9 Reasons Businesses Fail: With Possible Solutions

Last Updated on August 1, 2020 by Henry Ibeleme

Reasons Businesses Fail

There are tons of reasons why businesses fail in Nigeria, and most of them can be beyond the control of an entrepreneur. There are some factors, however, that you can control and ride your business to success. My first startup in Nigeria was a colossal failure, and truth be told, it plugged me into the most profound depression I have ever known. Many others delve into suicide since they couldn’t handle the reality.

Starting a business can be an exciting journey, but not so much if you’re in Nigeria. According to Fundera, about 70% of small businesses fail in their 10th year. You might have the skills to build a successful business, but some factors can fight intensely to make you fail.

New startups are springing up every day here in Nigeria, especially in Lagos and Abuja, being the Silicon Valley of Nigeria. Although most of these businesses often start on the right footing, with tons of customers to serve. But suddenly, there is a fold-up!

What went wrong? Why does businesses in Nigeria fail? In this article, I am going to make that known, with my experience as an entrepreneur in Nigeria.

1. Starting Without A Map

Imagine yourself in a dark forest. You don’t know how you got here, nor do you have a map to guide you. No doubt, you will wander around this gigantic dark forest days without making headway. Unless your survival instinct kicks in, you will die a lonely death in such a dark and dangerous forest.

When you start a business without a business plan or adequate market research, you’re like that individual in a dark forest with no map. You might know a great deal about your industry. Still, a business plan and a feasibility study would guide you to know more about your target market, competition rate, and chances of success.

The reason most businesses fail in Nigeria is that they never started with a plan. When you tell them to, you find them buying a business plan on some lame Nigerian entrepreneurial blogs for #5000. These business plans often purchased on these sites are trash and don’t reflect the uniqueness of your business. Every business is unique and different, so you need to draw a business plan from scratch, with the help of a business consultant.

When you get it right from the beginning, succeeding in Nigeria as an entrepreneur becomes possible. But when you end up buying these cheap business plan templates from mushroom bloggers that know nothing about business, you limit your chances a great deal.

2. Poor Marketing Strategy

Poor Marketing Strategy

Another great reason why some startups in Nigeria fail is poor marketing strategies. The moment you start a business, no one knows that you exist. Except perhaps your family and friend. If you want to reach your target audience, you must be ready to go back to the drawing board and plan.

There are tons of marketing strategies that you can implore as an entrepreneur. In this era of social media, reaching your target market is now easy. As a business, which marketing strategy should you use?

Marketing Strategies

  • Affiliate marketing – This marketing strategy is often best for eCommerce businesses. With an affiliate program, a company can double referrals when its affiliate member refers to their family or friends.
  • Social Media Marketing – Billions of your target market are on social media platforms like Facebook, Twitter, Instagram, etc. You can leverage these to grow your business and build your brand. These platforms also offer sponsored post adverts, which you can utilize.
  • PPC Marketing – An excellent example of this is Google AdWords. Companies like Pepsi, Coca Cola, Netflix, Dangote, Peak, etc. use this strategy to grow their companies even more. If these giant companies can still market their products and services, why can’t a small business?

The reason businesses fail in Nigeria is that they are weak and lazy when it comes to marketing. After developing a product, they don’t know HOW to reach their target market or even deliver. If you can market marketing as a business, you will be surprised by the rate of growth your business will experience.

3. Wrong Business Location

Wrong Business Location

Another cause of business failure in Nigeria is often wrong business location. For instance, starting a pork business in northern Nigeria is hilarious. You know why? It has made it impossible for such companies to succeed due to religious restrictions on pork consumption. Before you start a business, consider your target market and their location.

Here are some questions to ask yourself before establishing your business.

  1. Are my target market close to my business location?
  2. Will my target market find it easy to locate my business?
  3. Does my company have enough parking lot?
  4. Is my business location secured with tight security?
  5. Will my business location allow me to expand later in the future?

If you had answered no to any of the questions, you need to reconsider your business location. The primary reason businesses fail in Nigeria is due to this factor. They establish a company simply because the land is free, not because it is good for business.

Proximity to your target market is crucial and would ensure you get more customers and orders every day. When you fail in that regard, competitors in a good business location and environment will take your potential customers away.

4. The Wrong Business Team

The Wrong Business Team

As a small business in Nigeria, there are times you might need to hire extra hands to work on your business. But where some entrepreneurs make a mistake is hiring the wrong people who lack the necessary skills. It is a significant problem of business failure in developing countries in Africa.

Many of these startups start by employing their relative in a bid to create employment for them. There is nothing wrong with that, but something is wrong if they lack the necessary skills for the business’s day-to-day running.

Succeeding in business is very easy with the right team. You need professionals, the best brains in the industry. You need people who know the market better than you and are ready to help grow the business.

