Why businesses fail in Nigeria with solutions

June 1, 2017 Business,Nigeria

Business failure in Nigeria is a thing of concern. As a business owner or someone aspiring to have your own business, you need to address the 10 most common reasons “why businesses fail in Nigeria“. By doing so, you are given yourself a better chance of running a successful business. Also, we will look at how business failure can be reduced in Nigeria; that is to say, we’ll be looking at solutions to small business failure. In addition, I will take us through the solution to business failure in Nigeria.

Why do business fail in Nigeria?

Most business fail because of various factor as I will take you through in this article.

Major causes of business failure in Nigeria includes:

  1. Starting a business for a wrong reason;
  2. Lack of planning;
  3. Insufficient funding;
  4. Poor management;
  5. Lack of focus;
  6. Lack of Market differentiation;
  7. Outsourcing can eliminate unnecessary spending;
  8. Mismanagement of business funds;
  9. Lack of business visibility; and
  10. Poor customer services.

So, let us take each of these factors responsible for high business failure in Nigeria; taking each headings one after the other. In addition, we will also look at the recommended solutions for each one.

Reasons why businesses fail in Nigeria with solution and tips to run a successful business

As a result of questions asked by entrepreneurs on “why businesses fail” in Nigeria. We have listed some of the reasons that can bring about failures with solutions for businesses.

First thing to remember, failure is not what you want to think about in your business BUT it is something you should guide against. Above all, take the necessary steps to guide against business failure.

As an entrepreneur, I once asked myself the question – Why do some businesses fail while others succeed? It was hard for me then to get an answer, But now, I have a better knowledge on the topic of why businesses fail in Nigeria.

To begin with, we have listed the causes of business failure in Nigeria and the solutions that addresses each problem. By the time you are done reading this, you will be well equip to run a successful business.

What I later discovered is that most of the failed business owners’ live in our own world. In fact, they are unaware of what is happening around them until the business collapses. In other word, if the entrepreneur was aware of what was happening to the business, he or she will have source for a solution to save the business.

Business success is not by chance

A successful business does not just happen by chance, it takes hard work. Hard work in terms of planning, strategy, marketing and few other.

In general, an entrepreneur or business owner need to know how best to put things that matters in place. So for the purpose of this article on “Why businesses fail in Nigeria”, let us look are the reasons and possible solutions that can help to salvage the business.

I was privileged to attend a bootcamp by Andrew Reynolds, a self made millionaire at the age of 45. He said in one of his bootcamp in 2008 and I quote “why businesses fail could be linked to individuals. Many business owners loose focus, they sometimes forget the purpose and objective of the business“.

He further states that “what you are about to learn is not one of this get rich quick system, but a system that will provide you with wealth over time“. I will also say to you that, what you are about to learn here can help to prevent business failure.

In spite of different failure stories you may have heard, this article will help you to success

Read More: Business Ideas for Men.

Why do business fail

Before we put all the reasons why most businesses fail into content, I will like us to think deeply on these three simple words – “Why, How and What”. This can be depicted below.

Why do business fail in Nigeria, Reasons for business failure, Causes of business failure, Why do businesses fail

In fact, many entrepreneurs and business owners failed because they do not realize how powerful does words are. They tend to use them the other way round. Let us take them one after the other.

In the first place, you need to know how to these words operates in business. Not only do they work magic in business, but also point your business to the right directs.

1. Why: Any individual that will be successful in the business world should think first about “why” is he/she setting up the business. Yes, a business is set up to solve a problem.

This can be related to you know the purpose in which you have set up the business. The “why” word is the first on the list to a successful business. Figuring out the “why” of your business is the first step to success.It indicate the problem that you want to solve.

2. How: The process of “how” you are solving these problem is next. Figuring out the practical way to solve people’s problems will sustain your business. In fact, it’s the way of adding value to your business. This in turn will practically bring success to you.

3. What: It indicate the thing you in the business. What you do should come last in your thinking.

Just know that you are not the only one in that line of business; thinking in the sequence in which I have listed this above will give you more than 50% success rate.

Success come with a price

In other to run a successful business in Nigeria, I will encourage you to read, digest and practice some of the thing we have prepared for you in this article.

Without waiting time, let us go straight into the subject matter – Why businesses fail in Nigeria, I have combined a list for the causes of business failure with possible solution. At the same time, suggested possible solutions.

