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Why businesses fail in Nigeria
You’ll experience business failure  from your small business if you make any of these terrible errors most people make. Why do small businesses fail? 

Before I address that, you see, 80% of  why businesses fail is due to these factors. Fortunately, these answer to reasons behind large scale investments crash as well.  In other words, this equally attributes to large scale businesses also. 

In fact, a proof to that is Forbes’ survey that 8 out of 10 businesses crash. Well, it will be a deceit for you and me to agree that your business either online or offline might not be among the 8.

In other words, it’s like saying there is a 20% chance your business will be successful on the long run, especially if you’re just starting out. Or even if you’ve ventured into it for a while now.

It can be really easy to start up a business if the capital and the resources are set but without considering these factors, there’s no doubt that most of all businesses fails.

Besides, Andrew, a self made millionaire at the age of 45 said in one of his boot camps in 2008:

why businesses fail could be linked to individuals. Many business owners lose focus, they sometimes forget the purpose and objective of the business“,

Successful business holders would tell you  their aim isn’t to always make more money, but rather how they can access wider scope of attending to more customers.

For instance, you know that desire to make more money at all cost. Such desire won’t make an individual’s business grow.

Getting rich and successful investing takes a bit of time and commitment, but you might be confused of why I would insist that making money shouldn’t be the major focus.

For a business to be successful, an entrepreneur must be ready to be serious with giving out the best service.

Consequently, commitment automatically leaps in and there is no how you are committed to serving your traffic(customers) the best, the passion alone would make you want to learn reasons your business might fail.

But if you can conquer the effects of these reasons, your business, either online or offline will experience a boom.

Why do Small Businesses Fail (and even large scale businesses)? Business failure in a country like Nigeria is mainly caused by these:

Why Businesses Fail is First Attributed to Ego 

The feeling of self importance is common with you and me and it causes business failure in Nigeria. And if you don’t control your ego, it will tell negatively on your business. It’s a feeling.

I’ll subdivide this into two categories. You can begin to reflect such moments you made these ego errors and how to go about correcting these errors. For your business not to fail.

Ego of Overconfidence

I’m sure you were so proud of your status, irrespective of your level of experience. In fact, research reveals that 61% startups boast of  understanding the most whereabouts of any business they’re starting.

You see, God made you and I in a way that if you don’t always set to receive something, you won’t have more. The market changes. If you and I stay in a position and not learning more, our businesses will fail.

If you want your business to grow, you must avoid this ego of overconfidence. Then when I just started blogging business, I met fellow bloggers, most who are beginners as who ain’t that sound in SEO.

My faced yawned when I luckily got told by one of them. She told how she gets 1000 loyal daily readers. I melted and learned to be really meek.

P.S. If you are a blogger like me, see, don’t let anybody tell you your niche can’t be successful. Just make sure you carefully try what has not been in model before.

Ego of Self-importance

Have you also been insulted in the public before? Remember this disregard to your special feeling on worth and importance! Especially by a customer.

You’d feel like chopping off the head of such fool. Yea. It happens once in a while. But know that the fool suits business most times.

See. When it happened to me few years , I threw some salvage facts in a reply to shut “the rude brat” as I called her then. Hell no!

You know what? I discovered a sporadic spread of rumors about “how Godwin insults” many people and the likes… But the irony was. That lady was the only one I threw back my words to. It was a terrible error that almost collapsed my business.

You will come across difficult customers and you need to be emotionally intelligent while dealing with them. Some times, it’s not their fault

I understand that you have a reputation and honour to protect but don’t prioritize your ego over the effective service for any customer. Or before you know, such violent customer who is most likely to violently loud out your credibility would hurt your figure.

Nevertheless, you need to be official. You need to let your ego humbly reinstate the least respect you expect from any customer.

Honestly, every customer or fan is only concerned on how to enjoy from you. Most times, it’s not the fault of your fan, but may be due to one frustration he recently suffered from. It’s most times a transfer of aggression on you.

Always remember that customers don’t care how you enjoy or how you feel pain. That remembrance alone would magnet your consciousness not to overreact, but rather make them want to pay you more and get you more fans.

If you don’t mark out these two egos , your business might be among those 80% that would fail. Can you see why small businesses do really fail too? 


Businesses Fail Due to Financial Illiteracy

Business failure in Nigeria will always grow because of bad spending habits. You’re surely involved in this or maybe were. Because you and I grew up in an environment where they teach us how to work for money.

This might seem strange but if you don’t learn how money works, and make it work for you, your business will fail.

You getting a huge revenue or profit doesn’t mean you are already successful. What determines your success in any business is how you’ll make the money work and make its multiples.

If you make a great profit, I don’t say you shouldn’t spend on liabilities – that won’t generate you money but rather take from you. What I’m only saying is that whatever liability you’ll buy must be from the money generated from a cash-flow from any asset.

Let me shock you! Remember you and I went to school at least high school, if not tertiary institution. Schools are wicked! (my view). In fact, these schooling contributes to why businesses result in failure in a country like Nigeria.

