Why Most Businesses In Nigeria fail and Few Succeed

The answer to why most businesses fail in Nigeria and why only few succeed is staring at us in the face/ With over 200 Million people who needs different basic amenities, goods and resources daily, and with the present unemployment rate in the country, individuals venture into small scale and large scale businesses, something to put food on the table.  But it has been observed that very few of these businesses thrive while others don't see the light of the day.

Whether large Scale or Small Scale, if quality ideas, innovations, plans and strategies aren't put to us then the business is vulnerable and liable to be blown by the wind of market competition. Market is war, and it takes entrepreneurs with proper business plan to survive. Here are the reasons most Businesses Fail in Nigeria:

Why Most Businesses In Nigeria fail and Few Succeed

1) Inadequate and insufficient research about business

Proper research about what the target market actually needs, why they need it and when they'll be needing such products should be known. An Entrepreneur should be able to answer all this questions first before proceeding to how the products will be produced and passed to the customers. If this questions aren't properly answered and duly dealt with, you end up producing what people don't need and that is the beginning of failure.

This Research will help you know things like; how much is needed to start up the business, location which your products will be marketable, profit margin needed to be added on the products so as not to look like exploitation to customers, gadgets and equipment needed and so on. 

Research will help sort all this and in turn aid success in the business.

2) Improper consideration of start up location

Most young entrepreneurs do not put the start up location into consideration before starting a business. Location determines what your audience/customers will be like and how much of your product/services that'll be needed. For Example, situating a sachet water company in an area with poor inflow/supply of water. In this type of area, there is high probability of making sales. 

Another Example is starting of a fashion brand in an area were several fashion brand exist already. The probability of having growth in such area is low since competition will be high. 

Let's look at starting a logistics company in an environment that lacks the knowledge of ease, they will basically prefer to stress themselves and get materials themselves than for a logistics company to deliver it.

Whatsoever brand one wants to establish as an entrepreneur, start up location must be rightly chosen so as not to end up in an environment one isn't needed.

3) Lack of basic amenities for business

Some business starters do not put into consideration amenities such as Electricity, Road, Transportation, etcetera when starting up a business. Lack of such amenities stand as stumbling block to  businesses in need of them. Business that requires lots of energy supply should consider an environment with steady supply of power while one in need of fast conveyance should consider good road.

Presence of such basic amenities reduces expenditures, improves the cash at hand, encourages savings and aids growth.

4) Failure to study competitors

 There's virtually no business in Nigeria that someone hasn't started either on a small scale or large scale. Therefore, a proper investigation about competitors will help stand out. Every Businesses has its strength and weaknesses, knowing the weaknesses of your competitors and implementing on it stands as an advantage for your growth and survival.

Let's take for Example toothpaste companies such as Oral-B and CloseUp. Each company studies the lapses of the other to improve its own product and be the preferred. Doing this makes them stay in market and thrive.

5) Starting a business with the sole aim of making profit

Most business owners started up their businesses with the intent of profit making. Business should be about service and not entirely about profit making. The ability to render quality services brings about the profit, your reward for your services is profit. Customers attention and interest most times are gained through quality of your service and that will make them keep coming for more.

All your profit mustn't be imposed on one customers, it should be shared evenly on all. Why most businesses fail is because their prices seem like exploitation to customers and makes the customer loose interest. And without customer, there's no business. More reason you can never see different brands with similar products having different prices, their prices will also be similar, if not the same.

The reward for service in business is profit, so don't force it.

6) Buyer and seller relationship

How you treat your costumers and relate with them will determine if you ever get to see them again. It will also determine the size of your client/customer population. Professionalism should be maintained in every businesses. Entrepreneurs should know that all customers aren't the same and demeanor differs. Buyers will frustrate, rubbish, throw tantrums or despise products and services but a good customer relationship should be employed into treating such so as to maintain the image which is being built. You wouldn't want to keep potential customers as bay.

Every business has its own potential customers. The way you treat them determines whether they'll patronize or not. Know also that customers can refer, your attitude to them tells if they'll speak highly of you and recommend you or degrade you to the public.

7) Poor marketing of business

This is perhaps one of the major factors leading to the failure of businesses especially in Nigeria. Some lack the skills in marketing, some don't do it the right way. Your business needs a face and a voice. The face of your business tells the public you exist and what you stand for. 

