There is a popular adage often attributed to Benjamin Franklin, thefather of time management “Failing to plan is planning to fail,” the absence ofproper planning can detrimentally affect the success of a STARTUP anywhere inthe world, which means failing as a result of unplanned structure is nongeographical. Planning gives understanding and insight into what one is into,first of all, business analyst needs to carry out an in-depth research into thekind of business, the nature and model as should. (Raje, 2016)”It’snot the plan that is important, it’s the planning” says Dr.
Graeme Edwards. Thebusiness should have both short and long termed plans that will be focused on.The plan should answer where the business should be in three months or a year,ten years or a hundred years. The right plan will include specific-to-do-listswith dates and deadlines (George Meszaros, 2016)Sometimes, it is not lack of business planning that puts STARTUPS atrisk but lack of ‘personal planning’ as identified by the (INSIDEBUSINESS, 2016)online article ofSeptember 21st 2016. Business people need a kind of generalpreparation for their startup experience. Especially foreigners; they will needto learn to prepare their minds towards what their new environment would looklike in terms of social economic nature. What is personal preparation?PERSONAL PREPARATION means having in mind thatthe new business will exhibit a different thing entirely and knowing how toadjust to it.
In the event of a local person starting a new business, dealingwith familiar faces too could be very upsetting as disappointing (Edehi, 1994) Local councils andmany unorganized groups could threaten to bring the business to a standstillwhen certain demands are not met. In Nigeria, several oil and gas companieshave folded as a result of having non-reconcilable disagreements with localgroups. There have been cases where the federal government deliberately stepsin by military intervention yet without solving the problem; the company justfail at the end. Secondly, preparation without a sound knowledge of the culture of thebusiness environment would lead to failure. Let us consider the subject as verykey in Business success. HOW CULTURE AFFECT STARTUP PROGRESS IN NIGERIADealing with cross cultural differences: doing business in the SouthWest Nigeria is completely different from doing business in the Niger Delta orNorth East Nigeria, unique differences do exist. Culture is a comprehensiveconcept as it embraces all factors that influences an individual’s reasoningprocess and shapes behavior. It is an unavoidable part of human life and itvaries significantly from place to place.
(Hofstede, 2004) Agreed that culture is a fuzzy conceptthat can be viewed from two perspective that seems inter-related and confusing.He stated that culture could be seen from a narrow perspective to mean”civilization” and in the broad perspective as “anthropology” which involvesthinking, feeling and acting. (H.H Stern (1983, 1983) Divided culture intothree different categories; (1) Psychological Culture (2) System culture (3)System Culture.
Material culture deals with all the manmade material creationaided by civilization such as transportation, clothing etc., this aspect ofculture is visible and can be assessed and quantified. System and psychologicalculture, deals with the existence of the living system like religion, socialsystem, family system, behavior, reasoning, thinking and aesthetics. Nigeriahas several cultural values that startup entrepreneurs should not undermine.These cultural values included: value for acceptance and hospitality value forcommunity life, Value for family oneness, value for the sacred and for religion,value for the elderly and authority, value for tradition and tribalconnections, value for history and parables etc.
(Oliver, 1991). Now, we shall explain other cultural factors aiding the rise in startupfailure in Nigeria.SocialPerception on the female gender and entrepreneurship: In Nigeria, thefemale sex is considered most good for home care. Women are expected to getmarried and look after their husband and kids. Those with high ambition likegetting a quality education or becoming a successful entrepreneur are seen astreat by their male counterparts. Many Nigerian men always prefer their well-educatedwives not to take up demanding jobs. Especially in Northern Nigeria were Islamplays a significant role in deciding what a person can do or not.
Many femaleentrepreneurs do not get the required support from the society simply becausethey are women. This culture has affected many women who have brilliantbusiness ideas. When some of the very passionate ones attempt a startup theyhardly receive any cooperation, recognition and support from their spouses andfamily members.
