The Impact Of Business Failure In Nigeria (A Case Study Of Small Business In Federal Polytechnic Environment)

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The Impact Of Business Failure In Nigeria (A Case Study Of Small Business In Federal Polytechnic Environment)


The research work was carried out to find out the impact of business failure in Nigeria. (a case study of small business in Federal polytechnic environment). The study used survey design technique, the population of the study consist of 200 worker which used Yaro Yamen Formular were used to determined the sample size which where 133. Both primary and secondary sources of data where used to collect the information.

The researcher questionnaire analyzed using simple percentage and the hypothesis were tested with chi-square at (2) percentage level or significant. The major findings of the study where that the impact of business failure where base on the analysis of data collected from the different questionnaire administer to senior staff and junior staff of standard shoe manufacturing industry and Akaraka paint industry.

It has been concluded that many business fail due to the fact that, they lack the technical know how for running a business. The researcher recommend that effort should be made to improve employee relationship, and also there should be training for employee to carryout their job.

Table Of Content

Preliminary Page(s)

  • Title page
  • Approver
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of content

Chapter One

1.0 Introduction

  • 1.1 Background
  • 1.2 Statement of study
  • 1.3 Purpose of the study
  • 1.4 Research question
  • 1.5 Research hypothesis
  • 1.6 Significant of the study
  • 1.7 Scope of the study
  • 1.8 Limitation of the study
  • 1.9 Definitions

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 Conceptual of framework
  • 2.2.1 Concept of business failure
  • 2.2.2 Symptoms of business failure
  • 2.3 Theoretical framework
  • 2.3.1 Structural contingency
  • 2.4 Empirical framework
  • 2.5 Researcher position
  • 2.5.1 Nature and types of small business
  • 2.5.2 Characteristic of small business
  • 2.5.3 Role of small business in the economy
  • 2.5.4 Problems of small business

Chapter Three

3.0 Research Methodology

  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Sources and method of data collection
  • 3.4 Population and sample size determination
  • 3.5 Sampling techniques/procedures
  • 3.6 Validity and reliability of measuring instrument
  • 3.7 Method of data analysis

Chapter Four

4.0 Presentation Analysis and Interpretation of Data

  • 4.1 Introduction
  • 4.2 Presentation of data
  • 4.3 Analysis of data
  • 4.4 Test of hypothesis
  • 4.4.1 Test of hypothesis one.

Chapter Five

5.0 Summary, Conclusion and Recommendation

  • 5.1 Introduction
  • 5.2 Summary of findings
  • 5.3 Conclusion
  • 5.4 Recommendations.
  • References
  • Appendix
  • Questionnaire

Chapter One

1.0 Introduction

1.1 Background Of The Study

Business is important to our society because we depend on its for various services. While they depend on the environment. Business organization provide our basic needs such as food, clothing and shelter. They also provide us with moisture recreation, entertainment, education, etc. many of us work in business organization and therefore depend on them for our economic and social welfare.

One can see that our society cannot do without business organization. Over the years studies in management have often concentrated on large organization which are characterized by impersonal relation, formal structures and personal specialization.

The industrial revolution of the 19th century brought about radical change in the production process with a focus on achieving economic of scale and resources efficiency and effectiveness through large scale production. The large scale capital investment involved in large business make this category of business even risks hence, the need to place close supervision and control on their management as a way to protect the stakeholder interest.

However, studies of modern economics have show what it is difficult to achieved balance and sustainable economic growth by depending only on large business organization. Small and large business are known to contribute significantly in building a solid and rural economic base in both developed had been and less developed country.
It has been noted that 75% of business even through there are medium and large scale business which have failed either in the short or long run.

In this case, one would want to ask what factors that lead to these business failures and what are the consequences, effect of this failure to the company; employee and the society at large. Small scale business provide the training ground for business men. Experience and skills develop in running employed in large industrial set up. It has been appreciated that the managerial skill and knowledge needed to run large company cannot be developed overnight those who had experience in small scale business management can easily apply such knowledge and skill to manage bigger enterprise.

Many small scale business are mainly for the demand of their immediate local environment, and that their proprietor are usually conservative and suspicions unwilling to release information about their business for fear of taxation and unwanted competition.

No one aim to start a business which will be a failure, but it has been observed that many businesses have failed to survive, thereby disappointing their proprietor, although they may have contributed to their failure in one way or the other. Small business provide a very strong support for our economic development presently, our economy is dominated by small scale business and even the few existing large scale businesses heavily depend on them in several ways.

