THE CAUSES OF SMALL SCALE BUSINESS FAILURE IN NIGERIA
Abstract
This research project examines the reasons why small businesses fail in Nigeria. As a result, it will help discover and enhance the chances that small businesses will survive, which would help the country of Nigeria thrive economically.
Oral interviews and a questionnaire were both employed in the investigation. 30 business centers and 50 restaurant owners, respectively, make up the research’s sample sizes. The following was discovered as a result of the statistical analysis of the obtained data using the x2 (chi-square) formula. There is a correlation between respondents’ educational levels and business failure, that respondents’ gender does not contribute to business failure, and that finances are a major cause of business failure.
Therefore, suggestions like encouraging financial institutions to lend money to small businesses with fewer restrictions, encouraging local suppliers to provide cheap and readily available alternatives (raw materials), encouraging consistency in government policies that affect small businesses, improving the managerial skills of small business managers through seminars and workshops, and encouraging entrepreneurs to run less competitive enterprises are all suggested.
Conclusion was reached as a result of the findings that there should be more commitment when assistance in the form of bank loans and educational programs like seminars are organized by the government or its agencies. As a result, better support, understanding, and encouragement by all parties involved are required for an overall improvement in the performance of small-scale enterprises.
Chapiter 1
A.0 Introduction
Nigeria has used a variety of strategies in its pursuit for national economic development. The country’s growth plans have placed a significant focus on public sector control of the economy since 1960, the year of independence. The public/private sector mix has shifted more and more in favor of public sector giving in our current environment. The private sector, which included small-scale businesses, received 62% of the total capital expenditure in the first National Development Plan (1962–68), but only 12% of the total capital expenditure in the fourth plan (1981–1985), with the public sector controlling an astounding 88%. This development strategy that seemed to be flawed had negative effects on the Nigerian economy. Hunger, squalor, spiraling inflation, disease, and mass unemployment are the end results of unrestrained government involvement and control of business activities through large-scale industries and the oil boom of the 1970s. These factors also dictated the entire frivolous and wasteful attitude of the government and the people. But things are changing right now. The current focus is on the growth and expansion of the small business sector, which serves as the cornerstone of economic independence.
Many unemployed Nigerians, including graduates and others who want to be their own boss, are being drawn into self-employment by the country’s high unemployment rate as well as the new government initiative to reduce social tension among unemployed youths through the National Directorate of Employment (N D E) programs. Graduates and school dropouts are now aware that, due to the poor state of the economy, neither the government nor the established private enterprises are prepared to actively assist them through paid work. Due to a lack of alternatives, Nigerians, including our graduates, are starting a variety of small-scale businesses, including the manufacturing of college soap and cosmetics, farming, publishing, writing, blocking, the production of garri, food processing, the removal of waste, taxi driving, cleaning, services, public relations and advertising, business centers, restaurants, and other small businesses.
1.1 General Information About The Subtitle
Small enterprises play a key role in the growth of Nigeria’s economy in general and Enugu in particular.
Small-scale businesses can be broadly divided into two major types. The first is the industry of traditional craftsmen and artisans, some of whom may require help in order to update their methods of production, tools, and abilities. The second is an industry made up of associations of small manufacturing or service businesses that create goods or offer services to a range of customers. However, the size of the operations in both circumstances is typically too small for a forest to be of interest to a foreign investor.
There are a huge number of small businesses in Enugu, numbering in the thousands. Establishing a small business and seeing it through to completion can be financially and psychologically rewarding. These include weaving, carpentry, pattery, and ceramics, farming, fishing, pig farming, and animal husbandry, metalworking, retail trade, workshop, transportation, business centers restaurants, and tailoring and dressmaking. When they are founded, many of these tiny businesses are successful.
Small businesses in Nigeria today, however, confront a wide range of issues brought on by the global economic recovery. While many of these firms have managed to survive, a significant portion of them, notably in some commercial hubs and the restaurant industry, have been forced to close. B. Kalejaiye claims that an unacceptably high proportion of small businesses have collapsed. Another writer also made the point that it is generally accepted that more people who start businesses each year fail than succeed. Less than five out of every twenty new businesses survive their first year of operation, according to research. According to research and observation, more people fail than succeed each year when they enter the business world. The researcher has also seen some small businesses that were started with strong expectations for success fail.
