Poor planning, inadequate financial management, weak documentation and failure to conduct proper market analysis are among the factors responsible for the inability of many Nigerian small businesses to survive beyond their formative years.

The Head, Department of Business, Entrepreneurship and Executive Education, University of Ibadan School of Business (UISB), Dr [Mrs]. Siyanbola Omitoyin, stated this in an interview with The Guardian.

Omitoyin said while a viable business idea was important, entrepreneurs must understand the requirements for turning such ideas into sustainable ventures before committing their resources.

She identified poor planning and documentation, weak financial management, inappropriate staffing, unfavourable government policies and inadequate understanding of the business environment as major threats to business survival.

According to her, many start-ups are established around ideas without adequate consideration of what would be required to sustain them.

“A number of start-ups in the first five years rise and die because there are so many things that are not taken into consideration.

“Most start-ups come out of just an idea. ‘I have an idea, and I want to execute my idea.’ You have not taken the time to think about what is required to make the idea survive and become sustainable,” she said.

The don stressed the need for entrepreneurs to develop comprehensive business plans covering marketing, financial, organisational and technical aspects of their operations.

She also emphasised the importance of human capital, warning that assigning people to positions for which they lacked the requisite competence could undermine business performance.

Omitoyin said entrepreneurs must also examine their market and operating environment before commencing operations, noting that political developments, insecurity, legal requirements and prevailing economic conditions could significantly affect businesses.

“Business is started without looking at the legal environment and things like that. By the time they start off and all these things start coming in, it becomes very choking, and, at the end of the day, they are not able to survive,” she said.

The scholar identified poor capital management as another major challenge, noting that some entrepreneurs commit almost all their available resources to starting a business without making provision for unforeseen circumstances.

However, Omitoyin cautioned small and medium-sized enterprises (SMEs) regarding lack of credit as their only challenge, saying businesses with viable and well-structured ideas could attract funding from different sources.

She urged entrepreneurs to seek mentorship and explore funding options, including equity partnerships, angel investors, bootstrapping, crowdfunding, and support from family and friends.

The don also urged businesses operating in similar sectors to form partnerships and clusters to reduce operating costs. “Entrepreneurs need to work together, especially those who are in similar businesses, so that they can spread their overhead costs,” she said.

Omitoyin also called on entrepreneurs to embrace delayed gratification, noting that businesses often require sustained investment and patience before becoming profitable.

She said the UISB was addressing some of the challenges through practical entrepreneurship training designed to expose students to the realities of starting, managing and scaling businesses.