When hiring, never allow your emotions to guide you. You must be objective and access the skills of your potential employee. Gone are the days when you hire people based on their grades in school. Don’t limit yourself by requesting first-class candidates cause the majority of them to have nothing to offer.

Instead, come up with another strategy that focuses only on skills and capabilities. That way, you’ll be able to hire the right individuals for your business.

The cause of business failure in Nigeria is because most businesses are focused on paper qualification when hiring, instead of assessing the skills and ability of potential employees. The best candidates are often those that graduated from entrepreneurial universities.

5. Lack Of Online Presence

Lack Of Online Presence

Sadly enough, many businesses today are yet to have social media handles and a business website. We have move pass the era where your business is merely a brick and mortar business. If you fail to evolve and grow, another company will kick you out of the marketplace. The business world is not for those who are not ready to grow, to develop, and to improve.

When your competitors are dominating the internet with their products and services, your business will start running short or orders. Give it a few more months; you discover that no sales are happening. The problem is not spiritual, like many beliefs; another business is taking your customers away through the provisions of the internet.

Lack of online presence is one of the reasons businesses in Nigeria fail. These days, people want the fastest, and safest means possible to do business. The birth of eCommerce has made it possible for a company to deliver products and services to any part of the world without geographical restrictions.

According to research, most people often do some research on Google before finally ordering some products. When your business is yet to utilize the internet, you will be missing millions of opportunities daily.

A solution to this is to hire a competent web developer or designer to set up a business website. A lot is involved in this, but the first step would set you on the path of a new billion-dollar market.

6. Poor Power Supply

Poor Power Supply

The inadequate power supply is an African issue, and Nigeria could be worse based on the magnitude of complaints. There are lots of businesses today that can’t survive without electricity. When these businesses rely on generators that run on fuel, they begin to lose than they gain.

Although Nigeria is an oil-producing state, the cost of petrol is very high and unaffordable. It is the primary cause of business failure in Nigeria, and the government seems to do nothing about it. As a smart entrepreneur, should this stop you?

The solution to this anomaly is Solar Power. Although it could be somewhat expensive, the overall cost and benefits are tremendous. Since Nigeria receive adequate sunlight capable of boiling an egg, you will never have to worry about power outage ever again.

Lots of solar panel installation companies in Nigeria have different rates, depending on how many panels and batteries will be used. If your business cannot solve without power supply, and you want to save costs in the long run, consider solar power. Not only is it good for the environment, but you also will never have to worry about price anymore.

7. Poor Customer Service

Customer Service

When it comes to customer experience, many Nigerian businesses are weak in that arena. They don’t care if the customer has been standing for hours, nor do they apologize for any shortcomings. There are numerous cases where customer support insults the customer and refusing to serve them. It happens when the business fails to monitor the performance of their employees.

If you’re delving into business and you plan to hire a customer service agent, ensure that you monitor their services and performance. Also, make it possible for customers to drop complaints or a simple survey that allows the customer to talk about his experience.

Through such an avenue, you will be able to know more about your customers, and some areas to improve. But when you fail to pay attention to your customers and their experiences, you will fail.

Poor customer service is why many businesses fail in Nigeria, and you can avoid that by taking the necessary steps in this article. Train your employees to be helpful and always to treat the customer nicely. As you might already know, the customer is king.

8. Poor Management

As an entrepreneur, you must be ready to manage, plan, organize, and lead your team. When you fail in your management duties, every area of your business will suffer. The ability of your management team to put things in order can determine the success of your business. There is no doubt that poor management is the reason business startups in Nigeria fail.

It could be mismanagement of fund, labor, or numerous other resources that helps for the smooth running of the business.

Ensure that every equipment, system, or machine that aids in smooth operation are in good condition. Always seek ways to motivate your employees, and don’t forget to always lead by example.

9. Failure To Deliver Real Value

Failure To Deliver Real Value

You can’t succeed in business if your business fails to provide value to customers. The world’s most successful companies offer value, something customers cannot find in another company. Unfortunately, many Nigerian startups are concerned with selling, no care whether their products and services are solving needs.

When a customer is not satisfied with your products and services, rest assured the customer is not coming back. Not just that, they will discourage potential customers from patronizing your business.

Do not focus on selling; focus on customer satisfaction. Deliver what you promise, and you will see your business succeed. When you don’t care about your customer, the value of your products, another business that offers those will kick you out of business.


There are tons of reasons businesses fail in Nigeria. The key point is to understand these reasons, then profound solutions to them. Aside from some external factors beyond your control, like government policy, security, and so on, these are things that you can control and lead your business to success. Are there any other reasons why some businesses fail? Use the comment box and share it with us. Also, don’t forget to subscribe to receive periodic entrepreneurial tips on how to succeed in business.

2 thoughts on “9 Reasons Businesses Fail: With Possible Solutions”

  1. Pingback: 7 Vital Lessons Every Entrepreneur Must Learn - Utibe Etim - Business Plans, Fundings and Opportunities


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