1. Starting a business for a wrong reason.

First thing to remember is, why you are starting a business. You should be able to point out why you are getting int the business.

Many businesses are started for the wrong reasons you can thing of. Did you start your business with the mind set of making lots of money? Do you think that you just want to get out of the 9 – 5 job? or your taught was to just be you own boos? Those are just benefits of having your own business, they should not be the foundation to lay your business.

Let me tell you, money come with hard work. These benefits come after years of hard work invested in a business.


  • Do not start your business thinking of making lots of money immediately. Money will eventually come when you least expected. Just be focus and make good business decisions in all your dealings.With attention to details and good mind set, money will come.
  • Start with a mind set of solving people’s problems (remember the “why”). By having such mind set, you are eliminating the issue of “why businesses fail” in your business.
  • Love what you are doing and have a strong passion for it. For this reason, you are demonstrating willingness to succeed.
  • Positive attitude towards the business and a drive ti success plan an important role to your success.

2. Lack of planning.

Approximately 75% of businesses fail due to lack of both short-term and long-term planing for the business. Although this may be true, but with adequate planning a business will succeed. In spite of these high percentage in failure rate, company with adequate planning makes up the 25% that succeed.

As a matter of fact, there is a common adage that you may have heard of; “he who fail to plan, plans to fail“. This also goes for a business. Having a short-term plan will make your business stand the test of time while a long-term plan (strategy) will be the solid foundation that your business stand on.

Read More: How To Make Money Online.


  • Prepare a properly done business plan for yourself. Generally speaking, business plan play an important role in a business.
  • By all means, adhere to your plans. It is important to realize that, sticking to your initial business plan play a great deal to the success of your business; although, you may tweet it as need be. The most important thing is for you to stay focus and be determined on success. I can surely assure you that hard work pays.
  • Uphold your business Mission and Vision statement. This should also include your business core value.

3. Insufficient funding

Business capital, operating funds, you name it….. plays a vital role in the survive or a business. Above all, funds form your business cash flow! It is a good practice by business owners to forecast on how much money the business will need to move from one level to the other.

It is equally important for both entrepreneurs and business owners to ascertain how much the business is going to require in other to breakeven.

Although, sometimes things may not work as planned, but it is necessary to have a clear idea of what will be needed.


  • Point often overlooked – the power of leveraging. Depending on the type of business you are into, leveraging what you have to get what you want may be a better option for you to raise cash. Let me tell you a simple story about myself. During my early days of raising cash for my business, I did not have enough capital to get going; what I did was to register on one of the freelance websites in Nigeria to start going. It pays off! Within six months, I was able to raise the capital that I needed to start my own business.
  • Seek support from family and friends. The ones that believe in you will go extra miles for you. You can also give them your word of given them a small percentage of the business shares. Making them part-owners of your business.
  • In fact, use bank funds if you can. Inasmuch as it will not be too much liability on your business. You may want to know, successful business uses other peoples’ money to do business. Using other peoples’ money sometimes help in providing solutions to the problem of why businesses fail in Nigeria.

Other reasons why businesses fail in Nigeria are as follows

4. Poor management

Management play an important role in the survival of any business whatsoever. Additionally, the ability of a business management team to put things in order can actually determine the success of failure of a business. For example, a business entity should have procedures in place to guide them and their employees on a daily basis.

These procedures can be in terms communication, standards and systems in the business; moreover, they are to help all employees to know what to do at any given time in any situation.


  • In view of the above, management should create operational guideline. These guide are like a pointer that direct each employees of the organizational best practice.
  • Standards and Systems should be put in place – by having standard set for your staff, you are given them a weapon to excel at what they do.
  • Lead by example: Leading by example in most times makes the different.

5. Lack of focus

In addition, lack of focus is one of the main business killers in Nigeria. It is a major killer of most businesses. In fact, its’ contribution to why businesses fail in Nigeria is over 50%.

In the first place, you had a vision when you were setting up your business; I guess am right with that. But do you follow up on your vision? That is a the main question you should ask yourself. In fact, being focus is an attribute of a successful business owner.

Although, some challenges may come up along the way; it is you ability to focus on your goals that will help you through.

