ABSTRACT

This research work is on causes of business failure and possible solutions with a case study of Faith printing press, Uyo. business failure is when a firm is suffering from either technical insolvency or bankruptcy or when it happens that a firms total revenue do not cover its total cost , this can be avoided by finding solutions to business failure by way of managing recourses in a proper way. It is in view of this that a research work as this was undertaken. The research work contains five chapters, the introduction examines the historical background of the case study and so on and also limitations of the projects were outlined. chapter two was centered on the literature reviews with a view of bringing out what business entails, its operations and impact on the society ,its mode of operations and why and how failure occurs in business enter prices. Population sample and sources of data collocation were the various methods of data collection adopted .such as desk research ,personal interview as well as questionnaires In chapter four presentation and analysis of data was shown in the write up. The data collected were analyzed and presented based on the research questions, which form the views and opinions of the respondents drawn.In the final chapter, summaries and recommendations were made on the subject matter.

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TABLE OF CONTENTSTitle -- - - - - - - - - -- - i

Declaration- - -- - - -- - - - ii

Approval- - - - - - - - - -- - iii

Dedication-- - - - - - - - -- - iv

Acknowledgement- - - - - - - -- - v

Abstract- - - - - - - - - -- - vi

Table of contents- - - - - - - - - vii

CHAPTER ONE - Introduction1.0 Background Of The Study- - - - - - -

11.1 Historical Background Of Faith Printing Press- - - -

91.2 Statement of The Problem- - - - - -

111.3 Statements of Hypothesis- - - - - - -

121.4 Objectives of The Study- - - - - - - 121.5 Significance of The Study- - - - - - -

131.6 Scope and Limitations of The Study- - - - -

131.7 Definitions of Terms- - - - - - - -

15CHAPTER TWO - Literature Review

2.0 Introduction- - - - - - - - - 182.1 Definition of Business- - - - - - - -

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2.2 Types of Businesses- - - - - - - -21

2.3 Basic Management Functions needed for business operations 252.4 Importance of Business to the Society- - - - -

292.5 Modes of Operation In Faith Printing Press- - - -

322.6 Sources of Funds for Faith Printing Press – - - -

342.7. Reasons for Business Failure - - - - - - 35

References - - - - - - - - - 44CHAPTER THREE - Research Methodology3.0 Introduction- - - - - - - - - -

453.1 Research Design- - - - - - - - -

463.2 Population Sample Size of the Study- - - - -

473.3 Sampling Techniques Used- - - - - -

473.4 Instrument Used in Data Collection- - - - - 483.5 Procedures for the Administration of the Instrument- -

483.6 Statistical Techniques Used- - - - - - -

49CHAPTER FOUR Presentation and Analysis of Data4.0 Introduction- - - - - - - - - 50

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4.1 Test of Hypothesis- - - - - - - - 624.2 Test of hypothesis observed and expected frequency table

based on table sixteen - - - - - - - 634.3 Conclusion - - - - - - - - - 65

CHAPTER FIVE-SUMMARY OF FINDINGS, CONCLUSIONS & RECOMMENDATIONS5.0 Introduction-- - - - - - - - - 665.1 Summary Of Major Findings - - - - - -

665.2 Conclusions- - - - - - - - - 675.3 Recommendations - - - - - -- -

67Bibliography- - - - - - - - - 69Appendix - - - - - - - - - -70

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CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND OF THE STUDY

Business is absolutely a complex activity. This is because it

involves a lot of technicalities ranging from the task of

planning to control of such plans in order to achieve the

desire objectives of profit maximization. It is in view of this,

that this study is mainly centered on the floating of a

business to a stage where it finds it difficult to keep it’s head

above water.

In the late 70s business was in its period of boom, the

economy was doing well at that point in time and the

exchange rate was appreciable within this period.

International trade was easy as a result of lesser trade

restrictions and foreign exchange control.

During this period, Faith printing press was a beneficiary of

the prevailing policies such as the importation of papers and

other printing materials. These goods were usually tax free

by the agencies concerned, as a result of the significance the

5

government attaches to the publishing sector and the

clearance procedures at the port were effective and efficient

then.

In the late 80’s as a result of the military take-over, various

decrees and policies came into place. The economy became

unbearable for the citizens and their purchasing power

became very low, thereby forcing business not to live up to

their required billing. What followed was that industries

started operating on short run, and later businesses started

folding up.

The various trade restrictions, VAT policies on goods

imported did not help matters. The result effect of all these,

was folding up of businesses. Against the business affected

was then within our locality the -Faith printing press. The

concerns shown people in the locality spearheaded an

agenda to resuscitate the company and prevent it from total

collapse.