Although, your business will not fail if you can distinguish the shaft from the wheat in school. If you don’t know how money works, if you have a slight idea on spending habits, your business will fail.

Do you want to know why school affects (even studentpreneurs)?

Schools won’t teach you how to be rich for crying out loud. In fact , it is  an influence to why businesses fail. They only teach you how to lick from self-made wealth. It’s like telling you how to work and earn from millionaires either in politics or business, but not being that self-made millionaire.

But you being an entrepreneur, you’re better off any other person because, you’ll be more familiar with money. In school, financial illiteracy will be part of your habits. Only if you read personal finance books will you know how to escape the bad spending faculty

In fact MBA literally teach you in a similar route. That’s the major cause of high rate poverty. For your business not to fail, you must master how money works. It’s a wide topic. In fact, if you’re not used to well spending habits before, it will be a bit difficult to adjust. But you can.

Small Businesses Fail Due to Unfavorable Environment for The Business 

Here in Ikire of over tens of thousand inhabitants, the greatest restaurant has just packed off to Lagos. I inquired the reason behind the exit and I discovered the people didn’t patronize. This is another cause of business failure in Nigeria.

I know the restaurant wouldn’t make great sales. My University operates the Collegiate system and we’re not more than 1500 as a branch out of 6 campuses – here in Ikire. This environment is rural and they shouldnt expect much sales.

Apart from the huge “almost a million” rent they annually pay, students who are urbanized that would patronize would go on vacation.

Improper location would always make a business fail.

Well, a thing I loved about the restaurant’s situation is they planned proper exit strategy. They didn’t quit. That inspires me to the next point.

Giving Up too Soon 

As I said, the restaurant didn’t quit. They moved to Lagos.

We learn how to walk by falling. Lights don’t shine without darkness. You’d still fail. Expect some great mistakes that would even convince you to quit. But I assure you to see the brighter days come forth.

If you want to be wealthy, you need to forget the idea of get rich quick. You got to enjoy your smart hard work and take commitment as playing a football.

Remember how you were sweating in your last sporting. Transmute that desire to win in a way that makes you consistent to dominate the market.

If a business, as a result of setback, gives up, it’s obvious that even subsequent ones will fail as well.

Poor Planning

It’s common to hear “if you fail to plan, you plan to fail”, but I’ll tell you Ideaflavour’s quote: “if you plan not to fail, you can still fail. If you fail to plan well.

If at all you want to start any business, you must be sure to draw a business plan. But the mandatoriness of drawing on a paper is a tip of an iceberg. You need to do a thorough research on whatever business you want to embark on.

See. Before you embark on draw a plan of any business approach different experts in the field. That will not only guide you to key into the latest business model but also inspire in you the foundational fire that burns out your gold from your raw dirty soil.

In fact, you’ll begin to naturally receive the inspiration on how you’ll introduce new strategies that surpass other experts.

See, if you already have a business you control, it’s not yet late to key into this “orientation before business plan rule”.

Just as the room you’re in currently was planned, with a white sheet which serves as a building guide, if an entrepreneur doesn’t plan well, the foundational plan will affect the effectiveness and the product of the business. Business failure in Nigeria is as well caused by poor planning

Poor Sensitivity

Why businesses fail is really because of poor sensitivity. If you think you planned already, be sure to understand that other entrepreneurs have planned in such a way you planned and still failed.

You know why?
Market changes. It’s not static. You gotta grab the opportunity every new market brings if you don’t want to fail.

You must not sit and watch. A good way to play along with the game is to connect with other business owners in your niche. You need to sneak and see discover setbacks. Analytically help them out with some stuffs and leant from their experience.

As an entrepreneur, I need to be set for any fuck-up. Entrepreneurship is risk but it’s not that risky if I play it safe by constant research and I believe in the great gain ahead of me.

Pickens Boune said

“There are no disasters in business that you can’t avoid if you see them coming and make the adjustments”.
If your business is not sensitive, when market crisis comes, there’s a high chance your business fail.

Following the Crowd Makes Businesses Fail

Do you notice that if any market innovation comes up, the crowd rushes into it and crash it?

Wise entrepreneurs would however have sucked the honey before the crowd notices.

Your businesses may fail if you wait for your fellow to gain from it before you venture in. The reason is, the  crowd would have already been into it. The ROI you’d see won’t be as substantial when you didn’t follow the crowd (if at all you’ll even gain).

Wise entrepreneurs wouldn’t time the market. If they miss a wave in the market, they search for the next one and get themselves in position.

This can be hard for many entrepreneurs because buying what is not popular is frightening.

Timid entrepreneurs will always fail because go along with the crowd. Or maybe their greed gets them in when wise entrepreneurs have already taken their profits and moved on. This is a great cause of business failure in Nigeria.

Wise entrepreneurs buy an investment when it’s not yet popular. They know their profits are made when they buy, not when they sell. They wait patiently.


