Reasons why most Small Businesses Fail in Nigeria
Robert Kiyasoki my mentor once said that a research was conducted and it was discovered that 80 percent business never makes it more than 5 years before it crashes and that those that ever makes it, 90 percent of them never make a million dollars in 10 years. These days we see Businesses go up and suddenly fallout. It’s so difficult to see a new business ever make it to the top without ever falling millions of time.
The reasons are not far fetched at all. We also understand that it is very rare to see any business starter to get it right from the very onset. Very very rare. But determination will stand you tall among all these. So, keep doing the right thing and the needful and trust me your business stands the chance of not failing but success will be all guaranteed.
We have done our due diligence and we have identified some reasons why most Small Businesses Fail in Nigeria. The list goes on and on but we are gonna take the most prevalent ones.
1. No Business Plan
One of the most important Reasons why most Small Businesses Fail in Nigeria, is that most business starters are never prepared. Sometimes they think lack of capital is the major issue. But that’s not the issue first. Can you a builder building a house without a plan that involves an architectural work and other plans and yet you expect that house to stand? So many business starters go into business without a proper business plan and that is where it all begins. You can’t go into a business without a business and expect to make progress. It’s a mirage don’t believe it.
Have a good business plan , follow it up and trust me that will be the beginning of your success in business. A business plan is far more than just a paper document. It does a lot of job behind the scenes. It will help you set objective targets and ways on how you can achieve those predetermined goals. It’s one tool that helps you prepare for the job at hand, it helps you to monitor your progress and also it gives you direction. That’s not all because with a sound Business plan, you can still evaluate your performance at every stage of your growth too. Now sometimes you may lack knowledge about the but with a well documented Business plan, you will have a very sound knowledge of the market place.
Some persons think that a business plan is to elaborate or too voluminous but that’s how big your business gets too. But if you are afraid of having an elaborate business plan and don’t fancy it, then you should also have a plan for your business before you start. Can a blind man walk successfully with his stick for directions? Not possible and that’s what happen when you started a business without a business plan. You sure likely going to fall into a pit. So many persons are just so impatient with business that they rush into it without an adequate business plan and that’s the same speed they crash they’re business with. If you can’t write a detailed business plan for your business, then check our list of various business and if you can’t find what you are looking for, then give us a call, and we will prepare an updated business plan for you.
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2. Insufficient Capital
The second Reasons why most Small Businesses Fail in Nigeria, is that most business starters are never adequately prepared financially and this leads to collapse of the business. So many of us have fallen victims of this before. No money, no business that’s the popular adage. When going into a business, you must no that having the money for just commencing operations is different from the one needed for other factors the business needs. Sometimes newbies think that when they launch into any business, they start making profit instantly but that’s not always the case. This is why you need a business plan that will guide you all through the way.
They think as that as profits starts coming in, they will use it to start running the business. It is not always so. Go and make your research about successful business and you will understand what am saying. Before you go into any choice business, be very much ready to have good financial reserve that can cover for production, overhead, materials and equipment, rents, instant loss etc. for a minimum of one year.
3. No Records
How can you start a business and you don’t have a record of what goes in and out of your business? This is a major Reasons why most Small Businesses Fail in Nigeria. Doing something is quite okay but doing something the right way is best this and also it leads it your business success. One way to crash your business is not having a financial records for your business. Make a detailed marketing strategy records of customers, financial dealings about them, where they reside and what they want from you and your business.
Via your business records, it will aid you in making the right and accurate decisions when needed to make, then also it sheds more light on your management capabilities. With a due and detailed Financial records you will be able to know in full what’s coming in and going out of the business daily financially. With this knowledge, you are fully abreast with the financial situation of your business. With this you can’t be surprised at whatever comes your way. With a well documented financial records, it will be easier to tell if the business is pushing into over debt or not and what this could do to it in the near future for them business.
Don’t just think you have everything in your head. No. To have a succeeding business, you need to have a financial business records. Ensure you a clean book for records. Ensure you are making a record every information you come across which are very much useful for your business.I have seen many people do business without records. I assure you, they are failing woefully. When you want to succeed in something, you must learn to do it right. You cannot manage your finances without financial records. You cannot plan a good marketing strategy without records of customers, where they reside and what they want.
Financial records will tell you how much is coming in and going out of the business daily. When you know this, nothing comes as a surprise. With records you can tell if the business is plunging into much debt or not and what this could do to it in the near future. To manage a business, you need a financial record. Get a book and make sure you record every information that can be useful for your business.
4. Poor Management
This is one of the Reasons why most Small Businesses Fail in Nigeria. Seriously. Many business fail today because they are owned by people who have little or no idea about the business. It doesn’t matter if it’s your business or not let capable hands handle it and give you the profits you deserve. Now there is a difference between knowing about a particular business and having a managerial skill or knowledge. Some posses the former and lack the latter which is a major Reasons why most Small Businesses Fail in Nigeria.