Marketing is power and it keeps you registered in minds of the audience. In this segment, smaller firms get swallowed up by the fierceness and aggressiveness of competitors publicity and marketing. Now it is not a problem if you are not a guru in terms of marketing and publicity. How about you contact +2348137884995 (Call/WhatsApp)

Publicity and marketing is one of the best way your products can easily be brought to the knowledge of audience and the best way you can sell it to them. How attractive and catchy your content is determines the number of customers you get. Fliers, leaflets, banners, giveaway, contest, visual, audiovisual, etcetera can be part of the medium which can be employed for this.

8) Lack of goal setting

A dream without a plan will always remain at the level of a dream. Too many businesses have started on the basis of 'I am broke, I need some money' or 'I need a side hustle business to support my finance' so much that there is no proper planning. While it is one thing to feel the desire to start something, it is often the person with the sharp cutlass that gets to cut the tree, not the person planted the tree.

When writing business plan for our clients we often ensure Short term or Long term goal of their business is well analyzed so that every bit of the steps is realistically calculated towards having a feasible result. Organizational goals, if properly implemented, tells how the company will be in months and years. Goals makes entrepreneurs minimize lapses and pave way for growth and development.

And just in case you need a well planned and well written business plan, you can contact the number above. It makes starting any business easier.

A Company's goal must be Specific, Measureable, Achieveable, Realiable and Time-Conscious (S.M.A.R.T) but in Nigeria reverse is the case. Nigerian Entrepreneurs set goals too ambiguous and unrealistic and an unrealistic goal is unattainable one. A goal which is unattainable marks the beginning of failure.

9) Lack of operative marketing strategy

Entrepreneurs lack the sight of pushing their products beyond themselves to the audience and this causes failure of most businesses in Nigeria. Platforms for this are readily available for entrepreneurs but naivety of the right platforms to use in reaching the audience reduces sales and causes setback. Platforms such as website, social media, online stores, trade fairs, etcetera can be of good assistance to business owners.

10) Poor leadership skills

On our Instagram page is a video of a boss that rewards his employees for making mistakes. According to him, making mistakes is okay. It helps his employee to be better at what they do, especially after learning from their mistakes.

Leadership is all about service and not about domineering. Workers and Customers are indirectly and subconsciously influenced and affected by leaders attitude of control. To every action there's always an equal and opposite reaction they say. Workers self esteem and morale gets stimulated by leaders state of mind therefore, determines the business productivity. 

As a leader of an organization, you should try to drive the spirit of your workers high each day, prepared for productivity.

11) Mismanagement of business funds

It will really interest you to know that one of the foremost things that killa business even before it is ever born is having zero business fund structure. In other words, when you make any money from your business, and next day, it's all gone - you spent it all - it is highly unprofessional, a lack of discipline and structure for your fund.

This is why it is advisable to have a separate account for your business where you don't have easy access to it.  And even when you have a finance structure for your business funds, if you are not discipline enough to caution the outflow of cash from the business account, the organization will still crumble.

In an organisation which isn't transparent as it ought to be, this can be a major cause of breakdown. Irrelevant and unplanned use of business funds and profit for reasons unknown can affect a company's short term and long term projects which can in turn lead to the death of such organization.

In a situation where funds are being used for things outside the purpose of the company, the company is prone to bankruptcy and death. Therefore, funds should be well and properly managed so as to promote continuity of such business.

All this aforementioned points are reasons most businesses fail in Nigeria and only few Succeed. They could only have survived through what they did differently. Aside doing the opposite of what has been mentioned thus far, here are a few things that help businesses to succeed.

1) Teamwork

Every business that wants to succeed embraces and values teamwork and division of labour. They trust in the competency and capabilities of their employees, which makes them have a broader eyes overseeing.

They know they aren't an island which had all knowledge, therefore, welcome all ideas of development from staffs.

2) Quality over quantity

Most entrepreneur prefer making lots of profits rather than offering tangible and quality service thereby compromising their quality for quantity.

 Like I stated earlier, the quality of your service determines what your profit margin will be like and not your quantity. Buyers prefer quality over quantity, in turn making brands with such remain in existence. Entrepreneurs should always have it at the back of their minds to build quality over quantity.

3) Networking

As we all know that business in Nigeria isn't about what you can do alone or how best you can market your products but who you know. Networking goes a long way in business and aid growth.

Those you know acquires your products based on relations and that improves your level of income and sales. In Nigerian businesses, who you know matters a lot.

The List to Why Businesses in Nigeria fail is endless and subjected to change based on Individual experiences on businesses but the few points noted here are what was observed in Entrepreneurs who did fail, rose, tried again and succeeded.

Your questions, contributions and comments can be dropped in the comment box below!