 Why businesses fail in Nigeria, Solution to business failure, Causes of business failure, why do businesses fail


  • As a matter of fact, being focused is an integral part of business success. Any business that want to be in operation for years to come need to be focused on its’ core values.
  • Paying attention to details is an important part of being focus.
  • Focus on those part of the business that bring you good revenue; pay attention to those that are not doing as expected. By doing so, you will be able to analyse your business positively.

For example, the video “Untold story of facebook” below is a typical video of a business owner that is focused. I should believe that the successful story of facebook is not new to you.

6. Lack of Market differentiation

Another key point to mention is – Market differentiation. Successful business in this world have been able to do so using the “Market differentiation techniques”. They were able to differentiate their business, products and services from competitors.

A business will always fail if the owner(s) can not pin-point some basic advantages that makes their business different from others.

Many entrepreneurs and business owners fall short of this by not being able to create a good market impression of their products and services.

What is market differentiation and how can you apply it to your business?

When we talk about market differentiation, we generally refer to product differentiation. In other word, Differentiating your business is differentiating your products from others.


  • In detail, do a thorough analysis of your business. That is to say, analyses your strengths and weaknesses; improve on your shortfalls and turn your weaknesses into strengths.
  • Identify your customers. Create a niche market for your business and turn your customers to loyal customers. Remember, repeat business are more profitable.
  • Market Analysis of your competitor. From time to time, I recommend that you do a general analysis on your competitors.
  • All in all, communicate your business uniqueness to your customers. Device an effective way of communicating to your customers. Do this on a regular basis, it is very effective.
My advice to business owners and entrepreneurs:

Start from the smallest noticeable quality in your business. Small change to some things can bring a big business success to you. Your business will be more successful if you pay more attention to differentiating your business from others.

In addition to the above, a regular auditing of your business performance is highly recommended.

7. Outsourcing can eliminate unnecessary spending

In the first place, do you keep tabs on your business spending? Or salaries and other things that take money out of your business account each months? This may include staff salary or other expenses.

You may not know, unnecessary spending contribute to business failure. For this reason, I recommend you put a check in place.

As an entrepreneur (or business owners), cutting down on spending money wisely will boost your chances of survival in this stiff competition era. from time to time, always audit your outgoing.

In the first place, how much are your paying some of your staffs? Can you outsources what they do? If the answer is yes, I will suggest you do that without wasting time. Society of business managers and consultants in Nigeria find out that many businesses will save a substantial about of money when they outsource some of their jobs.


  • In the first place, cut down on any excessive spending.
  • From time to time, try outsourcing Agency. They may be expensive at times but on the long run, they are much cheaper than having a full time staff.
  • On the positive side, try to use the services of Freelance websites in Nigeria to get things done. With the use of a freelancers, you are in control of your project and you will be rest assured that your work will be done on time and to budget. This is one of the advantages of getting freelancers to do your jobs.

8. Mismanagement of business funds

Another key point – misappropriation of fund. It is another causes of business failure that can not be overlooked. As a matter of fact, a good business owner must know, where the money in the business is generated and what they are spent on.

9. Lack of business visibility

In addition, business visibility is key to a business success. What impact is your marketing strategy playing in the success of your business. To begin with, you can learn more on best marketing strategies to boost business visibility.

10. Poor customer services

From time to time, we do encounter some rude receptionist, clerk or even a telephone customer service assistant who act as if your inquiries are not important. Do you have such in your organisation? If you do, just one can have a negative impact on your business.

Generally speaking, these type of employees are known as “Toxic Employees”. They bring your business down. Customers employer to your get affected by these employees’ behaviors. 

In fact, poor customer services has been identified a an influencing factor to “causes of business failure in Nigeria”.

As shown above, all the 10 points mentioned can contribute to the failure of any business.

Enjoy the video “The untold story of facebook” below. It show you that, being focus has its own gain.

Conclusion on Why businesses fail and solutions to business failure

Truly, this is a remarkable example of someone that is focused. If business emulate some percentage of this attitude, business failure in Nigeria will reduce. In fact, we will be eradicating why businesses fail in Nigeria with. That is to say, all the factors responsible for high business failure in Nigeria will be reduced to the minimal.

As can be seen, this article “Why businesses fail in Nigeria” with “solutions to business failure” will assist you to avoid unnecessary business failure. As a matter of fact, it will guide you in the direction of success in your business. Appreciation from all of us at Yokebay for reading the article; please feel free to share this to family and friends in other to help reduce business failure. Thank you.

Only members can leave comments. Login or Register!