Successful Strategies

By Ayodeji Akinso, Walden University

Successful Strategies for the Survival of Business Owners in Nigeria.

Abstract

Small businesses remain the engine of growth in an economy such as Nigeria’s economy.

The objective of this study was to explore the high failure rate of small businesses during the first 5 years of business activities in Nigeria. The research design for this study was a multiple case study. The targeted population was small-scale entrepreneurs from 3 facilities in the soybean processing industries in Ibadan, Nigeria. The cognitive theory was the conceptual framework for the study. The data collection process was semi structured in-person interviews of 3 successful soy processing business owners. The data analysis process was conducted following the Rowley 4-step process and used the within-methodical triangulation that resulted in thematic answers to the central research question. The process of analysis included: grouping data, regrouping data based on themes, evaluating the information, and recognizing emergent themes. The five themes that emerged from the data were (a) education and training, (b) effective strategies for business profitability, (c) flexible financial strategy, (d) market positioning and, (e) efficient infrastructure. The data were cleaned and transcribed using software to code the features to identify the similarities of data used in the study. From the findings of this study, the implications for positive social change include the possibility to increase the survival rates of small businesses during early years of operation, reduce unemployment, increase tax receipts for the government, and catalyze economic activities, reducing poverty levels.

Section 1:

Foundation of the Study

Eighty percent of small and medium scale entrepreneurs (SMEs) in Nigeria exit business activities in less than 5 years (Small and Medium Enterprises DevelopmentAgency of Nigeria [SMEDAN], 2015). The national policy document on micro, small,and medium enterprises (MSMEs) revealed that the labor force in Nigeria has 84% in the MSMEs category (SMEDAN, 2015). Hofferbeth (2017) posited there are issues and challenges that Nigeria faces in bringing about a robust entrepreneurial environment.

Hofferberth touched on matters like poor access to credit facilities, inconsistent government policies, inadequate infrastructural facilities, unstable political atmosphere, security problems, and the activity itself among others. The issues and challenges identified might be responsible for the reason why SMEs are not doing well in Nigeria.

Change and innovation can only come when entrepreneurs embrace new technological processes. Enterprise remains the engine of growth in developing economies and will continue to employ the major percentage of the people (Ebitu, Glory, & Alfred, 2016).

There was the need for successful survival strategies for business owners in Nigeria to survive the first 5 years of business activities.

 

Background of the Problem

The purpose of this qualitative multiple case study was to explore strategies that some small Nigerian business owners use to survive their first 5 years. This problem deserved new research since some small Nigerian business owners lack strategies to survive their first 5 years. I used the success stories of business owners that survived thisterrain in their first 5 years, and developed them into a model that new entrants could use to survive the early years.

Previous studies justified why small businesses remain the engine of growth in an economy like Nigeria (Okon & Edet, 2016). Successful small businesses would facilitate the employment chain in the economy, and provide jobs for employees and the business owners, inputs for other firms, tax receipts for the government, products and services for the customers, and inputs for other concerns.

Problem Statement

Small businesses remain the engine of growth in an economy like Nigeria (Okon & Edet, 2016). SMEDAN reported that 80% of growing business owners in Nigeria do not survive their first 5 years in business (Agwu & Emeti, 2014). The general business problem was the high failure of Nigerian SMEs. The specific business problem was that some small Nigerian business owners lack strategies to survive their first 5 years of business activities.

Purpose Statement

The purpose of this qualitative multiple case study was to explore strategies that small Nigerian business owners use to survive their first 5 years of business activities.

The targeted population was small-scale entrepreneurs from three facilities in the soybeanprocessing industries in Ibadan, Nigeria. The population was appropriate for this study since their business survived their first 5 years of operation. The social change from this study might include improved survival rate of new entrants into the industry, reducedunemployment, increased tax receipts for the government, and accelerated growth of theNigerian economy.

