Approximately 46% of small businesses fail in the first three years, 70% fail within five years, and 43% make it to 10 years and further.
Do you know why ?
Every other day, new startups are coming up everywhere in big Nigerian cities like in Lagos and Abuja, which are cities to be reckoned with for new business especially in the area of real estate, ICT, essential commodities, hospitality and service industries . Nigeria has the largest market when it comes to startup Business in Africa. No wonder it’s called the giant of Africa when it comes to business. This made Nigeria stand out from other African Countries like Ghana, Kenya , South Africa ,and Togo . The fact still remains that new business are struggling to survive within the pace of 5 years of it’s start.
Again, most small businesses start out with the entrepreneur’s savings or money from friends and family and then look for outside financing to grow. Most times they do not succeed because of lack of expertise in the business or not being able to survive competition of it’s rivalry.
The thick density in population of Nigeria has helped more startups gain their ground in the business arena. and will increase the market validation.. but still there has not been a significant breakout success in business circle.
It’s unbelievably annoying but a bitter truth that some startups and new businesses still fail after 5 years of it’s existence. . Find below the 5 reasons why they fail despite all the experiences gatthered over a few years of it’s start.
What are some signs that startups are failing?
Signs that a new business is failing include lack of cash, inability to pay back loans on time, inability to pay suppliers on time, inability to pay Staffs on time, loss of clientele or customers , and an business strategy.
According to Mrs Joshua, an Abuja, Nigerian based Spa and Salon business owner, she said that her business has experience a lot of set backs owing to the fact that clients now see Spa and making of their hair as a frivolity . They rather prefer buying less expensive wigs they can wear at all times. She stressed that business is slow as compared to a few years back when she started .Mrs Joshua’s laments that she can no longer afford to pay her staffs, they were downsized from 10 staffs to 3. She also said that she is unexpected in beauty and fashion business , never has a well structured business plan..
As you can see from the above illustrations by Mrs Joshua , a beauty business owner, Lack of enough Capita,l , lLack of realistic business plan, inadequate management, bad and incompetent team, ineffective marketing, and problem of not being an expertise in that business has been reasons why her business failed.
Here are 5 easons why new business or startups fail.
1. Lack of realistic Business Plan
Business owners are faced with unrealistic business plans and it’s the solid pillar on which every business stands. One has to outline achievable goals for his or her business and make make out plans on how the business can meet those goals , weigh some possible problems and their solutions. The plan brings about need for business research and surveys;. It also entails it’s costs and inputs needed for the business, and bring to the table some strategies and timelines that should be implemented .
2.Lack of Capital
Mismanagement of funds leading to nsufficient Capital to run a new business is one of the major reason why startups fail. No matter how hard you work and the funds you have raised, if you don’t generate it from that business , you are passing through the doors of failing in that business. Like Mrs Joshua, the beauty tycoon, she believed that raising funds to start her Spa business is a huge success and has done all but she forgot that she needs manage it well so as to generate income and at some point she could not generate any revenue and that hugely contributed to reason why her business fail. She never managed her income well and this is the same problem most startups suffer from.
3. Inadequate Management.
Inadequate or poor management another common reason new small businesses fail . Lack of business acumen on the part of the management team or business owner. Small business owners lacks attributes of a strong manager . The don’t have the time to oversee over departments properly. They don’t have a dedicated management tea.They mismanage certain aspects of business and still control the accounts , human resources department and other supposed department of the structure of organogram of the business.without experience. The business owner is the only senior executive within a company who controls the affair. A business needs an experience competent person who has to manage it especially when its in it’s tutelage stage or say five years old.
4. Not thinking long term
Before you think of running a credible business , you have to think of running it for a long time. Most startups fail because they are only concerned about the now ( short term ) Yea it is very difficult to build and and run a business for a longer period of time, say make it a generational conglomerate but it’s very very achievable if you know all it entails. I think what business owners need here is rugged faith and persistent, commitment, passionate and remain focused in their Entreprenuership journey for its success. They should always believe that hardwork pays in the long run through perseverance and believing in God and by passionately believing he or she will succeed
5.Marketing Problem
As a business owner you have to apply the the four channels of distribution in place . They are as follows Product, Promotion, Place and distribution but often times all these are neglected. Again , a substantial capital is needed to drive those channels of distribution and is very important for startups .But when there is not much capital, the meeting campaigns that create products awareness to potential customers will suffer. . There should be room to create or prepare for marketing needs of the business in terms of provision of adequate funds.
For a new business or a startup to succeed , it requires enough capital to create a cost effective campaigns via a rugged marketing needs or strategy .On the other If a business do not have a solid marketing strategy it is likely to fail.
Conclusion.
As a business owner , here are ways to avoid the above mentioned mistakes create an extensive and accurate research, have a masterclass sessions with business coaches, get yourself a business mentor,, Be a die hard and a huge fan of your business , cherish and be passionate for the type of business you ventured into. . Your passion will make you stand the taste of time say, the hurdles found in growing a business.
Congratulations to you if your business has survived it’s first five years You are doing pretty well and have overcome big hurdles that over 70 percent of your likes have not . Wish you all the lucks to another 10 years of successful business…
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