Most people feel that business enterprising is for men and notwomen. All women interviewee categorically identified their sex as one of themajor factor that limited their capacity and largely contributed to why theirstartups failed in Nigeria.Our case studystartup, The Econet Wireless faced all sought of cultural problem whileentering Nigeria. The company had thought that they did enough background workbut experience later proved that their research was insufficient. 2.2.
3:NATIONAL INFRASTRUCTURAL BREAKDOWN”America has goodroads, not because America is rich, but America is rich because it has goodroads” __J.F Kennedy Since 1999, at theonset of our democratic experiment, the country has made efforts to lay afoundation for economic growth and development (Adekunle, (Adekunle, Vanguard News Paper, 24, August 2014). , 2014) Huge infrastructuraldeficit has constrained economic growth and development.
As the most populous WestAfrica nation, Nigeria sets a great vision to be among the 20 economies in theworld by 2020 with a minimum GDP of $900 billion and a per capital income of notless than $4000 per annum. The road is the most important element in thecountry’s transportation network, carrying about 95% of all the nation’s goodsand passengers. But now, many of the roads are in disrepair because of poormaintenance and years of heavy traffic. The rail system is completely notorganized. So do Nigeria have problem fixing all other infrastructure thatcould have boost her economy say lack of investment in power, housing, tunnels,water supply, electrical grids, telecommunication, airport/airways, even softinfrastructure like education, health and the financial system.
The Econet WirelessCompany was determined to solve the lack of telecom system in 2003 except thatit had infrastructural challenges to deal with just as other startup would.There was no good road networking system on ground to help with town mapping.This was a major challenge for the new telecommunication company. Apart fromthe road challenge, Econet just like every other startup had to import certaingoods in other for them to meet up with their goal, this had cost the freshorganization a lot of money. When startupsrealized that they’ll need to invest their own money into infrastructure theyjust get frustrated, most startup companies have limited funds. Scooping theirlittle resources to get themselves roads or vehicles that should ordinarily beavailable as public infrastructure just wear them down. The more investmentthey have to make in running these auxiliary needs can be frustrating. 2.
2.4:LACK OF TECHNICAL KNOW-HOW AND REQUISITE LABOURLABOUR is asignificant part of any business. It is defined as the aggregate of all humanphysical and mental effort used in creation of goods and services. It is aprimary factor of production that drives supply. The other three are naturalresources or the raw materials, capital and entrepreneurship or the drive toprofit from innovation (Amadeo) it is the drive ofall other factors of production. Products don’t create themselves, and you needpeople to provide services and people to manage business activities.
Labour could beclassified into skilled, semi-skilled or unskilled. The nature of job in focusdetermines the kind of labour that is needed but generally, all three kinds oflabour will be useful in every establishment. When startups get founded, theyalways have problem hiring the needed labour, especially the skilled labour.Technical companies like the Econet Wireless needed experts but could not getthem.
Over 200 foreign experts were flown into Nigeria and that was a hugeinvestment. If Nigeria had engineers, would Econet have to do such work to getstarted? Well no. many startup face exactly the same challenge even today. Sincethere’s not enough investment in education, training and development of thelabour force, businesses have continued to live in the hard truth of eitherinvesting in immigrating foreign experts or using the unqualified local labour.
Although the value of labour force have increased significantly from 30 millionin 1990 to about 55 million in 2014 (CBN/NBS) the international labourorganization still worry about the kind of skill Nigeria population have forsome specialized jobs. Emphasis is being made on ‘what kind of training do ouruniversity graduates have’? The economically active population of working agepopulation (Persons within ages 15 to 64) has increased to 105.02 million in Q42015 according to Nigerian Bureau of statistics Unemployment/Underemployment Q42015 report.
Of all theexecutives interviewed, 89% agreed that lack of needed labour largelycontributed to one of the reasons why they folded up. That’s a staggering statistics;it means that the country lacks a very vital factor of production. 2.2.
