There as very key in Business success. HOW CULTURE

There is a popular adage often attributed to Benjamin Franklin, the
father of time management “Failing to plan is planning to fail,” the absence of
proper planning can detrimentally affect the success of a STARTUP anywhere in
the world, which means failing as a result of unplanned structure is non
geographical. Planning gives understanding and insight into what one is into,
first of all, business analyst needs to carry out an in-depth research into the
kind of business, the nature and model as should. (Raje, 2016)”It’s
not the plan that is important, it’s the planning” says Dr. Graeme Edwards. The
business should have both short and long termed plans that will be focused on.
The plan should answer where the business should be in three months or a year,
ten years or a hundred years. The right plan will include specific-to-do-lists
with dates and deadlines (George Meszaros, 2016)

Sometimes, it is not lack of business planning that puts STARTUPS at
risk but lack of ‘personal planning’ as identified by the (INSIDEBUSINESS, 2016)online article of
September 21st 2016. Business people need a kind of general
preparation for their startup experience. Especially foreigners; they will need
to learn to prepare their minds towards what their new environment would look
like in terms of social economic nature. What is personal preparation?

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PERSONAL PREPARATION means having in mind that
the new business will exhibit a different thing entirely and knowing how to
adjust to it. In the event of a local person starting a new business, dealing
with familiar faces too could be very upsetting as disappointing (Edehi, 1994) Local councils and
many unorganized groups could threaten to bring the business to a standstill
when certain demands are not met. In Nigeria, several oil and gas companies
have folded as a result of having non-reconcilable disagreements with local
groups. There have been cases where the federal government deliberately steps
in by military intervention yet without solving the problem; the company just
fail at the end.

Secondly, preparation without a sound knowledge of the culture of the
business environment would lead to failure. Let us consider the subject as very
key in Business success.

 

HOW CULTURE AFFECT STARTUP PROGRESS IN NIGERIA

Dealing with cross cultural differences: doing business in the South
West Nigeria is completely different from doing business in the Niger Delta or
North East Nigeria, unique differences do exist. Culture is a comprehensive
concept as it embraces all factors that influences an individual’s reasoning
process and shapes behavior. It is an unavoidable part of human life and it
varies significantly from place to place. (Hofstede, 2004) Agreed that culture is a fuzzy concept
that can be viewed from two perspective that seems inter-related and confusing.
He stated that culture could be seen from a narrow perspective to mean
“civilization” and in the broad perspective as “anthropology” which involves
thinking, feeling and acting. (H.H Stern (1983, 1983) Divided culture into
three different categories; (1) Psychological Culture (2) System culture (3)
System Culture. Material culture deals with all the manmade material creation
aided by civilization such as transportation, clothing etc., this aspect of
culture is visible and can be assessed and quantified. System and psychological
culture, deals with the existence of the living system like religion, social
system, family system, behavior, reasoning, thinking and aesthetics. Nigeria
has several cultural values that startup entrepreneurs should not undermine.
These cultural values included: value for acceptance and hospitality value for
community life, Value for family oneness, value for the sacred and for religion,
value for the elderly and authority, value for tradition and tribal
connections, value for history and parables etc. (Oliver, 1991).

Now, we shall explain other cultural factors aiding the rise in startup
failure in Nigeria.

Social
Perception on the female gender and entrepreneurship:

In Nigeria, the
female sex is considered most good for home care. Women are expected to get
married and look after their husband and kids. Those with high ambition like
getting a quality education or becoming a successful entrepreneur are seen as
treat by their male counterparts. Many Nigerian men always prefer their well-educated
wives not to take up demanding jobs. Especially in Northern Nigeria were Islam
plays a significant role in deciding what a person can do or not.

