Determinants of ‘Time to Fail’ and Survival of Small Scale Business Enterprises in Lagos State, Nigeria

In recent times, significant attention has been focused on small and medium scale enterprises in developing countries because of their potential for diversification and expansion of industrial production, as well as job creation. But unfortunately, in spite of the plausible significance of these firms, the performance of SEs has been disheartening and the mortality rates of these enterprises still remain very high. In light of this, this study investigated the factors responsible for SE disheartening performance and high mortality (failure) rate using Shomolu LGA-one of the highly SEs concentrated clusters in Lagos state as the case study. Structured questionnaires were administered on 200 SEs that have been in existence for at least 5 years for the gathering of data. Following the analysis of data and discussion of findings, the major findings are that: the survival rate of SEs in Lagos is 42.2% and the average time to fail for SEs in Lagos state is about 10 years. However, the manufacturing SEs has the highest survival rate (53.8%) and the longest time to fail (18 years) followed by services with a 40% survival rate and 10 years as a time to fail while trade has a 43% survival rate but the lest time to survival. The finding shows that the major source of finance for SEs in Lagos state is owners' savings while the high cost of production is the major problem of SEs in Lagos state. The study also found that inadequate finance is the major cause of SE death and low sales are the major initial sign businesses show before they collapse. It was also established that the top priority in the intervention and assistance, the SE sub sector required from government to strengthen their survival rate is increasing access to affordable credit facilities