5:LACK OF PROFESSIONAL FINANCIAL MANAGEMENTMost startupentrepreneurs initially made a confident remark that they had insufficientfinancing and that contributed to over 50% of their failure. Nine out of tenentrepreneurs complained that insufficient funding was one of their major challengewhen they started and I took my time to ask them questions and realized thatthey all had enough startup capital; a minimum amount of funds required tostart their business. This research helped all interviewees locate where thefinancial problem of their startup lied; it was in their inability to properlyhandle basic but very vital financial responsibilities. Financial management isvery important in startup.
It involves ability to do accurate business plan, bookkeeping and proper allocation of funds. Most startup entrepreneurs take forgranted the need to hire experts to help with accounting and finance. They takeall financial decisions even at the detriment of their own startup companies.Startup entrepreneursdiffer from medieval business founders in several ways. They are referred to asgeeky and very passionate about their ideas. No matter how smart they are increating concepts and ideas, they will always do poorly when they do not hirethe services of professional financial officers who would help them withfinancial decision making.
Entrepreneurs always see themselves as the ‘boss’that knows it all. Poor financial management will result in more liabilitiesand ultimately bankruptcy. Therefore, poor accounting, unprofessional businessfinancing and decision making by startup owners makes them go bankrupt in mostcases.2.2.6:POOR SOCIAL INTEGRATION AND SUPPORTLack of Socialintegration and support for entrepreneurs is one of the root causes of Startup failurein Nigeria. Social integration structure allows all members to participate indialogue to get and keep peaceful social relationships. This is a vital part ofany organization to eliminate anarchy and great an enabling environment wherebusiness success can thrive.
When there are tribalism where people fromdifferent tribe cannot relate and work as team, then work performance andethics will plunge. No business will grow when the team involve under look oneanother (Abiodun, 2011)The Nigeriansociety has been reported by Oxfam publication of 17th may 2017 (54page reports titled Inequality in Nigeria…) as highly unequal; that the gapbetween the rich and the poor in Nigeria is very wide. According to the WorldBank data, in 2009, the poorest half of the population held only 22% ofnational income (page9). Meanwhile, the richest Nigerian man will take 42 yearsto spend all his wealth at one million per day (page4). Many startupentrepreneurs I interviewed were people of the minority groups; poor, not ableto afford a very good education, not so social but with dreams and ideas thatcould have changed the world.
One of those young person is Eneh. A collegeundergraduate of the Benue state University who founded a company known asCareLine; a doorstep healthcare startup that wanted to cater for the elderlyand abandoned using donations from the upper class people. According to the 21year old lady, more than 90% of her donations came from very poor locals whohad very little to give. The rich class refused to accept her idea and supportit simply because they felt she was an undergraduate studying in a publicinstitution therefore, she is classified a poor person. “They do a very quickrating on your social economic background before they choose if to back up youridea or not” says Adama Eneh of CareLine.More than 75% ofour interviewee failed business executives lamented how lack of support helpedfrustrate their startup. In Nigeria, parents generally expect their children toonly focus on their education and not try to explore their ideas. When such achild is still dependent, they are abandoned by their relatives, parents mostespecially.
Government too have failed to help integrate young aspiring entrepreneursinto the business forum. Incentives and supports are not available. Taxes andlevies are weighty on businesses.
There are a lot of things government couldput in place in form of policies but little or no attention is given to Startupin Nigeria.2.2.7: FAILURE TO TACKLE INDIGENOUS CHALLENGESNigeria have several indigenous challenges and we are goingto dedicate this section to them.