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The process of doing this proved difficult due to the extent of

funds require to source for foreign exchange needed for the

importation of raw materials there were other problems that

seem intractable. But the people and company unite make

persistence efforts to resuscitate the company but the more

difficult problems that resulted, Motivated an interest to

study the problems of business failure and the possible

solutions.

1.1 HISTORICAL BACKGROUND OF FAITH PRINTING PRESS

Faith printing press is a sole proprietorship business. It is

own by Chief Gabriel O. Faith. It was established on 20 th

August 1969 and was situated at V.V.I Lagos/Keffi Street,

Uyo.

Faith printing press was set-up with the objective of

providing the best quality printing jobs to customers at

affordable prices and at the due appointed time. At the early

life of the press, it started with letterpress and binding

machine. Namely: Adana, Letterpress Heidelberg and

Cutting Machines.

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In the course of expansion, the press relocated to N.C-.3

Oshogbo Road, Uyo in 1979. The press increased its

machineries by purchasing Rota prints, plate maker, camera,

and kond. During this period the press has increased its area

of specialization from letter press to offset printing.

In 1985, the press moved to J.11 main street Badarawa Uyo

and finally relocated to its permanent site V.V. 15 Nassarawa

Road, Uyo in June 1993. in its present site, it has acquired

additional machines such as multilith 1850, Stitching

machine, computers and Ruling machines.

This organization is engaged in the publishing of companies

Annual reports, text-books, invoices, Receipts calendars,

invitation cards, Business cards e.t.c. Faith printing press is

an organization worthy to be emulated, Judging by its

achievement within the period of its existence. The

organization has render a lot of its services to prominent

companies & government parastatals within this country,

among them are: Nitel Headquarters- Lagos, National

electric power authority Uyo, Uyo state water board, Ahmadu

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Bello University Teaching Hospital, Uyo, Bayero University

Kano, Nice Top papers industries Uyo etc.

Below is a sample of what Faith printing press Organizational chart should look like.

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ManagingDirector

Press maintenance

Manager manager/ engineerProduction

CashierCashier Receptionist

Lithographer printing section Finishing section With And AndApprentices Apprentices Apprentices

Drivers Gate men

1.2 STATEMENT OF THE PROBLEM

Business entrepreneurs today are making a lot of efforts in

order to make their investment a perpetual going concern.

Every means available at their disposal are being made

available terms of capital base sophisticated equipments etc

so as to meet-business demands and sustain the completive

market environment.

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How ever inspite of these tremendous effort businesses are

still failing and these are owing to various factors that pose

myriads of problems.

1.3 STATEMENTS OF HYPOTHESIS

The following hypothesis has been formulated to serve as a

guide for this study:-

1. That efficient management of resources could not lead to

business failure of _Faith printing press

2. That inefficient management of resource could lead to

business failure in Faith printing press.

1.4 OBJECTIVES OF THE STUDY

This study intends to achieve the following objective

i. To find out how Faith printing press should operate to

avoid failure.

ii. To examine the implications of government economic

policies on the survival or failure of Faith printing press.

iii. To find out and how to avoid business collapse with

reference to Faith printing press

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iv. To examine the use and control of resources in Faith

printing press.

1.5 SIGNIFICANCE OF THE STUDY

This study is significant in that its will also identify possible

mistakes if any, which could lead to business failure.

It will also point out possible solutions to business failure

with reference to Faith printing press, Uyo. It will be also

investigate some important factors to be considered before

setting up a business and those that will be implemented in

the course of business.

Finally, the study will be useful to the management of Faith

printing press, Uyo as it will help in tackling the problems

militating against the operations of the company.

1.6 SCOPE AND LIMITATIONS OF THE STUDY

This study is untaken to find out the fundamental obstacles

of business failure and possible solutions for a sustainable

economic development with a case study of Faith printing

press Uyo. The study is concerned in the first place with the

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source of funds available for printing press firms and then

their management system i.e its efficiency; it will appraise

these two factors and provide possible solutions.

The selected firm is a small printing press, it however

engages in different types of activities ranging from supplies,

printing contacts and binding.

The limitations of this study are many, though not

unfamiliar, as every project work deals with such limits, it

includes the following:-

i. The time limit for the submission of this project will not

be sufficient. this is due to the compressed academic

calendar that makes up a semester during which the

research work is being made.

ii. In adequate finance.

iii. Lack of full co-operation from officials/workers of Faith

printing press whose views are important to this topic.

Despite these difficulties it is the hope of the researcher

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that this study will be of value to future researchers and

also printing (private) operators.

