There has been many reports on the failure of some
Nigeria businesses. Most Nigerian Business fail after 2
or 3 years of start-ups and there is a quote that
states, "if you can survive for 5 years, you have
survived". I have come across many Nigerians that
gives many reasons why their business has failed and
some of these reasons comes from………. their lack of
understanding the basic principles of business
management.
Business in Nigeria can be tricky, challenging, difficult
and enjoyable at the same time. Most people enter
business with the idea that it is going to be easy and
smooth but the worst disservice anyone can do to
himself is to expect business to be easy.
A friend of mine in Nigeria who started manufacturing
tissue paper as it is popularly known in early 2011 has
a very good passion to start a business. He is
educated with an edge to succeed. He started of his
business and everything seems so good at the first 4
months. After sometimes he begin to have some
difficulties from few customers to low account
statements. It affected his business and mindset which
transforms to the overall business. Within some short
period of time, he is going bankrupt and finally quits. I
met this young and vibrant entrepreneur and we had
good conversations about his life and business. He
told me everything that happened to his business and
how it led to his failure. From all the things he was
saying, I gathered that he was just giving unrealistic
reasons from the fact that environment is not good for
business to customers don't like my product.
After a careful study, I told him that you have a very
gob business mindset and you are willing to take a
risk in business. I asked about his company
management, he gave reasons, I ask about his
accounting platform , he gave another reason and then
I asked about his marketing strategy, he paused for a
while and said that he only calls potential customers
when he deems fit to do. From all that I gathered from
him, I realize that he has not been good with some of
the fundamental aspect of business. I gave him the
ideas and how he can achieve that, from having a
good team to challenging your team, being ahead of
your business, think further and have a better picture
of the market. He thanked me and later moved in to
business again.
Many things affects businesses to fail in Nigeria but I
am going to share to you some of the core factors that
leads to failure of business in Nigeria.
Why Business Fail in Nigeria
1. Management
This is a crucial aspect of every business. If you are
starting a business in Nigeria or expanding your
business. You need to hire or have a very good team.
Employees as most company usually say are their
highest asset and this is very true. How good your
team is organized and managed will go a long way of
determining how successful your business will be. You
have the idea but you can't implement it all by your
self and that is why you need a very good team. Hire
people with skills in their niche and train them if
needed and treat your employees good at all time.
Respect them, praise them when needed and thank
them for doing a great work. They will be happy at all
times and this will improve the team work.
Managing your business has to do with providing good
ethics for your organization, having a good and clear
Companies vision and mission and making sure every
employee understands that. Drawing a business plan
for your business that will oversee your marketing
strategy, pricing strategy, organizational structure and
financial projections. Branding awareness and
positioning your brand as a good image in your
industry. Overseeing the works of other employees and
elaborating ideas that will make your business achieve
it's goals. Communicating effectively with your
employees and making sure they are in line with your
projected idea.
2. Planning
Most Nigerians only plan for how to start a business
but fail to extend the planing on how to run and
maintain the business for a period of time. They don't
set their mission or vision as they just depend of
making profit which is not what business is all about.
They fail to analyze the competition in the market and
lack the strategy to tackle them. They never think
about marketing activities of their business nor willing
to spend money doing that. They don't think about
potential problems or setbacks that could occur in their
businesses. Banks in Nigeria now, require a business
plan for some SMEs start-ups if you are willing to take
a loan. You have to make a detail plan and work on it
for you to be successful in business. There are different
types of plans one can adopt in his business such as
Strategic planning, Operational planning, Long term
plan, Short term plan, one time plan etc. Don't
underestimate the market or your competitors. Think,
plan, plan again , write it down, project it in a bigger
picture, work on it, plan again and keep on working.
3. Poor Accounting
This is one of the fundamentals of business failure in
Nigeria. You need to have a very good account record
of your business if you really want to succeed in
Nigeria. Monitor your accounts to know how the
customers react and how payable are they. You have
to create a situation that will enable good customer
relations and tell them the importance of cash and
carry. Watch your accounts properly and don't just
concentrate on the liquid cash in the bank. Watch how
the debits and credits are being done.