Limitations like diversity in language,culture, religion, behavioral and tradition have not been very helpful inmaking business startup strive. I witnessed how a certain Benin community (namewithheld) deliberately brought down an illustrious business because the companyfailed to inscribe the ‘forgotten’ traditional name of one of their ancestorson their signpost. That is both hilarious and ridiculous, it sounds barbaricbut that was how they wanted it.Several businesses in Nigeria have suffered languagebarrier and terminally failed. We have seen several cases where foreign experthad to withdraw from the northern part of Nigeria for fear of the unknown. Whenpeople do not understand themselves, they get worried about their trueintentions for one another. There are over 520 languages spoken in Nigeria ((Fida, 2008)the officiallanguage, English was chosen to facilitate the cultural and linguistic unity ofthe country.
However, communication in English is much more popular in thecountry’s urban communities than it is in the rural areas (Integrity, 2017)Nigeria like other countries ha ve cultural, religiousand traditional differences too. These do not help businesses to grow. Theseare barriers. Terrible behavioral differences can be frustrating,depending on the people. When a business man discuss his experience, he sharesdifferent stories according to region. The people in the south west of Nigeriatend to be friendlier than those in the north (Ozed, 2007)INSECURITY is another indigenous threat to doing business inNigeria.
The rise of the notorious terrorist sect; the Boko-Haram in thenorth-east Nigeria have completely crumbled business activities in that region (Egbunne, 2016). The Niger deltaAvengers in the South-South Delta of Nigeria have been a serious challenge forbusiness activities, especially the oil industry. Several startup have eitherpacked up or are planning to do so as accounted by Mr. William McKee, Chairmanof an oil multinational company in the Gulf whose original intention to beginrefining in 2012 was blown away by militancy group. Mr. William recalls how twoof his Lebanese experts were abducted for 16 days and taken to an unknownhideout. It had cost his parent company in the UAE several thousand dollars tosecure their release. The government of Nigeria claims to be on the fore frontof tackling insurgency but is the effect felt by the people? 2.
2.8: CORPORATE INTERNAL FACTORSDo entrepreneurs have their own problems? Yes they do.These problems could also largely contribute to the reasons their businesses’fail and here, we would elaborate those corporate errors that kill startups inNigeria.
Lancaster A. puts forth three summary points againstentrepreneursOver-Commitment/confidenceThe Problem: Takingon new actions and saying yes to new opportunities is tempting. But when theentrepreneur start saying yes to too much, they they fall into an agreementthey cannot keep. During negotiation, a proper skill is required. They becomeworn out and the overall quality of everything they do suffer. They usually seethemselves as capable of handling everything simply because they conceived thebusiness idea.IgnoringBoundaries and CheckersThe Problem: Entrepreneurs usually set some boundaries for themselves. For example, they could say,’everyone report directly to me’, or decide a complete work-free day each weekor shutting down the computer at a certain time.
Well, then things get busy andtheir own boundaries are much easier to compromise on than are their clients’ (Lancaster, 2011).Entrepreneurs always feel like they can overrule the checkers or corporateinstructions because they are the boss. This have a way of messing things upfor the company. When rules are floored regularly, people get tired and makeothers wear out too. As things compile, the entrepreneur becomes less activeand efficient.
Most startup entrepreneurs consume themselves up by trying tobecome a jack of all trade in a company.Avoiding NetworkingThe Problem: Startup founders always feel very unsafe meeting newpeople or seeking advice from their competitor. Instead, they normally feelsafe talking to the same people in their network.
The need for reaching out toothers in business cannot be overemphasized. For the fear of leaking a tradesecret, entrepreneurs never feel comfortable with others that are not in theirnetwork. This according to Barry Aikorin of PowerTel, a software company thatfailed in 2013 in Lagos, is among some reasons he failed. If Barry had agreedto talk to a competitor who had similar encounter five years before PowerTelwas founded, his company might have been savaged. The 30 year old executivelamented not talking to his superiors.Lack oftrainingMost entrepreneurs in Nigeria just have nothing but apassionate dream full of illustrative ideas that may not be very realistic inpractice. It is not enough to say that one will succeed simply by listening tofine idea or pitches.
That’s where the role of training and skill acquisitionapply.