Though there may not be specific statistics but it’s a fact that over 90% of small businesses in Nigeria fail. A number of factors contribute to this failure; these factors include the risks associated with this class of business that are not managed in a pragmatic or systemic manner.
In Nigeria, we treat things more as spiritual matters instead of taking pragmatic or systematic process of dealing with issues present or emerging. Taking an example to illustrate my point; you intend to take a trip from place A to place B, how many of us really sit back, write down all the possible factors that will likely make the trip unsuccessful and actually put in place measures that will ensure each factor is either eliminated or reduced to the extent that its likelihood of hindering the trip is reduced.
That is what I mean, we must think of the factors that will make the trip unsuccessful and not just say God Forbid! It is not my portion! My trip is covered with blood of Jesus! Etc. while we must have faith, we must deal with practical issues that can limit our success.
The probability that certain issues have potentials to limit our success are called risk, each of those specific issues are called risk factors. The risk factors have potential to limit or truncate our business objective thereby causing business failure.
Dealing with the risk is what we referred to as managing risks, this involves taking specific steps/process to ensure all risks are identified and identified risks factors are either reduced or eliminated thereby ensuring we achieve all our business objectives.
If every business owner can endeavor to study risk factors affecting their businesses, no business will fail. Larger businesses have units/department reviewing the risks the business faces in an ongoing basis to ensure that they are dealt with promptly.
Next time, we will address some of the risks SME face.