Many female
entrepreneurs do not get the required support from the society simply because
they are women. This culture has affected many women who have brilliant
business ideas. When some of the very passionate ones attempt a startup they
hardly receive any cooperation, recognition and support from their spouses and
family members. Most people feel that business enterprising is for men and not
women. All women interviewee categorically identified their sex as one of the
major factor that limited their capacity and largely contributed to why their
startups failed in Nigeria.

Our case study
startup, The Econet Wireless faced all sought of cultural problem while
entering Nigeria. The company had thought that they did enough background work
but experience later proved that their research was insufficient.

 

 

2.2.3:
NATIONAL INFRASTRUCTURAL BREAKDOWN

“America has good
roads, not because America is rich, but America is rich because it has good
roads” __J.F Kennedy

Since 1999, at the
onset of our democratic experiment, the country has made efforts to lay a
foundation for economic growth and development (Adekunle, (Adekunle,
Vanguard News Paper, 24, August 2014). , 2014) Huge infrastructural
deficit has constrained economic growth and development. As the most populous West
Africa nation, Nigeria sets a great vision to be among the 20 economies in the
world by 2020 with a minimum GDP of $900 billion and a per capital income of not
less than $4000 per annum. The road is the most important element in the
country’s transportation network, carrying about 95% of all the nation’s goods
and passengers. But now, many of the roads are in disrepair because of poor
maintenance and years of heavy traffic. The rail system is completely not
organized. So do Nigeria have problem fixing all other infrastructure that
could have boost her economy say lack of investment in power, housing, tunnels,
water supply, electrical grids, telecommunication, airport/airways, even soft
infrastructure like education, health and the financial system.

The Econet Wireless
Company was determined to solve the lack of telecom system in 2003 except that
it had infrastructural challenges to deal with just as other startup would.
There was no good road networking system on ground to help with town mapping.
This was a major challenge for the new telecommunication company. Apart from
the road challenge, Econet just like every other startup had to import certain
goods in other for them to meet up with their goal, this had cost the fresh
organization a lot of money.

When startups
realized that they’ll need to invest their own money into infrastructure they
just get frustrated, most startup companies have limited funds. Scooping their
little resources to get themselves roads or vehicles that should ordinarily be
available as public infrastructure just wear them down. The more investment
they have to make in running these auxiliary needs can be frustrating.

 

 

2.2.4:
LACK OF TECHNICAL KNOW-HOW AND REQUISITE LABOUR

LABOUR is a
significant part of any business. It is defined as the aggregate of all human
physical and mental effort used in creation of goods and services. It is a
primary factor of production that drives supply. The other three are natural
resources or the raw materials, capital and entrepreneurship or the drive to
profit from innovation (Amadeo) it is the drive of
all other factors of production. Products don’t create themselves, and you need
people to provide services and people to manage business activities.

Labour could be
classified into skilled, semi-skilled or unskilled. The nature of job in focus
determines the kind of labour that is needed but generally, all three kinds of
labour will be useful in every establishment. When startups get founded, they
always have problem hiring the needed labour, especially the skilled labour.
Technical companies like the Econet Wireless needed experts but could not get
them. Over 200 foreign experts were flown into Nigeria and that was a huge
investment. If Nigeria had engineers, would Econet have to do such work to get
started? Well no. many startup face exactly the same challenge even today. Since
there’s not enough investment in education, training and development of the
labour force, businesses have continued to live in the hard truth of either
investing in immigrating foreign experts or using the unqualified local labour.
Although the value of labour force have increased significantly from 30 million
in 1990 to about 55 million in 2014 (CBN/NBS) the international labour
organization still worry about the kind of skill Nigeria population have for
some specialized jobs. Emphasis is being made on ‘what kind of training do our
university graduates have’? The economically active population of working age
population (Persons within ages 15 to 64) has increased to 105.02 million in Q4
2015 according to Nigerian Bureau of statistics Unemployment/Underemployment Q4
2015 report.

Of all the
executives interviewed, 89% agreed that lack of needed labour largely
contributed to one of the reasons why they folded up. That’s a staggering statistics;
it means that the country lacks a very vital factor of production.

