Why Startup Business Fail in Nigeria

So, you just got a business idea and want to start your own startup business? Sometimes it can be hard to get it off the ground.

Starting a business is not easy in Nigeria. The rate of startup businesses failing in the first five years is very high, and there are many reasons why it’s hard to succeed as an entrepreneur.

Startup businesses in Nigeria, which is relatively new to the market, have a high failure rate. In other words, most Nigerian startups that startup in Nigeria fail before their 5th birthday. This is because these startup business owners are not aware of the challenges they will face as business owners and therefore cannot plan for them.

Here are some reasons why startup business may fail in Nigeria.

1. No Proper Business Plan

First reason businesses fail in Nigeria- Is it wrong to start a business without a proper plan? There is no simple, effective business plan available. There is a good chance that such a business will fail. A business plan is a straightforward guide that shows where the company was, where it is now, and going next.

1. Insufficient Finances

Insufficient funding or lack of funding is another primary reason many small businesses close in Nigeria. Many entrepreneurs make the usual mistake of starting a business without sufficient funds to operate it. As a result, many business owners will be disappointed and decide to close.

1. Financial Mismanagement

The next reason businesses fail in Nigeria is financial misappropriation Some small businesses fail is because the owners mismanage the business finances and have no accountability. These businesses fail to take responsibility for what they do or spend money on. Even some business owners use their business funds for personal or family needs. So what do you expect when a business loan is used for non-business purposes? Such a business will collapse sooner or later.

1. Inability to Manage GrowthGrowth

Some small businesses experience significant GrowthGrowth over a short period. This GrowthGrowth often creates new challenges for these small businesses. These challenges include currency fluctuations, billing, resource utilization, and technology. Unfortunately, if the company fails to meet the growing challenges, it will crash. For example, GoMyWay and Efritin left the company within 16 months because they could not produce the bag needed to continue operating after rapid GrowthGrowth.

1. Lack of Market Demand

Many start-ups and small businesses in Nigeria are crumbling due to a lack of market demand for their products or services. This is why any business needs to focus on specific products or services in high demand and has an existing market. Companies in Nigeria that died due to the crisis include Easy Taxi, Campus, and 9jabookings.

1. Negative Customer Care / Support

When customers are mistreated or thanked, they are often unsatisfied, leaving negative reviews and loving others. Small businesses that do not have good customer care will die automatically because they will lose many customers and prospects. If customers feel unsuitable for a company, they move to another business that will take care of it and appreciate it.

1. Wrong Business Management

If a business is not managed well, its death is imminent. Management includes planning, staffing, directing, promoting, organizing, coordinating, and communicating. In addition, knowing where your business stands at all times is a basic rule for small business management. However, small, poorly run businesses will eventually go out of business.

1. Copying Other Businesses

Every small business will inevitably fail if they constantly copy what other companies do. A business needs honest reflection and should not make essential business choices or decisions just because others have done it. In many cases, trying to imitate other companies without proper consultation can do more harm than good, especially if the goal is to succeed or generate more sales.

Failure To Comprehend Their Market And Customers

Nigeria is a complex country, and anyone who wants to do business should understand its competitive market and customer buying practices. Some failing small companies do not understand the markets and their customers. They fail to know who their customers are and how much they (customers) are willing to spend.

1. Wrong Expectations

Some small and medium-sized entrepreneurs expect the money to start flowing into their business account immediately by doing little or nothing. They seem unaware that building successful businesses in Nigeria can be compared to running a long race that requires effort, commitment, and patience before reaping the benefits. The idea of ​​starting an enterprise with the wrong expectations and impatience has caused many Nigerian firms to collapse in a short period.

1. Responsive mindsets

Several businesses have died in Nigeria because their executives or decision-makers have failed to respond to technology, competition, and market changes. Small companies that refuse to change and continue to innovate will fail and lose their jobs in the market.

1. Lack of Focus

Investing in multiple items at the same time is not a healthy business. To help your customers best, your focus should be on product quality, delivery, and tracking. A few small businesses will run out of cash and not profit because the owners start projects that are not part of their business types. Eventually, they will have to close the business. There are times when you need to say NO to additional projects (new products or services) to focus on quality rather than quantity.

The following findings will probably help you develop a better understanding of some of the reasons why startup business fail in Nigeria and how you can avoid being part of that statistics.