Another important thing is to buy a good accounting
software that will aid you in monitoring your
transactions and knowing when stocks are finished.
Accounting is a very crucial part of your business and
you should mind the kind of employee that handles it.
4. Marketing
It's a very major aspect of every business
management. Many Businesses have failed in Nigeria
simple because they are not interested in marketing or
advertising their products. Have you ever wondered
why MTN , GLO, PEAK MILK, NESTLE, and many other
companies in Nigeria are always advertising? Every
one knows about these businesses but they keep on
advertising their product and this is one of their secret
of success. Every time you advertise your product or
service, there are many people who are out there that
are willing to try it. Don't underestimate the power of
marketing. It is very important and always budget
some money for all different kinds of marketing.
Marketing Mix
Check Your 4cs and 4pcs
-Consumer-Product: Make sure you practice this.
-Cost-Price: Check the price and cost that is good
for your product.
-Convenience-place: Make sure the place, location is
convenience for your customers.
-Communication-promotion: Promote your products
and communicate effectively to your customers.
This is very important in every marketing. Know it and
practice it.
SWOT Analysis
-Strength:
What points of interest does your association
have?
What improvement do your business have over
any other individual?
What exceptional or most reduced cost assets
would you be able to draw upon that others
can't?
What do individuals in your business sector see
as your qualities?
-Weakness:
What would you be able to make strides?
What would it be advisable for you to stay away
from?
What are individuals in your business sector
prone to see as shortcomings?
-Opportunity:
What great opportunities would you be able to
spot?
What fascinating patterns would you say you are
mindful of?
-Threat:
What obstructions do you confront?
What's happening with your rivals?
Are quality models or determinations for your
employment, items or administrations evolving?
Is changing innovation debilitating your
position?
Do you have awful obligation or income issues?
Could any of your shortcomings genuinely
undermine your business?
Analyze all your SWOT very well and put it in every day
practice. Be accurate and work on it. It is very essential
in marketing and reaching your target customers.
5. Lack Customer target
Many business in Nigeria fail for lack of understanding
the Industry. Some start checking on the industry after
starting off their business or when it begins to affect
them. Do some research before starting and know your
target customers, the demographic of the region your
business is situated, what they want and where they
have been buying those things. You need to
understand the industry and it's target customers. If
you fail to to understand or meet your target
customers, how do you expect them to reach at to
you? Don't do that. Research and have a good
knowledge about the Industry.
6. Poor Customer relations
Many businesses in Nigeria do not relate well with their
customers. They simply allow other companies to take
away their customers freely. Give your customers the
best treatments. Hire a very good sales man that can
convince a customer. Always smile at customers and
don't raise your voice on customer no matter how bad
the situation is because your business is open for the
customers. Control your anger as some customers have
bad approach and use your knowledge in business to
outsmart them. Treat your customers very well and
they will be willing to come back again. The highest
and the best advert a company can get is from a
customer. When your customer refers your product to a
friend or a family member, they must be willing to
check on it. And this is the best advert and free but
you can't achieve it if you treat your customer bad or
cheat them. Be sincere, be honest, give them the best.
7. Poor funding or low cash reserve
Business fail in Nigeria because of lack of adequate
funding and poor management of reserves. Businesses
run out money many times and this is a result of poor
planning. You have to plan very well and know how
much money you need to run a business for a period
of time before cash begins to flow in. While running
your business, you have to reserve some cash in the
bank for emergency purposes. This is a very important
aspect as many business men in Nigeria will tell you
that money is not good to be in the bank. Don't listen
to them as reserving money in the bank gives you a
very good advantage over your competitors and also
shape the way you succeed. You will have a high
purchasing power when new technology or things
springs up that needs emergency funding. It will take
you many time to access a loan in emergency situation
and keeping some money also gives you a huge
advantage in staying ahead against market crash. It
makes you to position your self very well and enables
you to have a backup plan.
Other factors that may affect business failure in Nigeria
are
– Underestimating the Competition
-Lack of innovation
-Giving up
-Failure to accept change
-Bad depth
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