 

2.2.5:
LACK OF PROFESSIONAL FINANCIAL MANAGEMENT

Most startup
entrepreneurs initially made a confident remark that they had insufficient
financing and that contributed to over 50% of their failure. Nine out of ten
entrepreneurs complained that insufficient funding was one of their major challenge
when they started and I took my time to ask them questions and realized that
they all had enough startup capital; a minimum amount of funds required to
start their business. This research helped all interviewees locate where the
financial problem of their startup lied; it was in their inability to properly
handle basic but very vital financial responsibilities. Financial management is
very important in startup. It involves ability to do accurate business plan, book
keeping and proper allocation of funds. Most startup entrepreneurs take for
granted the need to hire experts to help with accounting and finance. They take
all financial decisions even at the detriment of their own startup companies.

Startup entrepreneurs
differ from medieval business founders in several ways. They are referred to as
geeky and very passionate about their ideas. No matter how smart they are in
creating concepts and ideas, they will always do poorly when they do not hire
the services of professional financial officers who would help them with
financial decision making. Entrepreneurs always see themselves as the ‘boss’
that knows it all. Poor financial management will result in more liabilities
and ultimately bankruptcy. Therefore, poor accounting, unprofessional business
financing and decision making by startup owners makes them go bankrupt in most
cases.

2.2.6:
POOR SOCIAL INTEGRATION AND SUPPORT

Lack of Social
integration and support for entrepreneurs is one of the root causes of Startup failure
in Nigeria. Social integration structure allows all members to participate in
dialogue to get and keep peaceful social relationships. This is a vital part of
any organization to eliminate anarchy and great an enabling environment where
business success can thrive. When there are tribalism where people from
different tribe cannot relate and work as team, then work performance and
ethics will plunge. No business will grow when the team involve under look one
another (Abiodun, 2011)

The Nigerian
society has been reported by Oxfam publication of 17th may 2017 (54
page reports titled Inequality in Nigeria…) as highly unequal; that the gap
between the rich and the poor in Nigeria is very wide. According to the World
Bank data, in 2009, the poorest half of the population held only 22% of
national income (page9). Meanwhile, the richest Nigerian man will take 42 years
to spend all his wealth at one million per day (page4).

Many startup
entrepreneurs I interviewed were people of the minority groups; poor, not able
to afford a very good education, not so social but with dreams and ideas that
could have changed the world. One of those young person is Eneh. A college
undergraduate of the Benue state University who founded a company known as
CareLine; a doorstep healthcare startup that wanted to cater for the elderly
and abandoned using donations from the upper class people. According to the 21
year old lady, more than 90% of her donations came from very poor locals who
had very little to give. The rich class refused to accept her idea and support
it simply because they felt she was an undergraduate studying in a public
institution therefore, she is classified a poor person. “They do a very quick
rating on your social economic background before they choose if to back up your
idea or not” says Adama Eneh of CareLine.

More than 75% of
our interviewee failed business executives lamented how lack of support helped
frustrate their startup. In Nigeria, parents generally expect their children to
only focus on their education and not try to explore their ideas. When such a
child is still dependent, they are abandoned by their relatives, parents most
especially. Government too have failed to help integrate young aspiring entrepreneurs
into the business forum. Incentives and supports are not available. Taxes and
levies are weighty on businesses. There are a lot of things government could
put in place in form of policies but little or no attention is given to Startup
in Nigeria.

2.2.7: FAILURE TO TACKLE INDIGENOUS CHALLENGES

Nigeria have several indigenous challenges and we are going
to dedicate this section to them. Limitations like diversity in language,
culture, religion, behavioral and tradition have not been very helpful in
making business startup strive. I witnessed how a certain Benin community (name
withheld) deliberately brought down an illustrious business because the company
failed to inscribe the ‘forgotten’ traditional name of one of their ancestors
on their signpost. That is both hilarious and ridiculous, it sounds barbaric
but that was how they wanted it.