 

Nature of the Study

For this study, the research methodology was qualitative. Qualitative researchers typically start with what and how questions to explain and understand the reasons behind phenomena (Subramony & Pugh, 2015). The qualitative method was suitable for this research to assist, identify, and explore the human behavior with less emphasis on numerical data as posited by Subramony and Pugh (2015). I did not consider the quantitative and the mixed methods approaches as appropriate because their use requires examining relationships and differences among variables. In the quantitative method, the researcher makes use of statistical analyses and numerical data, and the same examination and analysis apply to the mixed method (Loh et al., 2015). The qualitative approach was an appropriate choice for this study because I interviewed business owners to explore strategies to survive their first 5 years.

The research design for this study was a multiple case study. Case study researchers collect information from multiple study units, and use multiple types of data to study a phenomenon in a normal context (Adekambi, Ingenbleek, & van Trijp, 2015; Reddy, Xie & Huang, 2016). The other research designs that support qualitative studies are, phenomenological, ethnographical, and narrative (Yin, 2014). These designs were not appropriate for this study. The phenomenological design was useful only if the research explored the meanings of participants’ lived experiences to identify common themes (Yin, 2014). The ethnography design could be relevant for researchers seeking tostudy groups’ cultures and behaviors, while narrative researchers would explore phenomena through the stories of individuals (Yin, 2014). Contrary to these other designs, the most appropriate design was the multiple case study since it was expected to enable me to develop a description and understanding of subject phenomenon to improve business practices and outcomes (Mohlameane & Ruxwana, 2014).

 

Research Question

What strategies do small Nigerian business owners use to survive their first 5 years of business activities?

Interview Questions

The interview questions were open-ended and derived from the primary research question.

  1. How would you describe your educational background and that of your leadership team, including any training to develop and implement the strategies in the first 5 years?
  2. What strategies were responsible for your business profitability in the first 5 years?
  3. What business practices did you employ to support your business strategies for achieving profitability for the first 5 years?
  4. What were the challenges and risks that you had in implementing the business strategies in the first 5 years?
  5. How were you able to mitigate these challenges and risks?
  6. What role, if any, did professional advisers play to support your development and implementation of strategies for business survival in the first 5 years?
  7. What other information would you like to share about the strategies you employed in becoming a successful business owner?

Conceptual Framework

The cognitive theory is a theory developed by Piaget, who first did the study of cognitive development in 1936 (Lizardo, 2004; Piaget, 1964). Users of the theory seek to illustrate the development and nature of human intelligence (Piaget, 1964). The initial domain for the study was on children’s development and the concept was later expanded to address business endeavors (Lizardo, 2004). The fundamental focus of my study was the identification and exploration of the strategies Nigerian small business owners successfully use to address challenges and risks. The conversational model provided a lens for understanding the findings. I used themes based on entrepreneurial thinking and behavior. The theory was related to the study as it provided a potential means for understanding the development and deployment of successful strategies for sustaining soybean processing companies in Ibadan, Nigeria.

Operational Definitions

I used the following terms in the study and present their definitions as revealed below.

Business owner: Business owner is used to describe the person who owns the business (Adisa, Abdulraheem, & Mordi, 2014).

Entrepreneurship: Entrepreneurship is the capacity and readiness to organize, manage business venture with the risks, with a goal to make a profit (Korsgaard, Anderson, & Gaddefors, 2016).

Naira: Naira is the currency of Nigeria that currently exchanges at 360 naira to 1 dollar (Central Bank of Nigeria, 2017).

Small business: Small business is the description of a firm with assets more than 5million naira but less than 50 million naira, and a labor force fewer than 50 but exceeds 10 (SMEDAN, 2015).

SMEDAN: SMEDAN is an agency of Nigerian government set up to facilitate the growth of micro, small, and medium enterprises (Edoho, 2016).

 

Assumptions, Limitations, and Delimitations

The assumptions, limitations, and delimitations help to shape the originality of a study (Marshall &Rossman, 2016). They affect the references that a researcher may draw from a review. There is often confusion regarding what researchers consider as assumptions, limitations, and delimitations.

Assumptions

Assumptions are what a researcher accepts to be true, or as definite to happen, without proof (Niven & Boorman, 2016). Annabi and Wilkins (2016) suggested that a study should avoid bias. Assumptions are critical to the study, and do not create bias. The assumptions for this study were that a qualitative methodology researcher could explore the successful strategies for the survival of small businesses in Nigeria, and that participants for the study would provide adequate responses to the interview questions.

