Why Do Most Small Businesses in Liberia Fail

Abstract

Small businesses are considered to be the backbone of every economy. If they are not administered effectively, they quickly diminish. There are several factors that result in small business failure. This study examined the reasons for the failure of small businesses in Liberia. Data was collected using questionnaire and the targeted participants were business persons and business students within Liberia. The study revealed that poor business planning is the main factor responsible for the failure of most small businesses in Liberia. Most proprietors of small businesses in Liberia don’t plan properly before the commencement of a business. They depend on the day to day reality to run the business which is not good for the future of the business. The study identified ten contributing factors responsible for the failure of small businesses in Liberia. Out of the ten contributing factors, five of them were identified as the top factors. The top five contributing factors include poor business planning, lack of entrepreneurial skills, lack of customer relations, management incompetence and inadequate financing. The study recommended that small business proprietors should conduct a proper business research on the type of business that is to be established and develop a standard business plan that covers all the aspects of the business before commencement. The study also recommended how to address the other top four contributing factors to prevent small businesses from failing in Liberia. However, the information in this study is very essential for the development of the small business sector in Liberia, and other parts of Africa. It is also beneficial to the literature review of small businesses and their failure.