responsibilities, which is why planning is very important. If you fail to plan, then you plan to fail.
- Bad management: Good management is an important aspect when it comes to business success. Management is important in terms of finance, human resource and decision making. Most businesses in Nigeria have been written off due to bad management. It is important to carefully select those who would be managing the business with you if it would be a joint effort. The same also apllies if its a personal business. You need to manage all your resources judiciously.
Patience and consistent are very important when trying to grow a brand or build business. Challenges would always emerge, but you need to be determined about what you want achieve with that business. Take note of the loop holes and strategize effectively.