Limitations

Limitations are impediments to a research study, and they are potential vulnerabilities that may arise from available data including the sample size (Coffie, 2013). Marshall and Rossman (2016) suggested that the limitations of a study are factors that are not within control, and include influences, and policy restraints, amidst other forms of weaknesses. There might be instances where limitations are uncontrollable. For a qualitative study, and in the course of collecting data, there might be participants’ biases where I failed to appropriately frame interview questions that do not allow some participants to volunteer full information.

Delimitations

Delimitations are choices that a researcher makes and must mention. They represent the boundaries set for the study (Qiu & Gullett, 2017). The delimitations in the study included the 5-year survival restriction in business activities and the exclusive selection of only small business owners, which excluded other categories of entrepreneurs. The study participants were soybeans processing business owners from

Ibadan in the southwest part of Nigeria. The study did not include businesses in other sectors of the economy like oil, construction, banking, and finance.

 

Significance of the Study

The research study is of potential value to businesses because start up business owners could explore strategies that contributed to the survival of small business beyond 5 years. When business owners survive, there will be reduction in market failures and insecurity, thus increasing the potential for business profitability and growth.

Contribution to Business Practice

Urbano and Aparicio (2016) found that small businesses contribute meaningfully to the growth of emerging economies in developing countries like Nigeria. The findings from this study could contribute to business practice to help support emerging small businesses. Nigerian policy makers and business consultants can review the relevance for planning and decision making.

 

Implications for Social Change

The implications for positive social change are that increasing Nigerian small business owners’ 5 year survival rates can reduce unemployment, increase tax receipts for government, and catalyze up economic activities, reducing poverty levels. Small businesses comprise a major percentage of the companies in Nigeria (Agyei-Mensah, 2016). The findings of this study might help to increase the survival rates of small businesses during the early years, which could stimulate the Nigerian economy.

A Review of the Professional and Academic Literature

I used the literature review to explore the strategies used by small business owners in Ibadan, Nigeria to survive in their first 5 years. The review began with the discussion of the cognitive development theory and explanation of small business owners and small businesses, innovation and the small businesses, entrepreneurial finance and small businesses, critical success factors and risks, as well as challenges. The reason for the review of the literature was to have considerable knowledge of the research topics bysummarizing and synthesizing the peer-reviewed articles used in the study.

 

The purpose of this qualitative multiple case study was to explore strategies that some small Nigerian business owners used to survive their first 5 years. SMEDAN (2015) reported that 80% of small and medium scale entrepreneurs in Nigeria exit the industry in less than 5 years. The national policy document on MSMEs reported that the labor force in Nigeria has 84% in the MSMEs’ category (SMEDAN, 2015). Ihugba, Odii, and Njoku (2014) however, used the entrepreneurial recovery approach, which is a popular concept among market process theorists to analyze this problem. The researchers drilled down into the issues and challenges Nigeria faces in bringing about a robustentrepreneurial environment (Hofferberth, 2017). They touched issues like poor access to credit facilities, inconsistent government policies, inadequate infrastructural facilities, unstable political atmosphere, security problems and the activity itself among others (Hofferberth, 2017). The Nigerian economy recorded substantial growth in recent times, but poverty persists unabatedly (Dauda, 2017). Nigeria, as the biggest economy in sub- Sahara Africa, can only translate the advantage of the size, to frustrations and misery for the people (Dauda, 2017). Entrepreneurship should be a shield for poverty and hunger.

Change and innovation can only come when entrepreneurs embraced new technological processes. Enterprise remains the engine of growth in developing economies and will continue to employ the significant percentage of the people (Okon & Edet, 2016).

World Bank Group (2014) stated that Nigeria had a new business density of under 1% (.8%). Business density represents the number of business registered per 1000 people.

For a country of over 180 million inhabitants, this new business density ratio is considered small, and this might mean that the nation’s policy on entrepreneurship mightbe faulty. Neiva (2015) suggested that policy makers need to put in place quality financing, real infrastructure, training, and even mentorship to support the small-scale business owners. Mukhtar (2015) highlighted the prospects and problems of SMEs in Nigeria and identified the various constraints of SMEs majorly. This study was more of a review of past literature works.