1.2 Statement Of The Problem

In recognition of the fact that causes of business failure in Nigeria are high priority to the survival on any business concerned. The impact is very substantial objectives or goals and the end towards which activity is aimed. They represent not only the point of planning but also the end toward which organizing, staffing directing, leading and controlling are aimed.

The rampant folding up both small and large business organization in the recent time have stemmed from mismanagement by owners and inability to perform managerial function. Coupled with lack of managerial skills. Properly train and educated in other to find the cause of business failure in small business enterprise in federal polytechnic environment.

1.3 Objective Of The Study

The main objective of this study is to determine the impact of business failure on economic development of Nigeria. The specific objective include:

  1. To determine the causes of business failure
  2. To find out how business failure affect employment.
  3. To find out how business failure affect payment of taxes to government.
  4. To examine the relationship between business failure and managerial process and skills.

1.4 Research Questions

The research question that guided this study included

  1. What is the relationship between business failure and employment.
  2. How does business failure affect payment of taxes to government.
  3. What is the relationship between business failure and managerial process and skills.

1.5 Research Hypothesis

The following hypothesis were formulated for the study:

Ho 1: Business failure does not have significant relationship with employment of citizens.
HA 1: Business failure has significant relationship with employment of citizens.

Ho 2: Business failure does not have significant relationship with payment of tax to government.
H A 2: Business failure has significant relationship with payment of tax to government.

1.6 Significant Of The Study

This study will serve for upcoming researcher in related field. It we be useful to entrepreneurs of small scale, medium and large scale business, the government and public who may want to engage in any form of business it will enable the entrepreneurs of small business to detect signs and symptoms of failure in good time. It will be a constant reference point for researcher in a similar study.

Finally the study emphasis more on business that have failed and highlight causes and impact, the effect or business failure in Nigeria.

1.7 Scope Of The Study

The research work focused on the impact of business failure on economic development of small business in Nekede.

1.8 Limitation Of The Study

Lack of textbooks and journals it is know fact that the university and polytechnic libraries and other public libraries in Nigeria lack much books journal and other publication which are much needed in project write-ups.

Finance: The cost of interest is high and as the student was unable to afford all the financial requirement of the research study.

Time: The period of time allowed for this project is small or the time required for this study is just not enough. A project of time nature need to be done gradually hence month can be over without getting the necessary fact needed for this study.

1.9 Definitions Of Terms

1). Business:

Any legal or commercial activity which a person engage itself in order to make profit.

2). Business Failure:

Inability of a particular business enterprise to continue to function as “going concerned”.

3). Insolvency (Bankrupt):

Inability of income to cover the expenses of a business.

4). Working Capital:

The actual money used in running the business.

5). Fraud:

Unlawful acquiring and diversion of wealth and income.

6). Operating Cost:

The current expenditure of that business and expenses of the business.

7). Economic Downturn:

Is when things goes wrong in a society.

8). Product Line:

The target of goods and services of business.

9). Revenue:

The total or gross earning of a business.

10). Management:

The process of planning controlling directing, co-coordinating and organizing resources (human and material) by a business organization in order to achieved their business objectives.

11). Profit:

The net income of the business, it is the excess of gross earning over expenses.

12). Economic Depreciation:

A prolong period of recession of significant and prolonged down-turn in the economy. The characteristic of an economic depression include dealing with business activities falling prices, rising unemployment increase investment etc.

Chapter Five

5.0 Summary, Conclusion And Recommendation

5.1 Introduction

This summarized the data collected analyzed. The summary considers the different responses from respondent in the issue of business failure. At the end of the summary there will be which include the divergent factor highlight in the research work.

Recommendation will be made based on the problem identified in the course of this work, the recommendation will also aim in improving and remedying some issues raise in this work.

5.2 Summary Of Finding

From the finding, it is quite clear that many small businesses have not been doing well in federal polytechnic Nekede environment. The business experienced difficulties from government policies, poor infrastructure and lack of managerial skill needed for the effectiveness of that particular small business.

It can also be noted that the immediate consequences to business failure is closure of the business and all its operation, the effect of this closure on the small business owner employee, customer, supplier and government.
Some of the causes of business failure are directly related to the manager skills while others are more related to the environment variable such as financials competitions and customers behaviours.

5.3 Conclusion

It has been concluded that only a few of numerous small business have succeeded, many failed due to the fact that they lack the technical know-how for running a business in that case the major object behind it establishment is not achieved. Despite all these factors that militating the success, there are remedied to that when being applied by management the business can stay for a long time that it can make positive impact to the economy.

5.4 Recommendations

These research offer the following recommendation in order to propagate and maintain the concept of the causes, impact and effect of business failure.

