Startups have been successful at bridging the employment gap and contributing to GDP of many nations. But not all startups are able to succeed and establish themselves as a competent business entity and most of them fail within years of incorporation.
For instance, while you see there are many online gaming companies today, only a few like https://www.betway.com.ng/ have been able to make their mark. The above company for instance, has made even English Premier League teams like West Ham as their sponsor and have a presence in most countries around the world, in just a little over five years.
The situation is grim in Nigeria where only 20% of the startups survive. Nigeria has been encountering increased adoption of entrepreneurship with 73% adults thinking it as a good career option in the African and Middle East countries, according to the information available from a survey by Global Entrepreneurship Monitor (GEM).
Entrepreneurship: The Need for Nigeria
The push for entrepreneurship comes at wake of increased unemployment rates- almost 19% which is the six year high of all times, according to data of National Bureau of Statistics. The same survey quoted above shows that in spite of a favorable perception of entrepreneurship, only 40% Nigerian adults have established a startup or operated a business in the past 3 and half years. Many people in Nigeria are moving into the startup sphere, but over 2/3rd of them fail to survive the first few years in the market.
There can be many reasons behind the dismal performance of the Nigerian business. The country is not very favorable to businessmen ranking at 145 out of 190 countries in World Bank ease of doing business ranking. This scenario prevails even in the wake of technological transformation through which Nigeria is going currently.
One of the main reasons is the lack of infrastructure in the country which the government is also unable to tackle. The businesses also fail due to poor decisions if we go by the words of Wole Oluyemi, business advisor and accountant at KPMG, Arthur Andersen and Chevron Corporation. He has also worked with over 300 clients involving large and small businesses in both domestic and international market. Some of the companies died out because of factors beyond their control while others perished due to third party consequences.
Some of the businesses, Oluyemi says, did not have proper financial systems to manage the money matter of the company. Other companies were not able to perform because of over anxiety of the establishment itself. Forbes and Statista carried out analysis of 101 startups and found poor cash flow management to be the second most popular reason of failure. In other cases the companies could not come up with an USP or their products could not be differentiated from the competitors.
It is important for Nigeria to build on its talent and entrepreneurship is just the right way. Only then will the country’s economy be on the road to progress, without having to worry about the little stutters on the way.