Title Searches, Articles, Research Documents, and Journals

The literature review is a research process detailing the information a researcher obtains (Youtie, Bozeman, Jabbehdari, & Kao, 2017). The literature review is a comprehensive synthesis and analysis of the literature relating to the conceptual theory.

The literature review is the background to the entire project study, defines previous findings, and rationalizes how relevant is the current research (Youtie et al., 2017). The literature review differentiates what the researcher needs to do from what had been done thus putting together the real topic. The review marries the ideas to the problem and helps to identify the methodology that is used to prosecute the study (Mennicke & Ropes,

2016).

The writing strategy is usually to discuss the conceptual theory or model, the foundation, and the topic that relate to the theory. The primary purpose was to do a summary of the literature that was relevant and addressed the research question. In this study, I used sources that include Walden University Online Library, dissertations, articles, scholarly or peer-reviewed journals, web searches, and textbooks. I searchedthrough Pro-Quest, Google Scholar, and government databases. The search keywordswere smallbusiness, business owners, entrepreneurship, and SMEDAN.

I obtained information from the resources highlighted in the literature review that showed the interaction between the conceptual framework of cognitive theory, and explanation of small business owners and small businesses, innovation, and the small businesses, entrepreneurial finance and small businesses, critical success factors, and risks, as well as challenges. From the literature review, 100 articles were used, of which 92 or 92% were peer-reviewed, and 91 or 91% published between 2014 and 2018. The articles exceeded a minimum of 60 peer-reviewed sources and satisfied the 85% rule of the used information within 5 years of publication (Appendix E, Table 6). The articles used for the entire study so far was 185; 168 or 90.8% were peer-reviewed and 169 or 91.3%, published between 2014 and 2018. The percentages met and exceeded the required minimum of 85%.

Cognitive Theory

Piaget developed the cognitive theory, which first completed the study of cognitive development in 1936 (Lizardo, 2004; Piaget, 1964). Piaget (1964) posited that the theory illustrates the development and nature of human intelligence. The original domain for the study was on children’s development, and the concept was later expanded to address business endeavors (Bennett, Deane, & van Rijn, 2016). My fundamental use of the theory was on the identification and exploration of the strategies Nigerian small business owners successfully use to address challenges and risks. Warren (2017) suggested the use of conversational model to provide a lens for understanding thefindings, and assist in the business of growing firms where entrepreneurs do not have to play only with ideas like setting goals and solving problems. I used the process tocoordinate business retention and expand the outreach thus creating potential for economic growth and applied the conversation model to yield significant insights into a firm’s challenges and opportunities.

Warren (2017) suggested the use of a model, with data-driven techniques to identify enterprises, to enhance business intelligence prospects by employing entrepreneurial methods to obtain the analysis and industry trends on growing businesses.

I made use of a design that utilized themes that relied on entrepreneurial thinking and behavior. The cognition theory related to this study as it provided a potential means for understanding the development and deployment of successful strategies for sustaining soybean processing companies in Ibadan, Nigeria. The conceptual framework was to enable the articulation of the concepts from the literature in a way that it could bear relevance to the applied business topic. While the theoretical can be used to describe thetheory relating to the quantitative study, a conceptual framework is better suited for a qualitative study such as this one. For the conceptual study, one needs to search for the appropriate framework to identify the pertinent section.

The cognitive theory remains a quality approach to illustrate human behavior through the thought processes (Osiyevskyy & Dewald, 2015). Piaget (1964) posited that the theory explains the reason the brain remains an incredible network when processing information. The research in entrepreneurship has come to show the influence that cognition has especially when the issue has to do with the sequence in a business model development (Tell, 2015). Cognitions affect entrepreneurship and the small businesses. Becherer andand Helms (2016) suggested the risk and challenges that the entrepreneur facesand how to mitigate such risks. The persistent focus on the facet of affect that has ignored

the role in the individual level of analysis exists (Delgado-García, Quevedo-Puente, &

Blanco-Mazagatos, 2015). There is concentration on the valence facet of affect while

downplaying the role of affect in the analysis and devoting more time for the outcome

with fewer placements (Delgado-García et al., 2015).

