Physical business

Nigerian business failure: What cause it

According to research, more than 80% of businesses fail in their first year of operation in Nigeria, and more than 95% of startups fail in their first year. If I hadn’t done some research, I would say the same thing in another country, but that is far from true as evidenced by the business in America.

In America, the rate of sme failure in the first year is only 20%, 30% in the second year, and 50% in the third to fifth year, far lower than in Nigeria. What could have caused this failure? Isn’t it a little much?

Recently, the Nigerian entrepreneur field has been losing members as a result of this failure rate; no one wants to start a business in the face of failure, and this is exacerbating Nigeria’s already poor economy.

Though many people believe that funding is the primary cause of business failure in Nigeria, this is only true for 5% of the time. The following are the specific factors that have increased the business rate in Nigeria.

Awful business strategy

One of the reasons for business failure in Nigeria is a bad business idea. What sme isn’t a tech start-up?

Sure, SMEs differ from startups in that you must come up with a new idea or modify an existing one, whereas startups must come up with a new idea or modify an existing one. However, what they fail to realise is that no two businesses are the same, and success in one does not guarantee success in another. The business idea must be compatible with your lifestyle; otherwise, you will be disappointed.

When a man with a passion for a business idea persists in the face of adversity, you will be unable to do so because you are in it for the money.

Don’t get me wrong. I’m not saying you shouldn’t make money from your business; rather, I’m suggesting you find a business idea that you’re passionate about.


“A business idea is worthless unless it is executed properly.” Have you heard of these phrases before? What do you think of them? If you have been in business, you will not understand what it means at first glance. Execution is the energy you put into your business to see it grow.

Everyone in this life will have had one business idea, but while the executioner will sleep and wake up in a job or continue to dream about another business.


While execution is essential, you must also have a strategy. Rather than working yourself sick, develop a strategy that will give your business an edge in the face of competition. For example, if your business is broiler farming, instead of purchasing a large machine to process your birds, which will cost you a lot of money, you can pay a processor $150 per bird to help you process and blast freeze for 24 hours, after which you can distribute to retailers or end users.


This one cannot be overstated: whatever business you want to start, your location must support that business or you will only get 2 to 3 customers, and they will most likely be your family. Before starting a business, you should conduct a feasibility study to determine how feasible your proposed location is.

The customer is always right

There’s a saying that if your boss is giving you a hard time, you should fire them. Please don’t do that, especially if you’re just starting out; if you fire one custorer, you automatically fire ten more.


If one customer is dissatisfied with you, they will undoubtedly tell their family and friends, who will do the same, and the cycle will continue. Sure, you don’t want a negative word-of-mouth advertisement; trust me, it will ruin your business.


Cash, cash, cash

Money is the root of all evil, but it is also the bedrock of business; without it, your company will fail. Money is used to make money.

But I’d like to start my own business.

I need to find a way to fund na.

Haa I laugh when I hear people say these things; if you really want the truth, you can start a business without any money unless you come from a wealthy family; otherwise, you must work and save your salary; this is how you can’t get capital to finance your business. Another option is to start a side business while still working full-time, and then switch if the business succeeds.

Banks and investors will only invest in your business if it is already thriving or if you have one or two thriving businesses in your portfolio; no one wants to lose their money.

There is no market segment.

Most Nigerian entrepreneurs are greedy (I’m guilty of this as well), they want to take over the entire market at once, and as a result, their darts are scattered all over the place. Don’t be like this; instead, when you first start out, find an undersevr niche that you can seve and own, and then work your way up the market ladder.

Policy of the Gorvenment

This is one of the major causes of business failure in Nigeria, and you can’t do anything about it. Do you remember chaka, an app that helps Nigeria invest in US stocks, or abokifx, a website that provides real-time updates on the value of Nigeria’s currency?

Do you know what happened to them? They folded up because the government woke up one day and saw them as a threat to the Nigerian economy.

When it comes to business, the government is not your friend. Their goal is to collect taxes, and if it benefits them to shut down your operation, they will do so without hesitation.

Is there a way out?

Yes, there is; when the election comes, vote for the right candidate, someone who will support favourable policy.


It takes patience to care for a business like a baby, but it will eventually take care of you financially. Don’t give up in the face of difficulties; you are not alone; other entrepreneurs are also experiencing difficulties. Wait, did they tell you it would be easy? If a motivational speaker has told you this, please erase it from your mind because nothing good comes easy.

‘Today is difficult, tomorrow will be difficult, but the day after tomorrow will be sunny.’

Collaborative effort

You can run your business on your own, but you won’t be able to keep going on your own. When hiring employees, remember that they can make or break your business. Don’t hire solely on the basis of their skills; instead, consider why they want the job: is it for money, knowledge, or passion?

You will do well by hiring people who are personable and in need of money. If you only hire for passion, it may fade over time, but with both, you will have complete control over your employee.

Isn’t that cruel?

Business, after all, is cruel.

A bad egg

Sometime you will make a mistake by hiring people who do not fit with the culture of your company; you will want to let them go because they may turn a new leaf; if you do this, your business will fail. Should I remind you that you are not running a charity? You must be able to hire and fire quickly.


Some people believe that competition is the only reason businesses fail in Nigeria, but this is not the case. It is only applicable to businesses that have no value proposition, one thing they can do well and differentiate from the other businesses, such as soft drinks. Have you ever seen soft drinks that look and taste the same?

Of course not, and matches don’t do the same thing either. I’m certain you don’t. If you want your customer to hear you over the din, you must use a value preposition.


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