1.7 DEFINITIONS OF TERMS

This is an attempt which is aimed at explaining and defining

of terms and abbreviations used according to the meaning of

the contexts. Such terms includes the following:-

a. LIQUIDATION:- This is a process where a company

can no longer Maximize profit and

is being forced to wind up.

b. OVERHEAD COST:- These are the cost incurred as a

result of involvement in production

of goods and services.

c. WORKING CAPITAL:- This is the amount set aside for

the

running of the business.

d. MANAGEMENT:- The authorities that are

concerned with

decision making

e. CASH BOOK:- This is a principal book account

used for

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reading business transaction.

f. CAPACITY:- Ability to hold, contain, get hold of,

learn Things, qualities ideal

etc.

g. EFFECTIVE:- Is the ability to produce good

result, the

power to achieve desire goal or

objectives

h. EFFICIENT:- All the means or ways use in

producing a desire to

satisfactory result.

i. ENTERPRISE:- A business unit that needs courage

on that offers difficulties.

j. PROBLEMS:- Difficult situation, question, a

question

proposed for solution or discussion.

k. OBJECTIVE:- Are the goals, aims, and missions,

desire targets that an

organization must accomplish in other

to stay in business.

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l. PLAN:- Forecast, an action, method or

programme worth out

before hand. To draw or desire

a plan for Generally plan are

goals and objectives which in

organization seeks to seeks not to

achieve which an organization seeks to

achieve in executions of its

responsibilities.

m. RULE OF THUMB”- Something that is the usual

practice habit.

n. MOTIVATION:- Incentives that propel or arouse

one to put in more effort.

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CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter attempts to deal with the review of related

literatures by examining the conceptual views of some

writers on business failure.

The problem of business failure is so prevalent in all parts of

the country. Businesses are set up in order to expand and

provide essential services to every member of the society

but this contrary to its objectives more and more businesses

are winding up. When financial institutions which are

supposed to be reviewing business are victims of the same

problem. In a report by J.C Anyanwu in the “Business times”

title “Averting Bank failure in the 1990s” the author

diagnosed the cause of failures as the general economic

climate in which banks operates. For instance rapid inflation,

high interest rate and high variability in the rate of growth of

the money supply are very difficult conditions in which to run

a bank- Unfortunately, the conditions are glaringly prevalent

in the present Nigeria situation.

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Freeser J. (1990: pg 49-53), a study conducted by Dum and

Bradstreet in 1973 and the conclusion was that 95% of the

cause of failure stated from managerial inexperience and

incompetence. The evidence for inexperience and

incompetence was:-

i. Inadequate sales 44 percent

ii. Competitive weakness 24 percent

iii. Inadequate inventory control 4 percent

iv. Poor geographical location 2 percent

v. Heavy Operation Expenditure 9 percent

Lying behind these is failure to plan for planning and failure,

to control the consequence of the plans environmental

factors may be significant but only to the extent that they

are beyond the ability of the competent manager to predict

and control.

Allsopp M.J (1977: pg 73-81) also reported that in Eight

instances that companies losses were attributed to their

directors. Estimate made in average debt of 60 compared to

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an average of 30 in the previous year as at that time. It is

significant that bad debt is suffered to a great extent by

small company both in U.S.A and U.K.

Ogun Toyinbo. N.O (2003 pg 19) An article published in the

daily times, examined and diagnosed other causes of

business failures as interest discount income and credit

related free income, from substantial part of a bank’s

income.

2.1 DEFINITION OF BUSINESS

The word business means different things to different

people. Many authors have defined business based on their

purpose at a given time. The writer will therefore, examine

the various definitions as given by different authors.

According to oxford advance learners’ dictionary of current

English A.S. Horn by, business is defined as buying and

selling, commerce, trade shop, commercial enterprises etc.

while trade has been further analyzed by the same

dictionary to mean buying and selling which involves

exchange of goods for money or other goods.

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Also company and Allied matters Decree of 1990 defines it

as any trade, industry and profession and any other

occupation carried on for profit.

Having examine the above definition, one can see that all

the definition are centered in carrying on trade with a view

of making some profit.

Business can therefore, be define as any activity carried on

which produces and distribute goods and render services for

the purpose of making profits. All business involves

financing, purchasing, production selling and distribution of

goods for a reward of profit.

2.2 TYPES OF BUSINESSES

Businesses are of various types and can further be classified

two namely:-

i. Un-incorporated

ii. In- corporated

In the case of unincorporated it can further be classified into

viz sole proprietorship & partnership

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1a. THE SOLE PROPRIETORSHIP

This is the simplest form of business enterprise otherwise

known as one man business. They are very small business

organizations and are under the ownership and control of

one person. Here one person takes the responsibility of

providing the finance, making the operating decisions, taking

the risks and benefiting from the profits and losses

1b. THE PARTNERSHIP

S. Olokoyo (2000 pg 13) in his books “managing your small –

scale enterprises successfully’’-defines partnership as a form

of business that is a development over the sole

proprietorship. Partnership can be defined as “an association

of 2 or more people formed for the purpose of running a

business with a view to profit”.

