5 Reasons why businesses fail in Nigeria

1. Poor location; its been said over and over again; location is everything! We were swamped on every side by other viewing centres who had been in the business way before ours. Because of the way humans are wired, it’s not always easy for the customers to switch to a new brand, or product. Despite the projectors and other unique value propositions we were offering, we were still not making enough to run the business monthly. Its always good to go to a location where you can have the first mover advantage, we didn’t; we had to compete with businesses that had grown there over time and which people are now used to. I highly recommend the blue ocean strategy for small businesses about to start up. This book talks about the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand for businesses.

2. Misalignment with your customers; its imperative to define your customers and to align with them. This means seeing what they see, feeling what they feel, hearing what they hear, smelling what they smell; you need to do unto them as they would want to be done to. But we did the opposite; we did unto them as we would want to be done to. We were educated, we were technologically savvy, so we tried to revamp the way people watch matches in that neighbourhood. We provided them with technology at a little premium, when all they wanted was cheaper options. And we failed! Businesses that fail to align with their customer’s needs will eventually produce products and services that no one wants.

3. Running Cost; its common knowledge that you may not make much money in the first few years in business; but you need to break even nonetheless. That means making enough money to cover your running costs for the period of time. We didn’t! Some businesses fold when they don’t make profit in the first few years. Just like we did.

4. Inappropriate business planning and execution. Some people get a fantastic idea and they rush off into production without any planning whatsoever. Without understanding their landscape. Without knowing if someone in their chosen market already is into similar business. There just seems to be lots of gap. Small businesses need to have a solid business plan. A good business plan not only helps when trying to secure finances for the business but it also aids in understanding different areas of the business and answering lots of question that that the business would need answers to later on. We at lightednation.com, can help you package a great business plan for your business. However execution is everything, you may have the best ideas, but when if you fail at execution, the idea amounts to nothing

5. Managerial inefficiencies; to run businesses successfully, the owners need to be actively involved. We weren’t, I and my partner were working 9 to 5 jobs. We rarely had time to monitor the proceeding albeit over the phone. What you don’t monitor efficiently you lose track of. We did.