Often times we have seen situations where sales boys and sales girls run a business. What????? How did that happen or be? Management means that you have what it takes to be efficient in utilizing the little resources (money, men, materials, machines, information, space and skills) available to achieve a preset goal or targets. So if you have someone who lacks this ability or efficiency, then it’s as good as your business will crash if it has not, it’s a matter of time.
Have an efficient person who can effectively plan, organize, direct, control, communicate, create and motivate in a manner that can use the limited resources to achieve the desired goals. So if you are gonna hire a staff, then hire a manager. But if you can be a manager yourself? Then fire down.
5. Poor Marketing
This is where they all get it wrong. Yeah. I can’t say much here. But am preparing a very expository article on marketing as far as business is concerned here in Nigeria. What makes a business go viral, is marketing. What brings customers to your doorstep is marketing but keeps them is totally on your retainership strategy and tactics. Without a sound marketing, your business will at best operate as a mediocre business entity. Sometimes we just think about marketing as being “promotion”. It’s far beyond that. Though promotion as it where its an aspect of marketing. Let me quote what a senior colleague of mine said about marketing. He said it is an act that begins with producing a quality PRODUCT, in an attractive PACKAGE, for an reasonable and affordable PRICE, at the very best PLACE for easiest access by the customer. This means that, you are doing everything humanly possible to make your products or services appeal to the customer. This is what it means by marketing. So all these are done by PROMOTING it.
6. Incompetent Employees
Another reason why Small business fail in Nigeria is the lack if competent staffs. When you here people use the phrase “human resources” we are generally talking about your employees or staffs as the case may be. For me, these are the most important people in your business. They can make or break your business into nothing. Whatever resources you have, these ones are the ones who are gonna make use of them to achieve your business goals. So you can see the important role they play in your business.
Machines don’t have souls only human does.
This means that, they can easily be affected by anything. They could come to work grieved, or happy sad or joyous etc. They are not guaranteed to give you a hundred percent well job because they are humans. Don’t go for staffs that lacks skill, knowledge, and experience. You go for those who posses the aforementioned. Do well to make them happy and also don’t give room for nonsense too. Pay them them and in turn make them understand that should be able to make the money they earn even many times than what they earn. Let this be done until you make them see that they are part and parcel of the business.
Don’t believe the myth that customers are king. Your employees are Kings. Just have the best staffs that works in a conducive environment with a good motivation, just watch how your company or business will fly.
7. Little or no Innovation
Business as it where needs new innovations, new challenges, new operations etc. They sure need it and if you aren’t doing that, you might not grow and stagnation in business leads to collapse. If you want to grow your business and keep repeating same thing over and over again, then you must be really be in trouble thinking that way. Your business won’t witness any meaningful growth if you keep repeating the same system, operations etc. The world is changing, the world is evolving so are businesses too. You must as a matter of fact follow up too. Don’t repeat the same thing over and over again and expect a different answer that will be suicidal as far business is concerned.
One thing that will stand you out is your creativity. That have actually stood many businesses out today and place them among the top ones. I read a book by Dangote about how he takes two hours every day to think and brood about his business and new things to try out. So you can start by having a day every week to spend at least 2 hours alone with yourself thinking and meditating on the way forward. Think big and you will testimonies everywhere. Let every week comes with new goals, new challenges, new set of targets etc. And this will be the beginning of your success story.
8. No Preparation For Rainy Days
There are times when business is so Rosy and you just think that’s how it’s gonna be through. The gospel truth is that, when business goes bad, its not a sign of failure from you especially if you are doing all things well but it’s a time to learn new things. At times it may happen more than once it shows that there is something good to come out of it. Don’t quite just chi and learn. But some people too are not prepared for such eventuality. There are times when you experience low turnover, low sales periods, lack of vision, debts, downsizing, embezzlement of business money by staff, loss of competent staff etc. Every business today that have ever succeeded once faced one or more of the aforementioned scenario. But being prepared for such an occasion, then your business won’t get affected at all.
As you plan on how you are going to take your business very far high above the sky, also plan for such cases of eventuality. This will keep you prepared and your business not affected at all. Don’t get deceived, when eventuality happens, they don’t happen because you aren’t doing the right thing but it could be outside forces that are beyond your control. Corona-virus have been hampering trades in the Forex market. Even the best at losing on a daily basis. Amazon, Facebook, Google, Apple and Alphabet lost one trillion dollars put together on one week due to the global epidemic. It was a force beyond their control. But they where not moved because they had prepared for it.
These are some of the Reasons why most Small Businesses Fail in Nigeria. But now that you no, don’t fall a victim. You now have an edge over the others. So grow your business and be successful.
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