Business failure among small-scale entrepreneurs

[stompix]

3. OLX

OLX is a classified advertising platform launched in 2012. It allows individuals to buy, sell, and trade used products and services using their phones or the internet. Naspers, a South African media behemoth, owns the startup. However, the startup was shut down in 2018 due to challenging operating conditions.

This one is the wrong example.
First, the story is not true, as it never shut down, what it has done is leave Nigeria as in the physical presence and continue to operate there without a headquarter, just s Binance offers P2P in countries where it never plans to have an office.
Furthermore, you can't really point any of those flaws at the team behind olx, they managed to score big in some European counties, gaining a solid foothold even in southern Asia and South America, so actually none of those:

Poor Customer Care/Support
Customers need proper attention for a business to survive. Without them, your product will fail to exist. When customers are not well treated or appreciated, they often become dissatisfied, leave bad reviews and patronize others.

Mismanagement of Funds
 Inadequate Financing
 Poor Business Management
 No Planning

Olx is still up and running and has a 1 billion revenue, not even going into the fact that it wasn't a start-up anymore when it arrived in Nigeria if the dates are correct it was already 6 years old and with enough money and experience. A pulls out from some country or selling your business is not really a measure of the overall health of the said company.

[Dunamisx]

Inadequate Financing

Let me talk about this point as I don't accept such as one reason why a small scale business should fail, we can consider what we often referred to as business growth as a process whereby an enterprise proceed from one developmental stage to another and just as we know that many businesses started from being small to expand to something big in the later future and we've got some good examples of some businesses that has little start up capital and remain committed to it and they eventually got advanced and the business turn big while some have started with huge amount of capital but ended in bankruptcy within the shortest period, so it's a responsibility of funds utilization in business expansion and its management, start small and grow big is better than starting big and ending up closed down.

[dezoel]

Some of them are not from Nigeria. Efritin's description said it's from Swedish and OLX is from Singapore if I am not mistaken. Those businesses are also not small but a true small business won't be featured like that. I think OLX didn't fail but they only rebranded their website. It was now called carousel when I visited them last time.

I remember I used this site before for selling some of my stuffs and got a good offers from different people. It was a fun experience though. Easy taxi may have failed but there are now uber and grab which are more popular. Something tells me that competition is also one of the reasons on why a business can fail.

[Flexystar]

Just wow for this post! I am very much impressed because there are some facts which are actually making the failures amongst startups. I have heard/read almost all of the examples given in the OP and yes I have seen them failing. OLX is closely related to me as I have used it multiple times. The website is working till date but it's presence is next to zero. It's like surviving on it's final breaths these days. However one thing is sure, there are bigger players in the market as compared to them with bigger budget to spend on management and marketing etc. It's beautifully written article and every startup must note down them to save themselves from failing.

[Hydrogen]

More than 50% of small businesses failing within 5 years is a commonly touted statistic.

I think most entrepreneurs make a mistake of thinking that starting a business has to be a large mega enterprise. Its much better to start small. Buying and selling items on local second markets. Having some type of profitable side hustle. It could be as low key as cleaning parking lots. Or cutting lawns. Starting a business is better to not be something people pour all of their time and life savings into. It should be a casual thing and natural progression that is done on the side. If incorporating, large expenses and other extras are tacked on. I think those extra and unnecessary steps greatly increase chances of failure.

A good educational system would give students real life experience owning and operating a small business. That is something that is very necessary and needed in this day and age.

[South Park]

~snip~

You forgot to mention that harsh government policies can make a small business go under. A typical example which I remember clearly is Gokada. Gokada is a tech startup based in Lagos, Nigeria. The startup launched as a ride hailing company in 2017. And in 2020 the Government of Lagos State in Nigeria stopped the Gokada from working citing insecurity. A claim which made no sense. Even though, the company has now diversified into Logistics and Food Delivery, their ride hailing plan was the best because the company came with a very good initiative, where you can track their bikes to know where they are and where they are going. They are well registered. You can even track the bike from your phone, but the government cancelled it without a good explanation.

This is very common, governments supposedly want to encourage foreign and domestic investment but in reality they do the opposite, anyone that has tried to create a business before know how difficult and costly is to get all the paperwork done, and then once you begin to operate you have to deal with thousands of regulations and taxes, and before you know it your dream business becomes nothing more than a nightmare from which you wish to escape every single day.

[el kaka22]

I agree that there is a good reason why we can't really understand what could happen for us to fail, but we need to realize one huge and important thing, which is debt. Most of the companies that you see end up working towards the fine line between bankrupting and success, because they spend everything they get to grow, and that causes companies to be always in trouble, one big mistake and you are done because you can't pay for that mistake without getting paid and if it's a mistake you can't get paid.

