1.0            INTRODUCTION


          The problems of small business failure is as old as the history of business itself a large  number if business which started with so much optimism and promise have failed.

The problms that confront business in its own right could contribute a great threat to the survival of he business.  It is better to indicate here that the survival of business if any person managed economy to a great extent depends on sometimes sheer luck rather on managerial and technical capability as would have seen the case.

Business failure if like sickness such as malaria it always do not come without symptoms.  The Main symptoms of immediate business collapse according to Ifedi (1986) are detoriating capital, decrease in sales, decline profit and high debt ratio.  Once these factors are noticed in business, the entrepreneur should know that he business is at its collapse.  A large number of  business have failure in Enugu state.  The problem of business  failure is now a great concern to managers, entrepreneur customers and workers, an each can play an important role in minimizing it.

In order to minimize business failure, effects should be made to determine the cause of such failure and appropriate steps to reduce them to an acceptable proportion.  This is the concern of this study.



The study will attempt to sort out what business failure will be like in the economic cycle and the problems that are associated with business failure in small scale enterprises.

The problems can be classified this, general and specific factors.  Both factors are highlighted below:

  1. Government polices and regulations.
  2. Inflation and business cycle.
  3. Managerial incompetence.
  4. Inadequate capital.

In considering the problems as stated above, a question has to be asked.  How easy it is for small business to fight against failure.  The magnitude of this problems and its implication have inspired this research.



It is certain that in Nigeria today causes of business failure are rampart tot he point that is calls for some  aestivation into the cause, consequences and recommendations on their prevention.  It is hoped that it the recommendations are properly utilized, it would increase the chances of success thus reduce the personal and social cost due to business failure.



Business failure has adverse effects on any economy.  One should therefore understand the necessity to narrow this study in small scale business organizations.

In other to attain the objective of this research, the scope of the study was defined to embody all relevant aspects of failure in business.

The research work is aimed at analysing the causes of small business failure in Enugu State.  Due to financial constraints time and other academic involvement’s the study was limited to Enugu Urban.   However, this town was considered as a fairy true representative of the entire state.  Lack of relevant literature also constitutes some limitations of this study.


1.5            DEFINITION OF TERMS

Business:  This is all profit directed economic activities that are organ and directed top provide products and services.


Economics Cycle:   This is the cyclical change that occur as the  legality of economic activities varies overtime.

Entrepreneur:  This is a person who assumed the risk of  organisation and Managing a business I the hope of making profit.  If a profit is earned, the entrepreneur receives it.


Small Scale Industry:  This is an establishment with low capital based and the employees are relatively small.


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