THE FAILURE OF SMALL-SCALE BUSINESS IN NIGERIA: CAUSES AND SOLUTIONS (A STUDY OF SELECTED COMPANIES IN ENUGU, STATE)

ABSTRACT

This work is set to investigate the causes of failure in small scale enterprises in Nigeria, with a review to preferring solutions. Every economy starts from simple system to the complex one. At the simple stage of organization, ownership of business is not always distinct from management. In this sense, supervision of the business is in the hand of the owner. When the scope of business organization increases, it becomes very difficult for one person to co-ordinate. At this point, that ownership and management become differentiated. Therefore, it becomes very difficult for the owner to supervise the business enterprise. It will be easier here for management to pursue goals that are different from the objectives set by the owner. Conflicting objectives can result in business failure. In Nigeria it will be difficult to believe that a small-scale business enterprise that is owned and managed by the owner can die just like that. Is it as a result of finance, management inefficiency or government policies? This is what the research work is set to uncover. Based on the findings, recommendations were made towards success of small scale businesses in Nigeria and the researcher believes that the recommendations if adequately used by the government operators of these businesses will definitely facilitate success of small-scale business in selected companies in Enugu State and in selected companies in Enugu State and in Nigeria Generally. Also suggestions for further study were proposed.

TABLE OF CONTENTS

Title Page                                                                                          i

Certification                                                                                                ii

Dedication                                                                                         iii

Acknowledgements                                                                           iv

Abstract                                                                                            v

Table of Contents                                                                              vi

CHAPTER ONE: INTRODUCTION

1.1     Background of the Study                                                                  1

1.2     Statement of the Problem                                                                  3

1.3     Objectives of the Study                                                           4

1.4     Research Questions                                                                 5

1.5     Research Hypothesis                                                               5

1.6     Scope of the Study                                                                  6

1.7     Limitations                                                                              6

          References

CHAPTER TWO:  LITERATURE REVIEW

2.1     Concept of Small-Scale Enterprises                                        9

2.2     Features of Small-Scale Business                                           18

2.3     Relevance of Small-Scale Business in the

Socio-Economic Development of the Country                        19

2.5     Factors Responsible for the Failure of Small-Scale Business  24

2.6     Solutions to the Identified Problems of Small-Business          29

References

CHAPTER THREE: RESEARCH METHODOLOGY

3.1     Introduction                                                                                      33

3.2     Area of Coverage                                                                    33

3.3     Research Design                                                                      33

3.4     Population of Study                                                                33

3.5     Sampling Procedure                                                                34

3.6     Determination of the Sample Size                                           34

3.7     Instrumentation                                                                      35

3.8     Procedure for Data Analysis                                                   36

3.9     Sampling Units                                                                       37

References

CHAPTER FOUR: PRESENTATION ANALYSIS AND INTERPRETATION

4.1     Introduction                                                                                      40

4.2     Questionnaire Analysis  Presentation                                      40

4.3     Testing of Hypotheses                                                             52

4.4     Conclusion                                                                              57

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1     Overall Summary of the Project Work                                              58

5.2     Summary of Findings                                                              59

5.3     Conclusions                                                                                      61

5.4     Recommendations                                                                             62

5.5     Suggestion for Future Research                                                        63

Bibliography

Appendix

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

For many years now, most organizations especially those in Enugu State may have been subjected to incompetence, unprofitability and unproductivity following the inabilities of the managements of such enterprises to determine the causes of the failure of such enterprises.

It was Iwejuo (2002:18) that maintains that it is difficult to define a small business. This is because there is no one definition on what constitute a small business. However, small scale business can be defined by the criteria of project cost capital turnover per employee, asset value and sales volume. Anyanwu (1998:21) “The new industrial policy of Nigeria defined the small scale business as those with total investment of between one hundred thousand naira and two million excluding land but including working capital” Anyanwu reveals that “Small-Scale Industries Scheme” (SSIS) defined small scale business as” one with an initial capital of less than sixty thousand naira and a a work force of fifty working or fewer). Iwu (2004:61) maintains that “there are a lot of constraints to the survival of small scale business in Nigeria. According to him, the constraints include among others the absence or inadequate of credit for working capital; lack of credit for purchase of capital equipment; infrastructure inadequacy and environment; managerial problems, the state of domestic market and the propensity to consume foreign good, adequate information supply and absence of business plan.”

According to him, despite the new initiatives and repeated attempts by both the government and the private sector to promote the activities of small scale enterprise in Nigeria, they continue to be faced with numerous problems, some of which include: policy inconsistency, unstable macro-economic environment, very poor and even non-existent infrastructure, government lawreancracy which increase cost of operation, lack of short term capital, limited and unavailable data and lack of managerial facilities and enterprise support services. It was Nwosu (2003:11) that made constitution as regards the strategic policy measures to solve problem of small scale businesses. He cited the industrial policy in Nigeria (1989:5 – 6) as maintaining that the government should see to it that enabling business environment with all the support services is created not only in urban areas also in rural areas. The administration of the existing macro-credit schemes should be over hauled. There should be a deliberate policy to protect small scale business from extensive completion from foreign firms, among them.

This research work on: The Failure of Small-Scale Business in Nigeria: Its causes and Solutions with a study of selected companies in Enugu State are conducted to prefer solutions by way of recommendations, to the problems of small scale businesses.

STATEMENT OF THE PROBLEM