Poor Customer Relation

There’s one business lady who sells fried fish in my street in here in Ikire 😂.

She has this poor customer relation and I guess the only thing that’s sustaining her business presence, is that she’s the only one entrepreneur dealing fried fish in this street. This is a case study to answer the question “why do small businesses fail” . 

One day, I wanted to prepare a stew, as you know, I had no option than to buy from her. I returned her change due to it’s ruffle and it’s torn nature. She started insulting me. I forgot her words although!

You see one thing about dealing with your customer is that, as time goes on, they will forget whatever you said to them, but they will never forget how you made them feel. 

As I type this now, I don’t hate her but I hate her. 😒

Lady! if your fan is at fault, you must be able to calm him down. Bro! Let me tell you, it must be due to stress, lack of moral or frustration on that customer. Customers are always right and they will always be.

You know why?
Difficult customers will boost your business most and bring more fans if you handle them right.

This is why there’s massive business failure in Nigeria and these faulty entrepreneurs go into that length of shifting blames on government or family members. If poor customer relation is lacking, prepare for a crash.

Hell No! Crash won’t come first. But signs of crash which are :

  • When your prospective customers reduce,
  • When you start having low sales,
  • When you struggle around cash flows,
  • When no one is talking to you.

Wrong Choice of Business 

See! Just as following the crowd we analyzed above, businesses fail because entrepreneurs chose the wrong business. It is very important you start a business you’d best fit in.

Let me tell you, no matter how any business and personal finance experts give you  cheat sheet forms, on a model to follow to derive your right business idea, it still lies in your mind to choose.

If you’re about to startup any business, you do know well within you what you love to do but you’re only afraid to shoot. Maybe because of finance. Businesses fail because of choosing anyhow. Just as I wanted to join the science class while in high school, because my bosom friend chose there.

If any entrepreneur chooses any business anyhow, he/she will regret it. It’s not easy being an entrepreneur and if the business grows, the passion is required to sustain the time of setback and to move on.

Unfortunately, since the business model was wrongly chosen, the passion to pull the inner gear and not quit won’t be there.

For your business not to fail, it must be your desired and appropriate type. It’s bad for you to venture it any business just because anyone is there and it’s been lucrative.

All successful entrepreneurs would tell you today that it’s been their passion since childhood. For example Neil Patel, an SEO expert started since he was 16.

If the business is not your right type, it will be very difficult to harness it to success.

Bad Management and Leadership

Ever seen a private business sector on a strike before?

If you treat and lead selfishly, it tells in a way or the other and will always shrink the effectiveness of your business.

In managing employees, I’ve learned that if you can attach incentives and encouragement with how you pay them, you won’t only skyrocket brand, but also increase your fans and customers. I’m telling you.

A business will surely fail if the management is poor.

See, it’s not until you have employees. An Entrepreneur’s self-controlled business will surely fail when an entrepreneur lacks the ability to manage material resources at his disposal.

An entrepreneur must be able to manage the finances, production line and other sections of the business. If your area of weakness in managing, please hire a worker who’ll fit for a manager. It’s great.

Poor Focus

Focus = Concentration + Attention

An important reason businesses fail in Nigeria is due to poor concentration and attention. In the book by Napoleon Hill – think and grow rich, he pointed out the essence of desire. A strong desire is a fuel to focus.

I tell you if an entrepreneur takes attention and concentration with levity handling, the business will fail flat. All businesses have bitter days and if the ability to see the better days ahead is low, the business will fail.

For example, if a blogger like me decides to maintain a new blog, if I don’t focus on the purpose of investing in that new blog, I just wasted my capital.

Your ability to wish the success of a business with strict focus and attention will decide whether you will be successful.

A good reason why businesses fail is lack of proper focus.


You are can be the wealthiest in Nigerian in just few years time. In fact, if you have the capital, you can soar internationally. Just know that these failure causes are common and if you can scape through these mistakes you’ll win.

Nigeria is a land flowing with honey. That is if you can be smart. Almost only 3 sectors pump in money in Nigeria today which are the

  • political sector,
  • business sector, and
  • the entertainment sector.

If you can tap from the milk flowing with starting out your own new structured model, you’ll experience success and you won’t suck under the under the umbrella of why businesses fail.

Kindly share your thoughts and views on this business failure in Nigeria, in the comments section below. According to you, why do small businesses fail? 

You cannot book a session with Godwin Oluponmile and still remain the same. We've helped hundreds of freelance writers & bloggers become self-bosses... Godwin Oluponmile is a content marketing expert since 2017. He's a writing coach to hundreds of students learning content writing. With SEO posts, helped hundreds of small and large businesses hit the front page of Google where targeted thousands can access their products and services.


  1. Good points @writer, but I as expecting to see inadequate finance/ running capital as one if the causes of business failure.

    In all you wrote an amazing piece.

  2. Those are really good points, am impressed
    Thank you for the knowledge

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