Over time, there has been significant growth in investment and business development in Nigeria. This cuts across different areas of the economy; e-commerce, mobile technology, fintech, transport and logistics, among others.
However, despite the potentials in the Nigerian market, not so many new businesses can scale through the fundamental stage, and as such fold up or end up being purchased by a third party company.
Here are 6 reasons why many startups fail to thrive in Nigeria:
* Inadequate Funds: Money is undeniably one of the tools to effectively run a business. One of the reasons why tech startups fail in Nigeria is inadequate finances. Asides the capital it would take to set up a business, money is also needed to continue its operation. Money is just like the fuel of businesses. Asides from the financial issues some Nigerian tech startups experience, they also have to deal with the unavailability of investors. After striving unsuccessfully to find finances, many entrepreneurs reach a stalemate, and most of the time cut their losses and ultimately fold up.
* Poor Business Model: There is a common problem that has shut down many startups and it is simply the lack of a good business model and blueprint. Many tech startups in Nigeria offer great products/services but sometimes, these products or services do not have an excellent business plan or structure to back it up. A startup without a viable business model cannot last too long before failing.
* Competition: While many startups are always aiming to make a profit, they are usually not prepared for competition. When the competition becomes too tough and newly found businesses cannot cope any more, they are ultimately forced to go out of operation. Though they might have a workable mission, they lack the vision to expand and outgrow competition.
* Lack of Focus: Most startups lack direction and are easily carried away upon recording a small amount of success. After experiencing success with their products or services, some entrepreneurs find it very difficult to keep the success going. When some startups begin to experience failure, they find it difficult to steer back to the top.
* Poor Marketing: The effect of marketing on the success of a startup or business cannot be overemphasized. Many Nigerian startups, however, fail to understand the power of marketing, hence, they are unknown to the public. Knowing your target audience, how to get their attention and convert them to leads and ultimately to a customer is one of the most important skills of a successful business.
* Disunity: Some Nigerian startups fail due to lack of cooperation. A united team is everything any startup needs to reach the top. A disunited team, however, is like a boat with a hole in its side. It can ruin even the largest of establishments. Disharmony among founders and investors is another major reason why many Nigerian tech startups fail. When the investors and entrepreneurs can not seem to settle their differences, they are forced to close down.
After considering the reasons why many Nigerian startups fail, it is also noteworthy to point out the role of the government and the impact of the economy. While Nigeria is endowed with a growing population of youths and enthusiasts who have the vision to start a business, it is unfortunate that the government’s regulations create unfavourable conditions for small businesses and startups.