Even Tesla and Amazon had this, they had plenty of times when it looked like they would fail, and instead they ended up working out but it was very close for both of them at times.

[BIT-BENDER]

I don't know many of those Businesses you made mention but I am well aware of OLX and what the brand is all about and I would let you know that they weren't really a small scale business.
OLX came out with so much ambition, thought and financial backing and you could see that in the amount of resources they put into their marketing.
They hit the ground running for some few years and I personally know some people that made use of them. And just like many businesses that has fallen even with the right financial power, it has to do with management.

[Furious 7]

Inadequate Financing

Let me talk about this point as I don't accept such as one reason why a small scale business should fail, we can consider what we often referred to as business growth as a process whereby an enterprise proceed from one developmental stage to another and just as we know that many businesses started from being small to expand to something big in the later future and we've got some good examples of some businesses that has little start up capital and remain committed to it and they eventually got advanced and the business turn big while some have started with huge amount of capital but ended in bankruptcy within the shortest period, so it's a responsibility of funds utilization in business expansion and its management, start small and grow big is better than starting big and ending up closed down.

In this case it may be a target that we need to consider. Because in business, especially for small businesses, it is clear that we do not have to set high targets to fit our budget.
Actually, in this case insufficient capital can occur for several reasons and indeed for a small business, it will be more or less affected by capital, even though what you say is starting from small to big, but in this case, adequate money management is needed so that things like capital do not happen which is not adequate.

[milewilda]

I don't know many of those Businesses you made mention but I am well aware of OLX and what the brand is all about and I would let you know that they weren't really a small scale business.
OLX came out with so much ambition, thought and financial backing and you could see that in the amount of resources they put into their marketing.
They hit the ground running for some few years and I personally know some people that made use of them. And just like many businesses that has fallen even with the right financial power, it has to do with management.

It was sulit.com.ph and it turns out to be olx which i do know that lots had been changed and lots had left and using up the service or platform which i wasnt aware that they had gone down.
When it comes to business then there's no assurance that you would really be successful, yes its not bad to make out some changes for the good and trying out to expand but
it wouldnt ensure that it would really be that effective but well its really something the risk where these business owners need to test or try on for the better
but it did  really just failed and it is one of the risk.

[Sanitough]

Businesses in poor countries tend to face greater challenges and obstacles than those in developed countries. This includes factors such as a lack of access to capital, limited infrastructure, corruption, and a lack of skilled workers. As a result, businesses in poor countries often have a lower success rate than those in developed countries.

I see as a major difficult in developing countries the fact people don't have much money to spare, so you as a business owner have a very limited customers' base to acquire your services and products. People are too worried about survival that they will only have access to basic goods and in a limited scale. Furthermore, even though there aren't customers for everyone, the concurrency is the same or even more expressive than in developed countries. There are too many sellers for too few buyers. This situation has a very negative impact on individual businessmen and many consequently have to close the doors at some point.

The reason why businesses whether big or small should always have sufficient capital so that the production will always be consistent, and if ever there are sales decline, there are still good amount left that will cover the shortage. Also, in building businesses, it’s also important to consider the population of the consumers and specifically their demands too so that you will create quality products that will be consumed by a large amount of consumers.

[Hypnosis00]

CONCLUSION
Establishing a strong and firm business doesn't come easy. It involves patient, time, passion and hardworking. Young entrepreneurs should try to learn from failed businesses and guide themselves with successful businesses.

It is all connected to each other, once one of them will fail, the business will fail also. That is why we should know which part is weak in order to take immediate action to resolve it otherwise. Those companies that you have mentioned are just a few of having suffered huge losses due to mismanagement and lack of team participation. It was indeed important that each member of the team will understand each other, teamwork, and their is one goal and that is to success, not only for themselves but for the whole company.

[TimeTeller]

CONCLUSION
Establishing a strong and firm business doesn't come easy. It involves patient, time, passion and hardworking. Young entrepreneurs should try to learn from failed businesses and guide themselves with successful businesses.

It is all connected to each other, once one of them will fail, the business will fail also. That is why we should know which part is weak in order to take immediate action to resolve it otherwise. Those companies that you have mentioned are just a few of having suffered huge losses due to mismanagement and lack of team participation. It was indeed important that each member of the team will understand each other, teamwork, and their is one goal and that is to success, not only for themselves but for the whole company.

Also, it doesn't mean that your first attempt in business will always succeed.
It may take many failed attempts before you can really see the fruit of your hard work.
Also, if you have other members in the team, it would take their effort to accomplish your objectives.
But most young entrepreneurs easily give up if they encounter troubles building their business.

