7 PRIMARY REASONS WHY NEW BUSINESSES FAIL IN NIGERIA
“The primary reasons why businesses fail in Nigeria” is a nagging issue that faces every business person and prospective business person. This is because one needs to understand why others failed to be able to navigate his way to success by avoiding the wrong steps others took. The question is vital because a significant number of startup businesses fail within their first five years of operation.
Businesses fail because of varieties of reasons. These reasons for business failure are sometimes caused by the entrepreneur himself and other times because of the environment he’s operating in. It’s vital the business owner surveys the environment, and understand what the business entails before embarking on the business venture.
A LINK TO THE FIRST POST CAN GO HERE (THINGS YOU SHOULD KNOW BEFORE YOU START A BUSINESS)
Indeed, many contents exist online addressing this issue, but we look at the topic from a practical point of view. As a company that trains individuals, businesses, and organizations on digital marketing and how to grow a business successfully, we’ve seen many businesses fail, and many others succeed. We’ve helped many companies thrive in the market and understand what it takes to succeed or fail.
In this piece, we outline the seven major reasons why new businesses fail in Nigeria.
Wrong Business Decisions
The decisions you make in your business, right from the market research phase determines how successful your business will be. Many Nigerian businesses fail because of the wrong choices made by the owners. These wrong decisions lead to wrong investments, wrong finance management, wrong employees, and most times, a cascade of other wrong things follow leading the business down the drain.
Before you make any business decision, it’s important you get as much information as you can. Carefully analyze the situation; if possible, consult experts and understand the possible outcomes. When you’re okay and satisfied that the decision will be favorable, you can go for it. In rare times, it’s okay to go with your business guts, but they should be in the form of calculated business risks.
Be careful and tactical with your business decisions, and you’ll see your business thrive.
Lack of Managerial Skills
Excellent managerial skills are required to manage any business to success. When an entrepreneur cannot manage both the human and material resources at his disposal, it becomes hard to succeed. This typically leads to wrong decisions, which as explained, start a ride that’ll go downtown.
An entrepreneur must be able to manage all his resources; from employees to production line, cash flow, customers, etc. When the business owner doesn’t possess the managerial skills required, it’s advisable to outsource or hire an excellent business manager to handle that.
Unfavorable Government Policies
Nigeria operates on a four-year presidential term. This leads to different presidents making different fiscal, monetary, and economic policies. Though this factor is beyond the business owner’s control, it’s necessary to understand and adapt swiftly to the changing trends, policies, and technology.
The government will always make policies that’ll affect businesses positively or negatively. What matters is how tight your exit, pivot, and adaptability strategies are.
Internal Fraudulent Activities
Most times, what kills a business comes from within the business. Though it’s vital to be pleasant and accommodating to your staff, there are times when it’s necessary to be rigid and strict. Operate your business like the business that it is and not a family or friend affair. Be careful and smart with your employees so that they don’t defraud you or take their duties less seriously.
Family and friendship interference in business is a significant reason why a high number of businesses fail in Nigeria.
Wrong Target Audience
This is one of the biggest reasons why businesses fail. It’s vital to take the time and understand your business and the audience that needs your products/services most. Marketing your business to the wrong people ends up wasting your resources and yielding few results.
Make necessary research, plan, and target the right audience.
No Digital Marketing Knowledge
In this current era, having an online presence and excellent digital marketing skills is vital for the success of any business. The world has gone digital, and it’s only right to follow suit. Most potential customers search out businesses online, and any business that’s found wanting in the online space is doing itself more harm than good.
Get digital marketing training and get started online to meet up with the already existing competition.
Poor Customer Service
Any business with an excellent customer service team has the edge over its competitors. This is because customers expect more than getting the goods they seek when they interact with a business. They hope to have a satisfying experience. When a business fails to give this, they move to the next business. It gives customers a feeling of royalty and value, and they can turn to advocate for the business that gives them the most satisfying experience.
Conclusively, if you’re on the verge of starting a business in Nigeria, we advise you research in-depth, understand the reasons why new businesses fail in Nigeria, and develop strategies to help you succeed.