Several businesses in Nigeria have suffered language
barrier and terminally failed. We have seen several cases where foreign expert
had to withdraw from the northern part of Nigeria for fear of the unknown. When
people do not understand themselves, they get worried about their true
intentions for one another. There are over 520 languages spoken in Nigeria ((Fida, 2008)the official
language, English was chosen to facilitate the cultural and linguistic unity of
the country. However, communication in English is much more popular in the
country’s urban communities than it is in the rural areas (Integrity, 2017)

Nigeria like other countries ha ve cultural, religious
and traditional differences too. These do not help businesses to grow. These
are barriers.

Terrible behavioral differences can be frustrating,
depending on the people. When a business man discuss his experience, he shares
different stories according to region. The people in the south west of Nigeria
tend to be friendlier than those in the north (Ozed, 2007)

INSECURITY is another indigenous threat to doing business in
Nigeria. The rise of the notorious terrorist sect; the Boko-Haram in the
north-east Nigeria have completely crumbled business activities in that region (Egbunne, 2016). The Niger delta
Avengers in the South-South Delta of Nigeria have been a serious challenge for
business activities, especially the oil industry. Several startup have either
packed up or are planning to do so as accounted by Mr. William McKee, Chairman
of an oil multinational company in the Gulf whose original intention to begin
refining in 2012 was blown away by militancy group. Mr. William recalls how two
of his Lebanese experts were abducted for 16 days and taken to an unknown
hideout. It had cost his parent company in the UAE several thousand dollars to
secure their release. The government of Nigeria claims to be on the fore front
of tackling insurgency but is the effect felt by the people?

 

2.2.8: CORPORATE INTERNAL FACTORS

Do entrepreneurs have their own problems? Yes they do.
These problems could also largely contribute to the reasons their businesses’
fail and here, we would elaborate those corporate errors that kill startups in
Nigeria.

Lancaster A. puts forth three summary points against
entrepreneurs

Over-Commitment/confidence

The Problem: Taking
on new actions and saying yes to new opportunities is tempting. But when the
entrepreneur start saying yes to too much, they they fall into an agreement
they cannot keep. During negotiation, a proper skill is required. They become
worn out and the overall quality of everything they do suffer. They usually see
themselves as capable of handling everything simply because they conceived the
business idea.

Ignoring
Boundaries and Checkers

The Problem: Entrepreneurs usually set some boundaries for themselves. For example, they could say,
‘everyone report directly to me’, or decide a complete work-free day each week
or shutting down the computer at a certain time. Well, then things get busy and
their own boundaries are much easier to compromise on than are their clients’ (Lancaster,
2011).
Entrepreneurs always feel like they can overrule the checkers or corporate
instructions because they are the boss. This have a way of messing things up
for the company. When rules are floored regularly, people get tired and make
others wear out too. As things compile, the entrepreneur becomes less active
and efficient. Most startup entrepreneurs consume themselves up by trying to
become a jack of all trade in a company.

Avoiding Networking

The Problem: Startup founders always feel very unsafe meeting new
people or seeking advice from their competitor. Instead, they normally feel
safe talking to the same people in their network. The need for reaching out to
others in business cannot be overemphasized. For the fear of leaking a trade
secret, entrepreneurs never feel comfortable with others that are not in their
network. This according to Barry Aikorin of PowerTel, a software company that
failed in 2013 in Lagos, is among some reasons he failed. If Barry had agreed
to talk to a competitor who had similar encounter five years before PowerTel
was founded, his company might have been savaged. The 30 year old executive
lamented not talking to his superiors.

Lack of
training

Most entrepreneurs in Nigeria just have nothing but a
passionate dream full of illustrative ideas that may not be very realistic in
practice. It is not enough to say that one will succeed simply by listening to
fine idea or pitches. That’s where the role of training and skill acquisition
apply.