Friday, December 3, 2010

Why Do Businesses Fail in Nigeria?

Hi All,

Permit me today to share some thoughts and to also get to ear from you on why businesses fail In Nigeria.

I have been involved in some personal business for a while now and have been privileged to see from some companies point of view but I still haven't gotten it to see why businesses fail. Sometimes I have gotten frustrated and keep thinking if people are the helms of power see it the way am seeing it.

Let me discuss a few options I have heard and would also state my view on them.

Option 1 : Lack of planning, market research and technical expertise

I really don't agree fully with the lack of planning because I have seen companies with high level plans and even most are documented but key reason here is implementation. How many plans are actually implemented. Most times, we spent countless of hours to develop beautiful plans that would never see the light of the day in terms of implementation. To me, the decision to implement a plan is key than that of developing the plan.

I agree with the point on market research and technical expertise. I wont want to jump into any sea I don't have all the key information on. Businesses should be started with a full knowledge of all technical, commercial, market and personnel know- how's.

Option 2 : Leadership

A friend stated that most companies owners find it hard to create a system that works independent of them. This is so true. I have seen managers that scrutinize all level of expenditures from buying stationeries of N200 to other expense of N500000. Our businesses need to create leadership system where work schedules are known and top management people handle other key and time based issues.

We need to empower our staffs and believe in their abilities to act as we would in different situation. Many managers today are s afraid of people working under them that they keep all information to themselves and you see such businesses tumbling down on the absence of that manager.

Also on the issue of leadership is the vice called micro-management. This really to me is a bug that eats up time and drags businesses into the mud. We need to open up, let our staff sometimes make mistakes and learn from it.

Option 3: Professionalism and Excellence

I keep saying this is on key factor missing in most Nigerian businesses. Our presentations are so shallow and most times copied directly from the internet and just edited. Attitude to clients are at the poorest peak and the saying that "customers are always right" have been changed to "customers are sometimes right". A good comparison I like making is comparing the look of an American policeman to their Nigerian counterpart. The difference speaks for itself. Same most times goes for our banking industries where you have to keep waiting endlessly while the bank staff is on some personal calls. I made up my mind not to take a seat in any bank because I have concluded that it means I have given them my assent to waste my time.

Option 4: Lack of funds

I will like to rephrase this more to mismanagement of funds. Every business should thrive on a well and meaningful plan. Business expense should be well anticipated and resources should be planned to meet this need. Our society believes you should spend first on your social ego than on your businesses. I have seen managers use 80% of profits from a deal to get themselves very good and benefiting cars. Their social class need to be elevated at the expense of their business.

Let me stop here for now. I would take time to write more on ideas and opinions I get on this. So feel free to drop your comment or send me your articulated idea on this. My contact are, 08034424156, bb pin-30f13f82


Albert Afolabi said...

Comment from a friend

At the end of the day, all the factors u mentioned count. They however take up different percentages in my own analysis of why Nigerian businesses fail. There is no single fortune 500 company from subsaharan Africa and the reason really isn...'t far-fetched: lack of enough technical expertise and faulty allocation of resourses.

Most companies are adopting the blue ocean strategy now which emphasizes innovation over competition to achieve growth, how do you bring a new marketable product/service to the boardroom when your managers are technically bankrupt? The business space is about sales you may argue, but the chief driver of sales are not your salesmen who are designed to make the initial sales but your innovative product that would sustain the sales.

Businesses would not exist if resources are not scarce, it is the efficient and purposeful use of these scarce resources that allow you to create value and hence earn profit. Six Sigma method of resource allocation borders a lot on lean management: the ability of management to achieve excellence with the minimum. Modern managers should know how to manage materials as well as and more importantly the people handling these materials. Workers should not be overstretched neither should they be micromanaged. There should be a balance between supervision and trust.

The Nigerian business is a business..and that's it. A business should be an organism capable of not only growth but evolution. Nokia grew into the best rubber boot maker but evolved into a major player in the telecommunication market doubling as an OEM and a TSP. The only reason why I can allude some form of life to the Nigerian Business is because they die. Death after all is a major characteristic all organisms possess.

The Sex Series said...


Ayo Osho said...

This is a great write-up which I would recommend to all young and old entrepreneurs. Knowing where to go is not as important as getting there at the right time.