For many Nigerian entrepreneurs, launching a business is only the beginning. The greater challenge is staying in business.
Inside a modest medicine shop along the Lagos-Ibadan Expressway in Ibafo, Ogun State, one retailer offers a simple but hard-earned lesson from years of experience: uncontrolled credit can destroy a business.
“Allowing too much credit is one of the biggest business-killing agents,” he says, explaining how customers who delay payments can quietly drain a company’s working capital until daily operations become unsustainable.
His experience reflects a wider challenge facing Nigeria’s Micro, Small and Medium Enterprises (MSMEs), which remain the backbone of the country’s economy. According to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), MSMEs account for more than 96% of businesses and provide the overwhelming majority of jobs in the country. Yet business survival remains a persistent challenge.
The Financial Reporting Council of Nigeria (FRC) has also warned that a significant proportion of small businesses fail within their first few years, citing weak governance, poor financial management and inadequate record keeping as major causes.
For many entrepreneurs, the problem begins with cash flow rather than profitability. While sales may appear strong, businesses often struggle when customers delay payment while suppliers expect immediate settlement. This mismatch leaves many firms without enough liquidity to replenish inventory, pay workers or meet operating expenses.
The Ibafo retailer recalls how poor debt management nearly forced him to close his shop.
“Now, even if it’s a very small purchase, customers pay before they leave,” he says, describing a policy he adopted after suffering repeated losses from unpaid debts.
Financial experts say another common mistake is mixing personal and business finances. Many owners withdraw money from business accounts to fund household expenses without proper documentation, gradually eroding the capital needed for growth.
Chartered accountants and business advisers consistently recommend maintaining separate business accounts, documenting owner contributions as equity or loans, and preparing accurate financial records to improve accountability and strengthen access to financing.
Technology is also becoming an important survival tool. Digital bookkeeping, inventory management and payment platforms allow entrepreneurs to monitor sales, track customer debts, manage stock levels and generate financial reports that can support loan applications and business expansion.
Recognising these challenges, the FRC introduced the SME Corporate Governance Guidelines 2024, providing a practical framework to help small businesses improve governance, transparency and long-term sustainability.
Meanwhile, the Bank of Industry’s Business Clinic initiative offers advisory services covering bookkeeping, financial planning, taxation, digital adoption and inventory management. SMEDAN has also expanded entrepreneurship training and financing programmes aimed at improving business resilience and competitiveness.
Experts say the difference between businesses that survive and those that fail often comes down to discipline rather than ambition. Clear credit policies, sound financial records, effective governance and the separation of personal and business finances create the foundation for sustainable growth.
For Nigeria’s millions of entrepreneurs navigating inflation, foreign exchange volatility and rising operating costs, the message is increasingly clear: lasting success depends less on how a business starts than on how consistently it is managed.