Hockets (2015) confirmed that the theory of cognition on corporate survival and competition has a new impact on questions relating to a business case. Hockets mentioned that from interviews there is the revelation that a business case perspective would suffice as the main logic. Analytically, the respondents from the firms with lower perceived survival performance seem to draw on less assumed cognitive frameworks especially in the areas of efficiency and risk (Hockets, 2015). Those respondents from concerns with higher performance would tend to draw more on the complex mental models (Hockerts, 2015). The attention paid to the role of affect is shaky at different stages of entrepreneurial processes. It is also necessary, to examine cognitive and non cognitive that competes in every role of the affect (Delgado-García et al., 2015). In every role of the facet, a proposed agenda that can encourage investigations of topics that will assist those investigations of issues that they earlier ignored previously must be put in place.The small business entrepreneurs make decisions that are strategic and know those factors that make them happen (Zahra & Wright, 2016). The cognitive factors are the drivers of how small business operators make policy decisions (Delgado-Garcia et al., 2015). The small business operator will never choose a business model without takinginto consideration the existence of an opportunity (Osiyevskyy & Dewald, 2015). There may be the need to find out if a relationship exists between the factors scrutinized, by imposing similar conditions on the decision maker under environmental dynamism and alertness.

Systems thinking. The systems thinking theory was another theory that could support my conceptual framework. Dawidowicz (2012) mentioned that the theory dealswith the relationships that exist between members thus providing a vivid picture of the business phenomena, and allows the entrepreneur make use of the method to achieve their growth potentials. The systems thinking theory had its origin from a conceptual framework that internal or external action affecting a part of its system causes a reaction from the other members (Dawidowicz, 2012). Systems theory and systems thinking constitute the platform that predicts and explains those inherent constraints and or conflicts and problems that exist within a concern (Barile, Lusch, Reynoso, Saviano, &

Spohrer, 2016). The interaction and the way they affect other members have the influence on business owners (Barile et al., 2016). The firms, therefore, use several decision making processes that ginger the managers to make valuable inputs. Systems theory is valid to use when making business decisions in an organization. This approach would work for SMEs that pursue sustainability and growth goals.

I used the cognitive theory to identify and explore the strategies that Nigeriansmall business owners successfully use to address challenges and risks. The conversational model provided the lens to understand the findings. The model was relevant to the business of growing firms where entrepreneurs would not have to spendtime combing ideas like setting goals and solving problems. The cognitive theory was most relevant to this study to provide me with the answers to the problems of small

Businesses owners.

Small Businesses: Overview

Successful small businesses facilitate the employment chain in the economy, jobs for employees and the business owners, inputs for other firms, tax receipts for the government and products, services for the customers, and inputs for other concerns (Eniola & Ektebang, 2014). The business owners might have their own contrary opinions that may have implications for the success of the various firms (Jaouen & Lasch, 2015).

Most times, small business owners have their setbacks, which may cause them not to continue and they might decide to exit the small business realm (Jaouen & Lasch, 2015). Wennberg and DeTienne (2014) mentioned that entrepreneurs view the option of retreat in a negative way but should not consider it as business failure. Small businesses remain drivers of economic growth in economies, whether in a developing or developed economy. Small business owners contribute significantly to the gross domestic product (GDP) (Okon & Edet, 2016). Considering the importance of small business owners to the economy of Nigeria, they face critical challenges with poor financial management leading other challenges and become responsible for the firm failures among the growing businesses (Karadag, 2015). The features of small businesses continue to unfold in every area of Nigeria enterprise. Karadag (2015) suggested that this aspect of the economytakes a leap to deepen the economy of the nation. Mahadeo, Dusoye, and Aujayeb- Rogbeer

In summary, small businesses remain the mainstay of Nigeria’s economy, generating a sizeable percentage of the jobs in the productive sector. The small-scale industries have been contributing to large part of Nigerian economic history, and make up for the country’s industrial development and constitute a significant tool for rural development. The features of small businesses continue to unfold in every area of Nigeria 18 enterprise to ensure that this aspect of the economy continues to deepen the economy. All the above facts make up for the opening sentence in my problem statement.

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