  1. Government should carryout policies which will favour small business. Because in Nigeria today most large business depend on these small business in several ways.
  2. Management of small business should set up an intensive internal control system which will check financial misappropriation and other irregularity that militate the success of business.
  3. Professional advice should be sought regularly beginning at the start up phase and continuing through all the stages of business live.
  4. The small business owner, should be able to carryout market research concerning any business they went to start up in order to determine the risk and uncertainty involved in such business before venturing into it.

Also preparing strategic business plans, is an important step in developing long term view of where the business is going and how it plan to jet there. It is particularly relevant at critical times during small business development phase.

However, entrepreneurs of small business should be ready to take up the necessary actions in order to prevent business failure. Business don’t rarely fail suddenly, failure is gradual which usually involved a down ward spiral.

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Frequently Asked Questions

Why do small businesses fail in Nigeria?

Most of the failure is due to numerous challenges facing the sector which borders of the success factors of small businesses. This paper identified the business success strategies. The paper identified fifteen critical challenges facing small businesses in Nigeria.

Does business environment affect the survival of small scale businesses in Nigeria?

The results showed that the Obasan (2014) examined the impact of business environment on the survival of small scale businesses in Nigeria.

What is the government doing to help small businesses in Nigeria?

Nigerian government to develop policies that might reduce the external business environmental challenges of small businesses. Small Business Critical Issues, and Small Business Sustenance. since independence. Nigerian government through its employment to its citizens. Accordi ng to SMEDAN (2013),

What are the factors that determine business success in Nigeria?

Educational a degree and above educational qualification. Educational important in determining the success of operations. A small business success in Nigeria. The personality, Nigeria.

What are the factors that affect business survival in Nigeria?

The survival of small and medium scale businesses in Nigeria. accessibility and government policy serve as barriers to business growth and survival. Hence, it is recommended planning and predictions on the most significant factors that affects business survival. various operation responsibilities. Due to this

How does business environment affect the failure of small and medium scale enterprises?

Several authors have attributed failure of businesses particularly small and medium scale enterprises to various factors ranging from training of the entrepreneur to exposure and experience while some analysts opined that business environment could impact on small and medium scale enterprises.

What is the current business environment like in Nigeria?

The Nigerian business environment is currently beclouded with various kinds of risks, fear, and uncertainty that culminate into the collapsing of so many businesses and the relocation of several multinational and local firms to other countries.

How does the business environment affect the success of a business?

Nowhere is more real than today business environment which affect t he success or otherwise of any business venture. Several authors have attributed failure of businesses particularly small and medium scale analysts opined that business environment could impact on small and medium scale enterprises.

What is the role of small businesses in Nigeria’s economy?

SMEs are believed to be the engine room for the development of any economy because they form the bulk of business activities in a growing economy like that of Nigeria. Also Read: Best B2B Digital Marketing Strategies That Works In Nigeria.

How do government policies affect business in Nigeria?

In Nigeria, the government at federal, state and local government level creates and implements policies meant to alleviate and regulate commercial activities and most times, these policies actually have a positive effect. For the purpose of this article, we are going to discuss the effect of government policies on business in Nigeria.

How easy is it to do business in Nigeria?

Nigeria is ranked 131 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Nigeria improved to 131 in 2019 from 146 in 2018. source: World Bank

What is the expected ease of doing business in Nigeria in 2020?

Ease of Doing Business in Nigeria is expected to reach 128.00 by the end of 2020, according to Trading Economics global macro models and analysts expectations. In the long-term, the Ease of Doing Business in Nigeria is projected to trend around 133.00 in 2021 and 135.00 in 2022, according to our econometric models.

What are the key factors affecting Nigerian business entrepreneurs?

From our literature review, below are list of some key factors affecting the Nigerian business entrepreneurs. #1. Problem of Inadequate Capital Money is the life wire of every successful business.

Why is it important to identify the five key success factors?

Identifying and understanding the five key success factors of business is the best way to establish a foundation of knowledge about a company and its customers. The 5 Key Success Factors of business is a theory of strategic business management posed by Buck Lawrimore.

What are the critical factors that make a business successful?

Critical Factors That Make a Business Successful. 1 1. The Right Mindset. “A successful business is created before there is a business.”. – Rich Dad. “Getting rich begins with the right mindset, the … 2 2. The Right Business Idea. 3 3. Capital. 4 4. A Great Team. 5 5. The right timing. 

What are the social and cultural aspects of Nigerian business?

These connotations have their own spell on the activities that go on in the Nigerian business environment. These are the social and cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety nets. 

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