Why Do Businesses Fail in Nigeria?

With the rise of unemployment and neglect by the government, Nigerians are becoming entrepreneurs and business owners because it is the only solution available, and the one likely to give good returns.

Why Do Businesses Fail in Nigeria?

There are several reasons why businesses fail in Nigeria. Most of these reasons require the acquisition of certain skills, and if Nigerian business owners and entrepreneurs are willing to acquire them, then their chances of being successful will increase.

1. Lack of capital

This is one of the major reasons why Nigerian businesses fail. A business can’t thrive with inefficient funding because unplanned circumstances tend to occur.

The business owners can’t really be blamed because in Nigeria it is hard to raise money for businesses. Without good working capital to make the business functional and scalable, it will be hard to attract investors and even customers.

2. Poor infrastructure

Nigeria lacks adequate infrastructure which can help businesses prosper in this country. Business owners have to find a way to procure solutions to these issues which are supposed to be handled by the government. Some aspects can’t be solved by the business owner, so this means that sales will suffer and maximizing profit will be impossible. For instance, it will be hard to deliver goods to areas with bad roads, or with poor electricity in Nigeria, delays can happen during the production process.

3. Terrible cash-flow

This is not an issue prevalent only in Nigeria, it’s something that occurs worldwide. Most business owners don’t understand that there is a difference between profit earnings and cash flow. If business owners in Nigeria want to make their business survive and grow, then they should be mindful of cash flow statements.

Also, having cash flow is not enough, you need positive cash flow because it’s possible to still go bankrupt even if cash is flowing into your business every single day. So learn to manage your cash flow, and you’ll stay profitable and be able to settle loans and solve business problems.

Good bookkeeping and accounting will also help a lot. If you don’t have the skills to do both, you can hire people with the skills to do it for you.

4. Poor product knowledge

For sales to skyrocket, product knowledge is essential. You’ll need a clear definition of the product or service your business offers. If you don’t have a clear definition, then you can’t develop and effectively market what you’re offering.

The first rule of a good product or service is that it must be helpful, meaning, it must actually solve an existing problem. If you have extensive and adequate knowledge of what you offer, you’ll be able to present its features and benefits accurately to your target customers.

Apart from the owner having excellent product knowledge, his team too must understand the product and the target customer it will be sold to. This allows them to effectively put your product in the spotlight and provide great answers to customers’ questions.

5. Poor leadership and management

This is another major reason why businesses in Nigeria fail. If the business owner has poor leadership and management skills, the business will undoubtedly fail. If you dig deep, you’ll find out that this is what caused the demise of most private and public ventures.

Every successful business in the world today, regardless of the country it is situated, what made the business successful is quality leadership. Some of the successful businesses in Nigeria are Coca-Cola, Nestlé, MTN, and so on, and what made them this successful is quality leadership.

For effective leadership, there must be integrity, a good attitude, and business ethics. Incorporating all might be impossible at the start, but as time goes on it’s necessary to acquire the skill that will make you able to possess all.

If you don’t cultivate them all, then you’ll have a long shot at the top spot. Also, you need to clear out the noise and don’t get carried away with what your competitors are doing. A leader should be able to differentiate himself from the market through branding, and building a high-performance team.

6. Lack of focus

This particular issue is prevalent among young Nigerian entrepreneurs. They’re easily distracted by wishful offers and minute tasks. A business owner must not let his focus shift or else the chances of you having a successful business will shrink.

Once you set your priorities, you must not lose focus even if you see good opportunities, except it correlates with your priorities. If you try to do everything, such as offering products or services that don’t align with your main offer, it will cost you your time and money, and your business will suffer.

Another thing entrepreneurs should know is the Pareto principle which states that 20% of your actions bring 80% of the results. Some Nigerian business owners try to do everything themselves, instead of them to delegate tasks and outsource them to others if they have to.


Starting a business can be fun if you have done your research and understand all that is necessary for you to be successful. Regardless of Nigeria’s terrible economy and political structure, you can still run a successful business.

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