[Viscore]

Businesses in poor countries tend to face greater challenges and obstacles than those in developed countries. This includes factors such as a lack of access to capital, limited infrastructure, corruption, and a lack of skilled workers. As a result, businesses in poor countries often have a lower success rate than those in developed countries.

I see as a major difficult in developing countries the fact people don't have much money to spare, so you as a business owner have a very limited customers' base to acquire your services and products. People are too worried about survival that they will only have access to basic goods and in a limited scale. Furthermore, even though there aren't customers for everyone, the concurrency is the same or even more expressive than in developed countries. There are too many sellers for too few buyers. This situation has a very negative impact on individual businessmen and many consequently have to close the doors at some point.

This is the reason why as a business owner, you should always search for the best outlet where to build your business, otherwise your business won't work not only because of few customers, but also the products you are selling are not the ones they mostly wanted. In search for the demands of the customers, you should have a thorough research first and start a survey because that will determine the success of your business.

[adzino]

Most of the companies that you have stated seems to be an international company or companies formed in other countries trying to expand in your country. I wouldn't blame them if they had to shut operations. Like you have said they shut down due to "operational difficulties". I guess it was some issues with the government or the local laws that has changed or due to some changes their profits are no longer enough to run their business in your country.

I wouldn't call them "small-scale entrepreneurs" if they have franchises and expanded to other other countries.

[Smack That Ace]

It is true that maintaining a business isn't easy and that's why a business that's already seeing its peak should maintain its consistency. That's all that matters in most businesses because even if you're the best right now.

But, you're not consistent in what you do like marketing, customer support and innovation then you're going to be the last someday if you're not able to maintain that. Especially for these businesses that requires continuous upgrade and innovation, they'll be left behind if they don't accept that fact.

Nokia is a testament to that, a corporation that has always been a leader in phones has been killed by competitors because of its refusal to innovate. In fact, maintaining a business is not simple, it includes hundreds of different factors, not only capital management, planning, poor customer care support...Nowadays, every field will have extremely fierce competition, so opening a company or business is simple but maintaining it somehow is the problem.

There are many people who always say that there is no fairness in business when the director is paid dozens of times more than the workers. But we can see that to run and find a way to survive for a business is an extremely difficult thing, not everyone has the courage to do it.

[ethereumhunter]

Perhaps of the many young entrepreneurs, only a few can really successfully run their businesses. They are the ones who can learn from anywhere to gain more knowledge and also often try trial and error in business so they can find the right formula for them. Each entrepreneur must have their own formula so that their business can run well and if they get a formula from someone else on how to run their business, they have to adapt it to their circumstances. It will be better because they can find what works for them and help them achieve success.

[TravelMug]

Perhaps of the many young entrepreneurs, only a few can really successfully run their businesses. They are the ones who can learn from anywhere to gain more knowledge and also often try trial and error in business so they can find the right formula for them. Each entrepreneur must have their own formula so that their business can run well and if they get a formula from someone else on how to run their business, they have to adapt it to their circumstances. It will be better because they can find what works for them and help them achieve success.

Yes, each one of us who venture to become a entrepreneurship, might not succeed in the long run. There are a lot of factors and sacrifice that we need to do and there is no formula that really fits everyone to be successful. So it will be a trial and error in the initial and this is where it going to make or break new and young businessman. Hopefully, they will adapt, and only handful can achieved success because it is very difficult if you don't have the expertise or no one is mentoring you. Going to be a struggle, but for those who succeed, it will be worth.

[lovesmayfamilis]

Nice article with lot of meaningful lessons.. The biggest losers are those who don't try anything for fear of losing.. Every loss is a lesson learnt.

I want to argue. It is better to weigh everything and understand that a person is not yet ready for entrepreneurship than to take risks, implying a loss in advance. What are their failures if they have not lost anything? Another thing is when a person is dominated by excessive self-confidence, without a clear understanding of all the risks.
It's not scary to be confident, but it's scary when people are overconfident.

[lienfaye]

Nokia is a testament to that, a corporation that has always been a leader in phones has been killed by competitors because of its refusal to innovate.

Thats true. Nokia is well recognized globally but failed to continue to dominate due to few reasons resulting to its downfall.

I also have have a business that is running for years now. The profit is unstable but we managed to survive even there are many new competitors sprouting in our place. It might because we are already well known here and had a loyal customers who gained their trust that's why they keep coming back. We also dont stop marketing our business and giving promotions. It takes guts to be an entrepreneur since you'll never know the outcome but if you are determine to succeed then you have to do the best that you can. If you're too complacent and not competitive there's a high chance for other competitors to take over.