Business failure is common in most parts of the world, however, most businesses that experience failure are mostly startups and small businesses.
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In as much as most Nigerian startups have grown significantly over the past few years due to the population of the country and the total addressable market, it is still evident that most small businesses and startups experience business failure especially within the first five years of operation.
However, if you are a small business owner, it is important that you don’t let the failure of other businesses affect you or make you jettison or kill your entrepreneurial morale and spirit. The most important thing is for you to understand the common reasons why small businesses fail and know how to avoid these common pitfalls.
There are various reasons why small businesses fail in Nigeria and some of the reasons include:
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Copying Other Businesses
Nigeria is a complex country and anyone who wants to do business within the country has to understand its competitive market, nevertheless, it is not an avenue to copy from businesses you should be learning from. Every small business is bound to fail if it always copies what other businesses are doing.
A business needs to demonstrate originality and should be able to make vital decisions on its own, rather than making decisions because others did it. Oftentimes, trying to imitate other businesses without doing proper consultations would do more harm than good, especially if the purpose is to succeed or generate more sales.
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Poor Financing/ Mis-Management of Funds
This is one of the major reasons why small businesses fail in Nigeria, this is as a result of common mistakes made by startups and entrepreneurs. The majority of small business owners tend to start up a business without adequate funding, and then along the line, when the funds are not forthcoming, they become discouraged and frustrated and decide to close down.
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In addition, it is one thing to have adequate funds for your business and it is another thing to properly manage these funds, because even if you have adequate funds and you cannot manage these funds and channel them to the right areas of your business, you are on the verge of failure as well. The biggest mistake made by small business owners is carelessly spending money on areas that are irrelevant.
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Poor or No Futuristic Plan
Building and running a credible business is one of the most difficult things you can do in your lifetime. The saying, if you fail to plan, you have planned to fail applies to every aspect of life including starting up a business, and this is why most businesses in Nigeria fail. Most Nigerian startups set up a good business without having an adequate and actionable business strategy on how to run and grow the business, and yet they expect such business to thrive, ironical right?
In addition, most business owners do not think ahead or make long-term plans, for your business to succeed it is important that you not only make short-term plans but also long-term plans that will sustain your business in the few years to come.
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Weak Team and Poor Leadership
Another common reason why small businesses fail is that they do not have a strong team or adequate leadership experience to properly guide the team into making the right decisions that will benefit the business. Furthermore, most business owners cannot recruit and encourage the most talented people for the jobs on which the startup’s success depends.
Without the right persons on your team, your business is also on the verge of failing, because it is the people on our team and the leaders that will push the business forward.
Starting and running a business successfully is not easy and the business owners have a huge role to play in the success of the business. However avoiding the above-listed mistakes, making extensive research and having the right people on your team will go a long way to ensure that your business survives the pitfalls most businesses fall in.
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