It is important to note that many of these small businesses fail not because of their fundamental goals, policies, or tactics, but rather because of other factors. Additionally, it appears that the government is still coming to terms with the strategic value of small businesses to the overall national economy. Although its significance has long been understood, it wasn’t until lately that the government believed it was necessary to set up mechanisms aimed at the growth of small-scale businesses. The National Directorate of Employment (NDU), the National Economic Reconstruction Fund (NERFND), the Fund for Small-Scale Industries (FUSSI), the People’s Bank of Nigeria, Community Banks, and Small and Medium Enterprises Loan Facilities (SMELF) are a few of these institutions.
The small businesses continue to fail in spite of these efforts. In light of this, the study’s goal is to examine the numerous factors contributing to the alarming number of small business failures in the restaurant and business center industries. The recommendations and suggestions that will be provided at the conclusion of this study will undoubtedly give entrepreneurs—potential and current—enough knowledge to manage their business operations successfully.
1.2 The Problem Connected With The Subtle
The apparent unviability of the small-scale industries present in the economic system is the curse of the Nigerian economy. The importance of small-scale industries and their critical role in the economic system cannot be overstated. Small-scale industries have a high failure rate. Having said that, it should be noted that the failure rate of small-scale enterprises is worrisome.
The alarming proportion of small business failures is generally a result of a number of issues. What factors are these? Can a person’s sexual orientation lead to business failure? Could a company’s performance be impacted by its literacy rate? Are Nigeria’s small businesses underfunded? The study’s problem statement is formed by these inquiries.
1.3 Problem(s) With Which The Study Will Conclude
The causes of small business failure in Enugu are the subject of this study. The study will be restricted to two particular economic activities—business centers and restaurants—in the form of insufficient funds to cover the rising cost of research, a lack of sufficient books approved for the study’s subject matter by Nigeria, as well as other issues related to data collection.
The initial lack of interest some respondents initially showed in providing information provided a challenge for the study. Time restrictions were the biggest restriction. Nevertheless, despite the aforementioned limitations, the research has sought to produce high-quality results.
The Importance Of Studying The Area, Part.
Small-scale businesses in Nigeria are anticipated to play two significant roles if provided the necessary support in the current economic climate. The first is the function of backward-forward connections, which in practice implies the function of closing the gap between the rich and the poor. The second, which is really partially related to the first, is the function of enhancing overall national development initiatives.
Therefore, the goal of this study is to highlight the numerous elements that contribute more to small enterprises failing than succeeding. The researcher firmly believes that understanding these diverse aspects is the key to the success of those entrepreneurs who persevere in the face of overwhelming challenges. The study will be useful to aspiring business owners who may want to work for themselves, especially in the industry covered by the study. The fact that this study will supply materials for subsequent research on related topics is also crucial, particularly in light of the demise of pertinent books in our libraries. By bringing up particular issues that are likely to inspire additional research, it will help advance general understanding in the area of business management.
1.5 Terms Are Defined In Paragraph
In order to increase knowledge of the entire text and to provide clarity, the following terminology are defined and explained. Which are: Small-scale enterprises, exports, export marketing, eateries, and commercial districts.
A Small-scale Company
This refers to businesses with fewer than 160 employees. Self-employed individuals who may not have employed anybody else but themselves are also included. The difficulty of classifying such establishments as small-scale and disqualifying them from being included in the category of large-scale businesses is therefore resolved by basing the definition on the employment statutes of businesses that appear to be very capital intensive. In some nations, the quantity of capital investment appears to be capital with labor, however in ours, the employment status of the establishment serves as the criterion for separating small- and large-scale businesses.
A Substitute For Import
This policy substitutes domestic output for imports while protecting imports with high tariffs or import quotas. Import substitution affects the principle of comparative advantage and decreases global trade. Countries plan to implement this policy via tariffs and quotas to direct domestic
Import Substitution In B
This policy, which is protected by high tariffs or import quotas, replaces imports with domestic production. Import substitution affects the principle of comparative advantage and decreases global trade. To implement this strategy, nations frequently utilize tariffs and quotas to shift domestic resources away from industrial manufacturing, where they had a comparative disadvantage, and toward basic products, where they had a comparative advantage.
method C EXPORT-LED
Export-led growth is the process of increasing production and income without using imports to replace them.
Method For D Export Promotion
A realistic exchange rate and the removal of import rustications are used to promote both exports and imports, in contrast to the export-led system, which coordinates local and international prices. Therefore, it is important to create price incentives in a way that prevents the domestic market from becoming more profitable than the markets outside.
A location where various business-facilitating tools, such as photocopying machines, are made available for consumers to use in exchange for payment.
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