WHY DO SMALL SCALE BUSINESS FAILS IN NIGERIA.
DEFINTION OF SMALL SCALE BUSINESS
Small scale business are normally privately owned corporations ,partnership or sole proprietorship. Small business are commonly in many countries, depending on the economic system in operation, A small business can be started at a very low cost and on a part-time basis. WHY SMALL BUSINESSES FAIL IN NIGERIA
There is a huge and continuously growing literature on this subject. Micheal Garber(March 2007)listed ten reasons why most small scale business fail. This includes lack of financial planning, lack of management system, lack of marketing expertise, lack of customers, insufficient capital, poor price fixing, poor product or service ,life distractions, location, over expansion, hard to attract employees etc.
LACK OF FINANCIAL PLANNING
Most of entrepreneur do not sit down and create a plan before venturing into any business. Lack of financial planning is one of the most common mistake new entrepreneurs make which can lead to a business failure. Financial planning is important to support the new business until the business can stand on its own, majority of new business fail because of lack of fund and attempting to achieve a vision that did not match the reality of the business. In starting a new business, there is need for you to consult a financial expert to help you check your cash flow and the financial risk involve. An entrepreneur should be ready to assume the risk and financial responsibility in a business and should be ready to provide additional capital just incase need arises. Lastly feasibility study should be done before starting a new business. LACK OF MANAGEMENT SYSTEM
Many entrepreneurs are technical experts in what they do but start a business without any formal training or experience in management practices and principles. By ‘management’ here we mean the business of managing the non technical side of the business, the ‘back room’ activities. As a result of inadequate management, many small businesses fail in the early years, they fail not because of weakness in the product or services concept they have, but because the business was not properly managed in the back office. Once a business has emerged or grown to a certain level, management techniques must change or business will run in to trouble, for many small scale businesses, sometimes the critical point is smaller sometimes it is larger, however, when it occurs, the owner or manager of a small business must evolve, morph or otherwise change from a manager of things to a manager of people, and from a technical expert to a strategic thinker. Failure to grow as a manager is the major reason why a business will falter, stagnate or even collapse under its own weight.
Choose your location wisely before setting up your business. Make sure that your business is accessible and convenient for your customers. A poor location can discourage people from coming back and buying from you again. Location is just as important for web based businesses, however it is your location on Google and other search service with search engine optimizing tactics that will improve your online presence and improve your online location .
Poor price fixing Some small business entrepreneurs ruin their ventures by overpricing their products or services. Experts note that young entrepreneurs must avoid competing with established firms when it comes to price fixing of similar products or services. They advise the small business entrepreneur to fix a price that will not just profit his venture, but will not overprice his product. A detailed study of the selected business by the entrepreneur will guide him in price fixing, experts say
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