CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

A business is an organisation set up and run to provide goods and services in the expectation of private gain. Its fundamental purpose in society is to supply goods and services for consumption and, in the process, to earn a profit. More broadly, business covers all human activity involved in producing and distributing goods and services through a socially organised system of exchange, and it comprises a wide variety of activities aimed at satisfying people’s needs and wants. It takes in the whole field of industry, trade and finance, including agriculture, mining, quarrying, manufacturing, processing, retail distribution and services of every kind.

Small and medium enterprises (SMEs) make up most of this activity in Nigeria. According to the 2021 NBS/SMEDAN national survey, as reported by PwC Nigeria (2024), micro, small and medium enterprises accounted for 96.9% of all businesses, 87.9% of employment and 46.32% of gross domestic product. In Nigeria’s SMEDAN classification, firms with 10 to 49 employees are small and those with 50 to 199 are medium, while those with fewer than 10 are micro (Enhancing Financial Innovation and Access [EFInA], 2021). Atah and Ushie (2023) describe small enterprises as major sources of innovation, employment, poverty alleviation and wealth creation.

Business survival is the continued existence of a business despite an unfavourable environment. Survival is not automatic, because many small enterprises close within a few years. Olaore, Adejare and Udofia (2021) cite a UNIDO estimate that only about 20% of Nigerian SMEs survive, and they identify financing, infrastructure deficiency and the lack of a workable policy framework as the main problems. In a volatile environment, Adebisi and Bakare (2019) note, the survival rate of Nigerian SMEs has been seriously affected, and many owners wrongly believe that strategies are meant only for large and multinational firms. Their study of 350 SME respondents in Lagos found a significant positive relationship between the use of survival strategies and the sustainability of small and medium enterprises.

A business cannot survive for long if it does not use strategies that allow it to earn enough profit. Profit is used to meet the personal needs of the owner, to pay employees’ salaries, to buy raw materials and to finance expansion. Iorun (2014) evaluated survival strategies of SMEs in Benue State and found that creativity, high risk taking and the identification of areas of opportunity were strategies on which small enterprises depended for survival. He also recommended that owners take a realistic view of their strengths and weaknesses and prepare a well-thought-out business plan, and that government provide the infrastructure needed for SMEs to grow.

The local setting matters too. Uyo is the capital of Akwa Ibom State, and small businesses there face financing and infrastructure constraints. Ndem, Walter, Henry, Peter and Ita (2022) studied 295 SME operators in Akwa Ibom State and found that bank loans showed no significant relationship with poverty alleviation, and they urged banks to lower interest rates. Abaikpa (2025), who drew a sample of 361 respondents from 3,725 registered small businesses in Uyo, recommended that financial institutions simplify their loan procedures and that government provide reliable power and roads for SME clusters. Against this background, the research seeks to examine the strategies that can enhance the survival of small scale business enterprises in Uyo.

1.2 Statement of the Problem

The contribution of small scale businesses to the growth of any economy cannot be overemphasised. Yet a cursory survey of small scale enterprises in Nigeria reveals frequent cases of collapse within a few years of their start-up, a pattern consistent with the low survival rate reported by Olaore et al. (2021). The situation can be traced in part to the use of ineffective business strategies by owners and operators, who often lack a clear business plan, fail to innovate and do not systematically look for opportunities (Iorun, 2014; Adebisi & Bakare, 2019). It is made worse by weak infrastructure and limited access to affordable finance (Olaore et al., 2021; Ndem et al., 2022; Abaikpa, 2025).

The continued collapse of small scale enterprises will heighten unemployment and poverty in the country, which will in turn have a negative impact on the nation’s gross domestic product (GDP). These concerns led the researcher to examine the strategies for enhancing business survival, with particular reference to selected small scale enterprises in Uyo.

1.3 Objectives of the Study

The study intends to achieve the following objectives:

1. to find out the strategies that can be used to enhance business survival in Nigeria;
2. to examine the role that government plays in promoting business survival; and
3. to identify the factors militating against business survival in small scale enterprises in Nigeria.

1.4 Research Questions

The following research questions were formulated from the objectives of the study:

1. What is the contribution of small scale businesses to the Nigerian economy?
2. What strategies can be used to enhance business survival in Nigeria?
3. What role does government play in the promotion of business survival in Nigeria?
4. What factors militate against business survival in small scale enterprises?

