12 causes of business failure in Nigeria - Startuppreneur

12 causes of business failure in Nigeria

According to research over 80% of SME business fails in their first year of operation in Nigeria while over 95% of tech startup fails in their first year.

If I didn’t conducted a research I would have say it is the same in other countries of the world but that will be far from true.


Rate of SME failure in America in their first year is just 20%, in their second year 30% while in their third to fifth year it is 50%, far from what we are having in Nigeria.

This high rate of failure continue to reduce the number of entrepreneur and discouraged those who might have interest in entrepreneur, no body want to start business in the face of failure and this is adding salt to the already bad Nigeria economy.


Though many believe the cause of business failure in Nigeria is funding while this is true its only take 5% in the causes of failure in Nigeria.

Below are the detail factors that causes business failure in nigeria.

1). Bad business idea

One of the cause of business failure in Nigeria is business idea.

What SME is not tech startup na?


Sure sme is deferent from startup where you have to think up a new idea or modify one, while SME can copy business idea infact the two business might not be far from each other what they forget is that no business is the same because someone is making wave in one business doess not gurantee your success in that business.

Business idea has to be conform with your way of life, you motivation can’t be money alone or else you will be frustrated. When a man with passion keep going even inface of difficult you won’t be able to because you are solely in there for money.

Don’t cote me wrong I didn’t say you should not make money from your business what I’m insinuating is that find business idea you are really passionate about.

2).  Execution

“Business idea is worthless, execution is the real deal” have you ever heard of this phrase before, what do you think about it? If you have been doing business you will know what it means at a glance.

Execution is the energy you pour into your business to see it blossom no matter what. Everybody in this life would have had one business idea or the other so its not big deal the defernet is just that while executioner wake up all night to work on is business idea the dreamer will sleep and wake up in a job or keep dreaming about another business.

3). Strategy

While execution is bae you need to have a strategy, you can’t continue to work youself to sickness, instead create a strategy that will give your business an egde in the face of competition.

For instance let say your business is a broiler farming, instead of buying heavy machine to process your birds which will cost you a lot of money, you can pay #150 per bird to processor who will help you process and blast freeze for 24hours, you can then distribute to retailer or final consumer.

4). Location

Haa this one can not be over emphasise what ever business you want to set up, your location must support that business or else you might not get more that 2 to 3 custormer and they are likely to be your family. Before seting up business one of the thing you should do is feasibility study which will show you how feasible is your business in your propose location.

5). Customer is always right

There is a phrase going around about sacking your custormer if they are giving you though time. Please don’t do that especially if you are just starting out if you sack one customer you have automatically sack more than ten of your custormer.


If one customer get dissatisfy with you they will surely tell their family and friends in turn those frinds and family will do the same and the cycle will go on. Sure you don’t want a negative word of mouth ad, trust me it will kill your business.

6). Fund

Money money money
Money is the root of all evil but in business word it is the bedrock of business without it your business is going no where. You use money to make money in business world.

But I can push the business till I have a fund

I will surly find a way

Haa I laugh when I hear people saying these, if you really want the truth, you can’t start business without having any money unless you come from a rich home if not you need to take a job and save your salary, this is how you can’t get capital to finace your business.

Another idea is to start side business while still on a job then if the business boom you can switch. Bank and investor will only invest in your business if it’s already booming or you have one or two business that have already boom in your portfolio, no body want to loose their hard earn money.

7). No tartget market

Most of Nigeria entrepreneur are greedy, they want to take up all the market at once and in doing so they have no target custormer their dart is scatter all over the board. Don’t be like this infact when starting out find an underserve niiche that you can serve and own, from there you can climb up the market ladder.

8). Gorvenment policy

This is one the major causes of business failure in nigeria and you no what you can’t do anything about it, do you remember chaka an app that help Nigeria invest in US stock or abokifx a website that give real time update about Nigeria currency value, do you know what happen to them they fold up because government wake up in a day and see them as treat to nigeria economy.

When its come to business government is not your friend their aim is their tax and noting more if it benefit them to stop your business they won’t think twice.

Is there a solution?

Yes there is, when election come around vote the right candidate, some one that will make favourable business policy.

9). Patience

Business is like a baby, it require a great patience to take care of it when young but after that its will take care of you financially. Don’t quit in face of challenges you are not the only one facing such other entrepreneur have overcome and other are also currently having their own share of business pain.

Wait did they tell you it will be easy?

If motivational speaker have told you this please take it out of your brain nothing good comes easy, hang on better days are coming
‘today is hard, tomorrow will be worst but the day after tomorrow will be sunshine’

10). Team work

You can’t do your business alone even if you start it alone you can’t go on like that you will need hands. Employee can make or mar your business don’t employ only because of skill check them very.

Why do they want the job is it for money, knowleged or passion you will do well by employing people that are personate and need money. If you employ only because of passion it may wane down eventually but with both you will have your employee under control.

That’s cruel?

Well, business Is cruel

11). Bad egg

Some time you will make a mistake by employing people that does not fit with the culture of your business, you will want to leave them may be they would turn a new leave, if you do this your business is band to fail. Need I remind you that you are not operating a charity organization, you must be able to hire quickly and fire quickly.

12). Competition

Competition to some people is the only reason business fail in nigeria ,but no its not. It only applicable to business that have no value preposition; one thing they can do well that will difernetiate them from other business.

let take soft drink for example have you ever seen soft drink that taste the same, of course no what of matches don’t they do the same thing when last do you have a favourite machtes brand.

I’m sure you don’t. if you want your customer to hear you in the midst of noise you need to have a value preposition, something that will deferentiate you.

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