Terser Adamu: Reasons Why Nigerian Startups Fail
In Nigerian culture, failure is often not an option. From education to employment, there is a general fear of failure, especially when it comes to risk-taking, which is one of the fundamental aspects of entrepreneurship. But across the Atlantic Ocean in Silicon Valley, failure is almost encouraged. Old quotes like If you are not failing, you are not growing (H. Stanley Judd) are constantly touted around boardrooms, conferences and social media.
So, do cultural pressures and expectations play a big role in the failure of Nigerian startups? Personally, I don’t think so!
One of the reoccurring issues that I’ve witnessed is that many Nigerian startups expect things to happen too soon, which is often the root cause of all their issues. To have a successful company, you need to have a long-term vision, plan and strategy. Unfortunately, this is often missing.
Are these issues exclusive to Nigeria? Maybe not; but unfortunately, due to the absence of fundamental internal and external support mechanisms the ability to recover is a lot more complicated and further highlights the failure.
Through my experience, I have identified the most common reasons why many (more than 85%) Nigerian startups fail.
Here are my top six reasons why Nigerian startups fail. Use these as pieces of insight to avoid business failure.
Lack of sustainable financing
Be realistic with your financial projections or you will run out of cash. In Nigeria there tends to be a greater need for continual financing due to higher levels of waste. This will be more prevalent if you’re aiming to penetrate an already saturated market or one that is monopolized by big brands.
No matter how good your product is you will be spending large amounts of your budget on penetrating the market and building your brand loyalty. The initial penetration is likely to be carried out at a loss. This takes money, time and patient investors who understand and believe in what you’re trying to achieve.
Hiring the wrong people
Be rigorous in your employment procedure. The quality of the people you hire will be a big factor in determining the future success of your business.
It can sometimes feel like a desert out there when you are trying to find the right employees or partners. Unfortunately as well, due to cultural obligations, many Nigerians are too quick to pick friends and family as co-founders and business partners instead of picking an outsider that can bring in the skills that are needed to add value and progress the venture.
Little or no management skills
So you’ve built a great app, which means you’re also a great manager! Well, not exactly. Some people are natural managers, and some people aren’t. You need to identify your strengths and weaknesses, and be honest about them.
If your skills are in computer programming you might want to take on a partner who is skilled in business management. Alternatively, there is no shortage of people who are willing to closely mentor an enthusiastic and promising entrepreneur.
Don’t be afraid to ask for help, or accept help when offered it. It’s not a sign of weaknesses.
Working in Isolation
In Nigeria many startups tend to work in isolation out of choice and necessity. Don’t underestimate how demanding running a business can be.
I’ve seen entrepreneurs single handedly attempt to control a business from the point of conception to product launch. This is not recommended, and is totally unnecessary and counterproductive. Surely you can’t be an expert in product design, research, product development, funding, marketing, sourcing and everything else that is required to launch a successful business.
Hubs, Startup incubators and online communities are popping up all over Nigeria. Use these to your advantage to increase your chances of success.
Support processes and working in partnership will accelerate the successful development of your business by providing you with an array of targeted resources and services.
Trying to copy Europe and the US
This is a trend that I’ve observed predominantly in the new crop of Nigerian tech startups. One of the biggest mistakes local startups make is they watch what’s going on in Europe and the US, and attempt to clone it.
There are so many web-based businesses currently being built in Nigeria. Few of them aim to find genuine solutions that will impact the everyday life of ordinary Nigerians. A lot of these web-based businesses emulate western web businesses, but our infrastructure and way of life is totally different.
To have a successful business you must create a solution to a problem. If that problem doesn’t connect with the people you are marketing to, you will have no customers, and no business because there is no market need.
“Think local but act global.”
Inadequate Infrastructure
Like many African countries, Nigeria still suffers from a weak infrastructure. Amenities that are essential in supporting startups like access to strong and reliable Internet, consistent energy, logistics, good suppliers, legal advice, financial and economic support are often not readily available.
These issues can build up and make the possible seem impossible. Sometimes it is hard to remember that nothing is impossible. In these situations you have to demonstrate your true entrepreneurial skills. You have to be creative, innovative and resourceful in finding solutions around these problems. Ultimately, this can determine whether or not you are successful.
Terser Adamu is a consultant, entrepreneur, inovator and speaker.
Do you have an opinion on the business/economic environment in your country and wish to share your views with thousands of business professionals in Africa and international? Please contact andrea@africabusinesscommunities.com with your articles and blogs.