4 Major Reasons Why Small Businesses Fail in Nigeria | What to do?

According to Small Business Administration(SBA), roughly 20% of small businesses fail within the first year of their initiation. This increases by 30% in 3years and by the end of a decade, 70% of those businesses will be gone.

Why do businesses fail at this rate? Well, there are several factors, some of which will be discussed in this post.

ACCESS TO CAPITAL

 One of the prevailing challenges most small businesses face is having access to capital. This is a challenge in most developing countries like Nigeria. Thus, small businesses are usually labor-intensive. However, for such businesses, staying competitive in a free market is an onerous task.

POOR PRODUCT/SERVICE DEVELOPMENT

Most entrepreneurs who get past the hurdle of sourcing capital for their idea may still encounter the challenges of developing a suitable product at the right price for their prospective customer who they also have to identify.

ALSO READ: HOW TO GET YOUR PRICING RIGHT

The process of developing a product or service is time-consuming, requires attention to detail, and is capital-intensive. Most entrepreneurs tend to cut corners which impacts the business in the long run.

POOR PRODUCT/SERVICE MANAGEMENT

One of the key areas most small businesses tend to fail is in the management of their product and service. It is one thing to have a great idea and a totally different thing to keep it viable for a long time.

We live in an ever-changing world and it is easy for a business to become obsolete if it does not evolve with the changing times and trends.

SOCIAL-ECONOMICAL CHALLENGES

There are various socio-economical factors that can affect the growth of a business. They include:

• the social norms, 
• ethics and, 
• philosophy of people or regions.

 There are certain types of businesses that may not thrive in specific regions. E.g – Selling processed food in rural areas.

Also having a poor support system can gravely impede the growth of a business. Starting and growing a business can be tasking which can have psychological implications.

WHAT TO DO

1. Do a proper feasibility study. Identify the economic, social, and environmental factors that affect your business.
2. Constantly improve your product and service.
3. Seek emotional support when needed.
4. Learn from your mistakes. 

Also read, 4 THINGS TO CONSIDER WHEN STARTING A COTTAGE BUSINESS