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Causes of Business Failure in Nigeria

Causes of Business Failure in Nigeria – Almost every day, new companies spring up, and the majority of them die soon. Statistics indicate that a large percentage of companies fail during their first three years, and these figures are consistent throughout Nigeria. Knowing why companies fail can give you a leg up on the competition in terms of avoiding costly errors and ensuring your own success.

Causes of Business Failure in Nigeria

Below are five causes why a business fails in Nigeria and how to avoid them.

Starting Big

One of the reasons for company failure in Nigeria is this. It’s OK to dream big, but it’s much better to start small and develop your company. In the business world, there is a proverb that goes, “dream big, start small,” but some entrepreneurs, in their hurry to reap the rewards and see their names in bright lights, start lavishly, which leads to burnout before the company has a chance to develop.

Typically, any new firm is expected to strive to cut costs as much as possible in order to expand. However, this does not seem to be the case for most Nigerian businesses, as we watch them take out needless loans and spend lavishly. Don’t get me wrong: I’m not suggesting that taking out loans to fund your new company is a bad idea. I’m only suggesting that it should only be done when absolutely necessary, not to make a point to anybody. To avoid making this error, always spend when absolutely necessary and limit your spending as much as possible. Rather, put more money into your company and watch it develop.

Business and Sentiments

This is one of the main reasons why many Nigerian companies have died prematurely. I understand and encourage devotion to friends and family, but not at the expense of your business. Even in business, individuals in Nigeria are becoming too emotional and ethnocentric. For example, suppose there is a vacancy that has to be filled; instead of hiring a better competent applicant, you bring in a family member or someone from your village who is unqualified for the job. What do you expect to happen to that company if you make such decisions?

Family is family, and business is business. When it comes to work, be courteous and devoted to your family, but when it comes to relationships, put them aside and let everyone perform their job properly. If you offer goods, make sure your friend or family member pays for them when they come to purchase. “Business thrives when relatives and friends pay for the items they buy,” according to a famous adage. You, too, are not exempt from this. If you are selling a product that you need, never take it at will and justify it to yourself by saying, “After all, I own it.” Never, ever, ever, ever, ever, ever, ever, ever, ever, ever If you need a product that you offer, make sure you pay for it like you would expect everyone else too.

Poor Customer Relationship Management

Many business owners do not know how to handle their consumers properly. To put it another way, many business owners have employees that do not know how to serve their clients properly. Customer Relationship Management (CRM) is a relatively new concept in today’s corporate world, and several Nigerian companies are just now starting to explore it.

If you serve your clients properly, they will return, and they will most likely bring someone else with them. Businesses can no longer afford to be disrespectful to their consumers or ignore their needs. Customers should be handled with the greatest respect since this is one of the most important methods to remain competitive in today’s world. Modern companies should have proper CRM. However, several Nigerian firms have failed to understand this concept.

Poor Management

In Nigeria, poor management is one of the leading reasons for company failure. It is not sufficient to just start a company. You must learn how to run your company effectively. Every business owner should understand how to run their company. Learn how to successfully manage your organization’s people and material resources.

Learn to maintain accurate daily, weekly, and monthly records of your products and sales. In any firm, keeping accurate records of sales is critical. It will be easier to monitor expenses and evaluate earnings if you keep accurate records of all resources that enter and exit the company.

Same old, same old

Lack of innovation is another reason for company failure in Nigeria. In Nigeria, there are certain markets that are already saturated. The only way to succeed in business is to keep innovating, innovating, and innovating. People are often so enthralled by the notion of establishing a company that they fail to assess the market before getting started.

If a market is saturated, either innovate or go on. You can bake bread, but what distinguishes it from the bread that the consumers you’re hunting down ate the day before? It’s all about creativity. Yes, there’s nothing new under the sun. The demand for innovation, on the other hand, is that you perform the same old thing in a new, better, and more creative manner. Most companies that do things the same way as their neighboring rival earn ‘enough’ profit, barely break even, or eventually close down. That’s that about “Causes of Business Failure in Nigeria”

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