Top Challenges of Small Business in Nigeria and Solutions

Challenges of small business in Nigeria

One of the things that will make you successful in any business is knowing the pitfalls and how to avoid them. Nigeria being among the business hub countries in Africa have various challenges that affects SMEs. Despite the contribution of small businesses to the nation’s economy, yet, they have some hassles to tackle. One of the things that I admire about most small business owners in the country is that they are not giving up despite these challenges.

The problems of Small Business owners in Nigeria can be classified based on the source. The sources of the various challenges are; Government Policies, Problems arising from their locations or surroundings, and Ignorance on the part of the entrepreneurs. Some government policies which I will discuss in details later here do not pave way for the growth and expansion of SMEs. On the side of the entrepreneurs, they seems to be adamant on the various innovations and strategies that could elevate them to another level. All hope is not lost as a small business owner because you can conquer some of these challenges if you are determined to do so.

Personally, when I started my first bead making business as a small entrepreneur, my first business attempt failed due to lack of awareness of some strategies that could have been of help to me. As at that time, I would have taken loan to support my business instead of relying on my small capital, not meeting up with the demands of my customers made me to stop that business. Today, I have learnt my lesson and I am happy that I corrected this mistake in my second small business which has recorded a great growth.

Challenges of Small Business in Nigeria and Solutions

On the part of the Government;

1. Lack of Adequate Capital

I know why I’m starting with this point because a lot of small businesses in the country have been hampered from expanding as a result of this. Not every business thrives well with small capital. It can be initiated with a small capital but its expansion will require more capital. One of the reasons why so many entrepreneurs encounters this issue is that most started with their little savings while others borrowed from family and friends.

Government loans being provided in the country is not accessible to many due to the terms and conditions attached to it which many may not be able to meet up with. Some of these loans and grants are not evenly distributed to every part of the country and illiteracy on the part of some small business owners may make them not to be aware of such loans. For instance, some people living in the rural areas may not be informed about some opportunities unlike people who are living in Urban areas where they are well informed. They online processing of such loans equally hamper some uneducated entrepreneurs from having access to it.


Individuals trying to venture into business and wants that business to grow should be financially ready before starting up such business. Having a good business plan and survey will equip such a person to know the necessary amount needed to start up. Starting up business with small capital will make the business not to stand the taste of time.

Government should also try to make loans accessible and reachable to SMEs in the country. The availability of such loans should be evenly distributed. Various channels should be used to make people who are in need of such loans aware of it whether educated or not, in the urban or in the rural areas. The strict terms and conditions attached to getting such loans and grants should equally be addressed.

2. Lack of Basic Infrastructure and Amenities

It is not every business that can survive the absence of some basic infrastructure and amenities. For instance; An entrepreneur who is into food processing business that requires regular power supply may not be able to survive in that business if there is no electricity in his or her vicinity. One of the things that will happen when he or she decides to supply power to his her business is that the cost of his products and services will be high and this may scare people away from such a person’s business. Such a business owner will not also be able to meet up with the price competitiveness of others producing similar products with him or her who have constant power supply.

Some of the basic infrastructure and amenities required by small business owners in Nigeria are; Power Supply, Good Road, Railways, Good water supply and others.


The government should ensure that there is equal distribution of resources in the country. Thus, those living in both the rural and urban areas should have all these infrastructures needed for their business to thrive. Knowing fully well that everybody will not be at the same place to run their various businesses. There is also a great need to repair existing infrastructures that may have worn out.

3. Inadequate Security

Some parts of the country are under frequent attacks by thugs and hoodlums leaving a lot of small business owners in an indecisive state. A lot of goods have been spoilt by such attacks. Small Business owners in such areas finds it difficult to open their businesses due to the fear of the unknown. In most cases, you will discover that there is an inadequate or inefficient security operating systems in such areas.


The government should make the country a very safe place for business entrepreneurs. Issues relating to ethnic conflicts, bandits attacks and other sources of unrest in different parts of the country should be properly addressed. This will provide a friendly environment for Small Business to thrive. This will also inturn add to the country’s economic growth.

4. Inefficient Enlightenment Programs for Small Business Owners

Any nation that want to attain an economic stability should not neglect the small businesses in that area. This is due to the fact that most thriving big businesses started as a small business. Therefore, a small business today may become a big business tomorrow. Government should organize various enlightenment programs for small business owners. Small business owners should also make themselves available for such programs.

5. Fight Against Illiteracy

Some small business owners are not properly educated. Some are from some of the educationally backward areas in the country. Most of them are school dropouts or those who have not entered the four walls of the classroom at all. This could be the ignorance on the part of their parents or guardians. Though, such people may be able to start up and be managing their small businesses, the further ideas needed for its expansion may not be there. This is also among the major challenges of small business in Nigeria.


The Government should make a policy which makes education compulsory within a certain age. Parents and guardians should make sure that their children and wards acquires the needed foundation education before any other thing.

On the part of the Small Business Owner;

6. Improper Planning

Just like the saying goes “If you fail to plan, you plan to fail.” This is among the top challenges facing small business owners in Nigeria. Most of them jump into some business without proper planning and knowledge of the business. Some business requires good survey and making of the right estimates before taking off.


Small Business owners should carry out a proper survey of the business that they want to go into. Costs, location and other surveys needed for the business to thrive should be put into consideration.

7. Being Adamant to innovations

There are a lot of technological advancement and other innovations going on in the business world. Most of these innovations and advancements are aimed at making things better for small business owners. This will inturn help to scale up in their business. A lot of small business owners in Nigeria are still glued to their old ways of doing things. For instance, there are several production machines which are being innovated to enhance productivity level. When a small business owner sticks to his or her manual way of producing things, his or her productivity level will remain stagnant.


Small Business owners should be able to embrace various technological and any other form of innovation that will enhance their growth. They should also get in touch with others who are making it big in their lines of business to know what they need to implement inorder to grow.

8. Lack of proper record keeping

Some small business owners in Nigeria do not have proper records. This results to their inability to ascertain when they are gaining or loosing in their business. As long as they have money for their next transaction, they will think that everything is okay. Such a business mentality does not give room for growth.


Small Business owners should keep record of their daily transactions. Such record includes; cost of purchases, number of items sold, profit made and other miscellaneous expenses.

9. Inadequate Workforce

When there is enough and adequate workforce, the level of productivity will increase. The lack of adequate workforce is among the challenges facing small business in Nigeria. At times, you will see the founders of such businesses undertaking all the tasks by themselves.


There should be adequate workforce to give room for greater productivity. Thus, division of labour should be practiced.

10. Lack of Continuity

Some small businesses in Nigeria ends with their owners death. Others ends when their owners switching to another thing. Most times, illnesses can equally make small business owners to stop their businesses. This happens because of lack of transmission of knowledge. Some children and family members of such business owners may not be interested or were not given the opportunity to have the knowledge of such business.


Small Business owners should be able to transmit their business knowledge and secrets to their friends and family members to enable continuity.

Now that you are aware of some of the challenges of small businesses in Nigeria, know how to run your own business and ensures its growth and continuity. Don’t lose hope if it is not booming yet. Explore, research and be consistent in your business. The government should also play their own roles very well to promote the growth of small businesses in the country.

Also Read; 10 Best Small Businesses to Start in Nigeria

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