Challenges of Small-Scale Businesses in Nigeria

Challenges of Small-Scale Businesses in Nigeria

People are encouraged to start businesses, no matter how little, instead of searching for jobs they might not find. In Nigeria today, small-scale businesses are springing up in every nook and cranny, providing sources of livelihood to many Nigerians. This is an encouraging development, especially when considering how many people they will remove from the labour market. Even the government has set up several intervention programmes to encourage small and medium enterprises (SMEs). However, many small scale business owners are passing through a lot of difficulties and many of them have closed down their businesses as a result of these challenges.

Experiences of Some Small Scale Business Owners

In this section, the challenges of four small scale business owners are narrated to reveal what is affecting or has affected their businesses.

Challenges Faced by Uche, the Poultry Farmer

Uche started his small poultry farming business with two hundred birds and was hoping to increase the number to two hundred and fifty birds when he sold off the ones he was growing. Unfortunately for him, the price of feed shot up a few weeks after he started the farm so he had to borrow to buy more feed for the chickens. That was not all, some birds died and some became stunted. He also complained of a few birds with “factory faults”, which he had to consume because he was sure no one would buy them. By the time the birds were ready for sale, they were short by eleven. But that was the least of the problem.

When Uche went to the contacts he made before and while rearing his birds, he discovered that “I will buy” is different from “I want to buy”. These people began to give funny excuses why they couldn’t buy his birds. After much effort, he found customers but the amount they priced the birds were not as palatable as he had expected. That was when he learnt that people preferred patronising big established farms to small start-ups. To cut the long story short, Uche’s next batch of birds was one hundred and seventy in number and no longer two hundred and fifty as he initially planned. His reason was that the cost of feeds and chicks have gone up and he was afraid of being stranded again.

Challenges Faced by Jane, the Event Planner

Jane went into her business with the savings she made from her NYSC. Because the business is capital intensive, she bought some pieces of equipment and invested most of her capital in publicity. She worked with different vendors, who provided the things her customers asked for. So, Jane gets the contract and then pays other business owners to work with her. Jane’s problem started when these vendors began to disappoint her, steal her contracts, and/or increase their prices. Jane found herself in a fix because she had no capital to get all she needs for the job, including labour. Today, she is considering quitting the business and searching for a 9-5 job.

Frank, the Auto Mechanic

Frank went into the auto mechanic business shortly after his NYSC but he had no physical workshop. He printed flyers and business cards and shared them around. He had good patronage because he made it easier for people to repair their cars: he goes to their homes for the repair or they meet at an agreed place that is convenient for the customers. However, he complained that many people don’t pay him the agreed amount for his services once he is done with the work. Some plead with him to accept the little they have while others use threats and intimidation to force him into collecting what they wanted to pay. There are also those that promise to pay up later but, to date, they are nowhere to be found. Right now, Frank is wondering whether his mobile auto mechanic workshop is worth it at all.

Onyinye, the Restaurateur

Onyinye had a shack, where she sells food to her numerous customers, who were mostly artisans and secondary school students. She had hoped to grow the business into a big restaurant, considering the profit she made from it. Onyinye’s business was booming until she employed her husband to help in collecting money from absconding customers. The man’s presence spelt doom for Onyinye and her business because he did not only allow his friends to buy food on credit and never pay, he also took her money to drink and gamble. Other miscreants, who discovered Onyinye’s weak point, began to buy food on credit and later claimed they paid her husband. Furthermore, since Onyinye was the breadwinner of the family, she ran her home from her little business. Bit by bit, the business began to go down until finally, it packed up. Today, Onyinye hawks polythene bag at a popular market in Enugu.

Analyses of the Challenges

The experiences of these small scale business owners are what many others face in Nigeria today. Note that these persons did not complain about taxes and levies they had to pay, even for Onyinye that had a physical office. This shows that tax is not their problem and so should not be regarded as one of the major challenges faced by business owners in Nigeria. So long as they are not making sales, they can pay those taxes. From the stories of these persons, it will be discovered that their challenges are:

  1. Inflation
  2. Insufficient funds
  3. Competition from larger companies
  4. Natural disaster
  5. Poverty
  6. Lack of managerial skills
  7. Fraudulent customers
  8. Bad employees and partners

Some of these challenges are beyond the control of business owners but many could be handled through the development of good managerial skills. However, many small-scale business owners have been able to battle through these challenges and came out victorious. It is, therefore, worthy to state that business owners encountering any of the listed challenges should seek professional advice so they can scale through them. Quitting is never the best option.

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