SMEs as the main drivers of the global economic growthMoreover, they contribute to about 70% of total employment and the '' major contributors to value creation, generating between 50% and 60% of value added on average''. In developing economies, SMEs contribute up to 45% of total employment and 33% of GDP.
The top ten problem areas of SMEs in Nigeria in decreasing order of intensity include: management, access to finance, infrastructure, government policy inconsistencies and bureaucracy, environmental factors, multiple taxes and levies, access to modern technology, unfair competition, marketing problems and non-
SMEs in Nigeria. ? SMEs are broadly defined(1) as businesses with turnover of less than N100. MM per annum and/ or less than 300 employees.
The estimated figure of micro-businesses in Lagos is 3,224,324 and to add to this, over 11, 663 SMEs operate in the state, according to a recent statement from the Lagos ministry for commerce, industry, and cooperatives.
Problems of Small Scale Industries – Production, Technology, Financial, Personnel and Marketing Problems
- Production Problems:
- Financial Problems:
- Personnel Problems:
- Marketing Problems:
- Problem of Raw Material:
- Problem-of Finance:
- Problem of Marketing:
- Problem of under Utilization of Capacity:
SME's contributes to over 55% of GDP and over 65% of total employment in high-income countries. SME's and informal enterprises, account for over 60% of GDP and over 70% of total employment in low-income countries, while they contribute over 95% of total employment and about 70% of GDP in middle-income countries.
Here are five of the most common challenges you may encounter.
- Lack of Funds. Nothing can hold a business back like money problems.
- Lack of Time.
- Trouble Finding Good Employees.
- Difficulties Balancing Growth and Quality.
- Ineffective Web Presence.
- How Can You Manage These Challenges?
5 Tips for Avoiding Small Business Failure
- Give up delusions of grandeur. “A lot of people don't think about all that's involved in being their own boss,” says Melinda.
- Nurture your network.
- Keep in touch with your customers.
- Pick a niche.
- Know your numbers.
According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have faltered. After 10 years, only around a third of businesses have survived. Surprisingly, business failure rates are fairly consistent.
- Manage Cash Flow. Many startup businesses struggle with cash flow issues.
- Develop a Strong Business Plan. A famous quote goes, "If you fail to plan, you plan to fail." While no entrepreneur goes into business planning to fail, many of them start off failing to plan.
- Avoid High Debt.
- Make Accurate Projections.
Becoming profitable is important for you and for everyone who's invested in your company. It's hard to predict the average time for a new business to make a profit, but standard advice is that you should prepare to run three years before you reach that point.
The IRS recognizes five types of businesses: sole proprietorship, partnership, corporation, S corporation and limited liability company or LLC. Many small businesses go the sole proprietorship route. Its name says it all: One person is in charge and accepts all responsibilities, debts, losses and obligations.
Research concludes 21.5% of startups fail in the first year, 30% in the second year, 50% in the fifth year, and 70% in their 10th year.
- Small businesses can offer a more personalized and customized service.
- Your small business likely exists because larger companies are not serving customers effectively.
- Big-name companies often need to focus on consistency, whether it is internal with staff or external to customers.
How to avoid business failure
- Supervise cash flow.
- Avoid going into debt.
- Create a solid business plan.
- Maintain good customer service.
- Learn from business competitors.
She suggests that there are in fact 4 sources of capital: equity, debt, grants and sales/revenue. There are 3 types of equity for funding operations: Public Equity, External Private Equity and Internal Equity. Public equity or securities include IPOs and crowdfunding efforts.
Five Common Causes of Business Failure
- Poor cash flow management.
- Losing control of the finances.
- Bad planning and a lack of strategy.
- Weak leadership.
- Overdependence on a few big customers.
The Top 5 Reasons Small Businesses Fail
- Failure to market online.
- Failing to listen to their customers.
- Failing to leverage future growth.
- Failing to adapt (and grow) when the market changes.
- Failing to track and measure your marketing efforts.
9 Ways to Overcome Failures in Your Life
- Don't Feel Threatened By Failure.
- There is Nothing Wrong with Feeling Bad.
- Develop Healthy Habits to Stay Healthy.
- Avoid Picking Up Bad Habits.
- Take Reasonable Responsibility for Your Failure.
- Study Yourself.
- Keep Looking Ahead.
- Take Inspiration from Failures that Led to Success.
Here are the most common failure-causing problems and their solutions:
- Lack of Persistence. More people fail not because they lack knowledge or talent but because they just quit.
- Lack of Conviction.
- Rationalization.
- Dismissal of Past Mistakes.
- Lack of Discipline.
- Poor Self-Esteem.
- Fatalistic Attitude.
What are the signs of business failure?
- Lack of cash.
- Your customers are paying late.
- You don't know your business' financial position.
- Constantly 'firefighting' issues.
- Loss of a key customer.
You can divide failures into three types:
- Preventable failures. These could have been foreseen but weren't.
- Unavoidable failures. These often happen in complex situations and involve unique sets of factors.
- Intelligent failures. These are the best kind.
Lack of market research. Poor financial control. Poor management. All the above.
Entrepreneurship Management
- raising of more money by issue of shares.
- acquiring fixed assets on excessive amounts.
- over-estimation of earnings for enterprise.
- under-estimation of initial rate of earnings.
10 Steps to Recovering After a Business Failure
- Accept failure happened and learn from it.
- Actively decide to change.
- Prioritize the tasks that lead to change.
- Have a mentor direct the makeover.
- Move outside your comfort zone:
- Align yourself with the right people:
- Keep an eye on your finances.
- Follow-up and reflect:
Short term: one to six months.In the short term, your job is to either develop an objective and realistic plan to get the business back to breakeven or, if that's not possible, to close or sell it. In general, you shouldn't allow losses to accumulate beyond six consecutive months.
Survival Rate for Small BusinessMore than half of small businesses, according to the Small Business Administration, survive for five or more years, and about a third of them survive for more than 10 years. The SBA doesn't break down survival rates for sole proprietorships separately.
A successful small business is continually looking for new ways to market the company, or company products, to new audiences and to existing target audiences. Marketing keeps the company name in front of potential customers, and that contributes to the company's success.
4 Reasons Why Businesses Succeed
- Clear Mission and Vision. A concise and clear mission vision is essential to make any business successful.
- Inspiring Company Culture. The culture of any company should be inspiring for employees as well as management.
- Clear Differentiation.
- Adequate Financial Reserves.
According to the BLS, entrepreneurs started 774,725 new business in the year ending March 2019. From the historical data, we can expect approximately 155,000 of these businesses to fail within the first two years.
No business can survive for a significant amount of time without making a profit, though measuring a company's profitability, both current and future, is critical in evaluating the company. Although a company can use financing to sustain itself financially for a time, it is ultimately a liability, not an asset.
A Business Analyst would look at problem areas within the business and identify what is required to correct them. A Business Process Analyst would use Business Process Management to optimise Business Processes.