1.5 Hypotheses

The following null hypotheses were formulated:

H₀₁: Creativity is not a strategy for the survival of small and medium enterprises in Akwa Ibom State.

H₀₂: High risk taking is not responsible for the survival of small and medium enterprises in Akwa Ibom State.

H₀₃: The identification of areas of opportunity for business operation is not a strategy for the survival of small and medium enterprises in Akwa Ibom State.

1.6 Significance of the Study

This study will benefit operators and owners of business enterprises in Akwa Ibom State and in Nigeria as a whole, because it will help them to evaluate their operations and will highlight the challenges that threaten their survival. By showing which strategies work, it will help owners to plan more carefully and to use creativity, calculated risk taking and opportunity identification deliberately rather than by chance.

The findings will be useful to government and policy makers, who can use them to design support in the areas that SME operators identify as most important, such as infrastructure, access to finance and enabling regulation. They will also help financial institutions and development agencies to understand what small enterprises need in order to remain in business. For students and researchers, the study will serve as a reference and a basis for further work on small business survival in Akwa Ibom State. If more small enterprises survive, the benefits will reach the wider society in the form of more jobs, higher incomes and a stronger contribution to national output.

1.7 Scope of the Study

The study covers strategies for enhancing business survival among selected small scale enterprises in Uyo, Akwa Ibom State. It focuses on the strategies that owners use, the role of government in promoting survival, and the factors that hinder survival, with creativity, risk taking and the identification of business opportunities as the strategies tested.

1.8 Limitations of the Study

The study is limited to selected small scale enterprises in Uyo, so its findings should be generalised to other places with caution. Some respondents may be unwilling to disclose information about their businesses, which could introduce bias into the responses. Limited time and funds also restricted the size of the sample and the extent of the literature that could be reviewed. The researcher tried to minimise these limitations by assuring respondents of confidentiality and by relating the findings to those of similar studies.

1.9 Definition of Terms

Business: An organised activity carried out to produce and distribute goods and services for profit.

Business survival: The continued existence of a business despite unfavourable conditions in its environment.

Small scale enterprise: A business with a small number of employees and a limited asset base. In Nigeria, firms with 10 to 49 employees are classified as small (EFInA, 2021).

Strategy: A plan of action that a business adopts to achieve its objectives and to cope with its environment.

Creativity: The ability to generate new ideas, products or methods that give a business an advantage.

Risk taking: The willingness of an owner to commit resources to ventures whose outcome is uncertain, in the expectation of reward.

References

Abaikpa, U. A. (2025). Effect of performance management systems on small and medium enterprises in Uyo, Akwa Ibom State, Nigeria. African Journal of Commercial Studies, 6(3).

Adebisi, S. A., & Bakare, N. A. (2019). Survival strategies and sustainability of small and medium enterprises in a volatile environment. Management Dynamics in the Knowledge Economy, 7(4), 553–569. https://doi.org/10.25019/mdke/7.4.07

Atah, C. A., & Ushie, G. B. (2023). Reengineering small-scale business enterprises as predictors of youth employment and poverty alleviation. Journal of International Cooperation and Development, 6(1). https://richtmann.org/journal/index.php/jicd/article/download/13289/12879/46437

Enhancing Financial Innovation and Access (EFInA). (2021). Research findings from MSME access to finance challenges in Nigeria. https://efina.org.ng/wp-content/uploads/2021/12/Research-Findings-from-MSME-Access-to-Finance-Challenges-in-Nigeria.pdf

Iorun, J. I. (2014). Evaluation of survival strategies of small and medium enterprises in Benue State, Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(2), 255–263.

Ndem, B. E., Walter, M. H., Henry, J. T., Peter, L. M., & Ita, A. J. (2022). Financial inclusion and poverty alleviation in Akwa Ibom State, Nigeria: The case study of small and medium enterprises. International Journal of Economics and Financial Issues, 12(5), 129–134. https://doi.org/10.32479/ijefi.12829

Olaore, G. O., Adejare, B. O., & Udofia, E. E. (2021). The gains and pains of small and medium-scale enterprises (SMEs): The way forward for entrepreneurship development in Nigeria. Rajagiri Management Journal, 15(1), 53–68. https://doi.org/10.1108/RAMJ-09-2020-0056

PwC Nigeria. (2024). MSME survey report 2024. https://www.pwc.com/ng/en/assets/pdf/msme-survey-report-july-2024.pdf