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.




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.


There are a lot of problems which this research work seeks to address. It is in agreement with certain experiences that the inability of the management of the small scale businesses to determine causes of failure may have led to unproductively. Also it is perceived that the inability of the management to develop policies for solving the problem of small scale businesses may have reduced the profitability of such enterprises.

Indeed, nothing weakens organization more than when management develops poor attitude to personnel training. Experiences show that the poor attitude of the government to creation of conducive environments for business may have reduced the chances of survival of small scale enterprises.

The inability of works to implement managements policies just as experiences have shown, may have led to unproductively. Again poor financial management strategies may have aggravated the situation just as the perceived inability of management to employ competent personnel may have led to unproductivity.

Above all, the poor marketing strategies of most organizations just as experience can show may not have helped matters. It is in view of this problem that this research work is conducted.


This work is conducted to achieve the following goals or objective

  • To determine the cause of failure of small scale businesses.
  • To ensure the development of policies for combating collapse of small-scale businesses.
  • To develop the level of training of works in small scale businesses.
  • To ensure that government creates conducive environment for businesses.
  • To determine the reasons why workers do not implement management policies in small scale business.
  • To evaluate the finance options of small scale businesses.
  • To ensure that competent hands are employed for business activities.
  • To determine the marketing strategies of businesses.
  • To make recommendation for future researches.


The research questions stated earlier in the first chapter are: The following are the research questions for this work:

  • Does management determine the causes of the failure of small scale business in Nigeria?
  • Does management develop policies for solving the problems of small scale businesses in Nigeria?
  • Does the government provide conducive environment for business?
  • Do workers implement management’s policies?
  • Does management of enterprises have financial management strategies?
  • Does management employ competent hands for business activities?
  • What are the marketing strategies of your business?

The hypotheses stated earlier in this research work are:

HOTrade   union   does   not   contribute   to   corporate   goal achievement.

HI:    Trade union contrite to corporate goal achievement.

HO:    Management does not provide trade union with their demand.

HIManagement provides trade union with their demands.


It is the desire of the researcher to investigate into the causes and solutions to the failure of small scale businesses in Nigeria as it affects all organization. But/due to time and financial constraints, the researcher has chosen the Nourisher Bakery, Tasco investment, Ozo Ekwem Furniture, Nelo Tailors, Francis foods and Nucon Ventures as case study firms.

It can not also be said that it is only the factors or points given in this work that will cause the failure of small scale businesses in Nigeria.


A lot of constraints were encountered in the course of carrying out this research work. The researcher lacked sufficient to face the challenges of this research work.

It was not easy for the researcher to combine- field work and course work hence the researcher sacrificed of lectures at the altar of field work.

Indeed, the researcher found it difficult to collect certain information from the management staff of the organization and it was quite uneasy to educate the respondents on the best ways of filling the questionnaires.


Anyanwu, S. E. (1998), Introduction to Business Management. Owerri: Canun Publication.

Iwejuo, T. D. (2002), Aspects of Entrepreneurial Development. Enugu: Vongasen Publications.

Iwu, A. S. (2004), Small Business Management in Nigeria. Aba: Chudy Publication.

Njoku, P. E. (1999), Business Development and Strategic Management. Owerri. Stanley – George Publication. Nwosu, P. P. (2003), Aspect of Business Administration. Jos: Ahmed Publications.