Often individuals do not wish to operate in business in their

own but prefer to do so in conjunction with an agreement to

share responsibilities, the profits and losses. This is

commonly found in professions like medical doctors and law

practice. The ownership & control is in the hand of more

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than one-person. The formation of this type of organization

needs between 2-20 members.

The partnership is also subject to few legal requirements

other than the contract between the partners. Other legal

requirements include the following:-

a. All partners except in special cases are subject to

unlimited liability for all debts and obligations of the

business

b. The normal maximum number of partners is 20 and the

least is 2.

c. No restrictions on a partner: showing his/her intention

to withdraw its membership any time.

ii. Ellen.R (2004) financial times noted that the

incorporated form of business organization was a direct

result of 19th century limited liability Acts, remodified to

suit the 20th profit driven century, which was designed

to mobilize the savings of the community into company

finance. There are two types of this form, namely:-

(a) The private company (b) The public company.

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1.A. Private COMPANY

The private company must have not less than two and not

more than fifty members. This form of organization is very

popular in the retail, whole sale trade and in those sections

of manufacturing industry in which only moderately amount

of capital are required.

b. PUBLIC COMPANY

Lipsey R.G et al (1992:pg 24-27) Economic –defines public

company as a business enterprise set up with no limit in the

number of members and a minimum number of seven. The

public company is the major instruments responsible for the

high rate of economic growth in most industrial countries.

The formation of joint stock company involves more legal

constraints than the other two forms of business in

organizations. Its formation involves the production of three

documents:-

a. MEMORANDUM OF ASSOCIATION:- This includes

the name of Company, its objectives, details of authorized

23

Share capital. It must be signed by at least two persons in

the case of a private and at least seven people in the case of

a public company.

b. ARTICLE OF ASSOCIATION:-This document contains

Information on its issues and transfer of shares,

alteration of capital, dividend policy, a private company

has constraints on the right to transfer shares and

prohibition of public subscription.

c. STATUTORY DECLARATION:- Is a declaration by a

director or the acting solicitor for the company that the

conditions laid down in the company act for the formation of

companies have been complied with.

Except in the event of bankruptcy or a decision to wind up

the joint-stock company has no weakness of impermanence

as in the other two forms of business. The principle of limited

liability is of great importance. It means that the shareholder

is liable only up to the amount stated on the face value of

the shares.

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2.3 BASIC MANAGEMENT FUNCTIONS NEEDED FOR

BUSINESS

OPERATIONS

1. Ellen. R. (2004) Financial times sees management

functions as a combination of elements and task of

management processes combined for the effective running

of an enterprise or organization. They are therefore

considered very relevant in the discussion of management

roles and action.

Henri Fayol considered to be the father of management

stipulated the following functions of management.

a. PLANNING:- This is the role of using available data to

forecast future requirements of various human skills needed

at the various units of the organization.

b. ORGANIZING-This involves arranging organizational

activities into units and allocating specific schedules to

individual. It includes establishing a structural relationship of

Responsibilities and authority between and within the

component units.

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c. STAFFING: - This is a process of recruitment, selection

placement, retention and welfare during and after services

of people whose services are dispensed with.

d. CO-ORDINATING: - Co-ordination involves

ensuring that the personnel activities of the component units

are uni-directional, in line with approved schedules and

aimed at achieving goals of the organization.

e. REPORTING- This is the documentation of staff

performances, promotions, disciplinary actions, leaves etc.

All personnel officers keep data relating to staff and their

performances at work.

f. CONTROL: - It means exercise of authority to directs

workers on what to do and ensuring that deviations when

noticed are timely corrected.

g. BUDGETING- It means translating the quantity &

quality of materials needed for each department into

monetary terms. It is a means of stating possible salaries to

be paid workers within a given period and therefore earning

at a total cost of staff remunerations to ease decision on how

many new staff could be taken on board in relation to

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output. This function’s are performed by the top level

management of the organization.

OPERATIVE – FUNCTIONS

2. Operative functions are the specific duties of the

personnel office in an organization, which are performed on

day-to-day basis. Generally operative duties of the personnel

office are performed by junior and middle level office of the

personnel office working under the supervision of more

serious personnel officers. These duties are:-

a. RECRUITMENT:- Determining the type and sources

of human Skills to be brought into the organization.

b. STAFF SELECTION:- The responsibility of choosing

who should be taken amongst the various applicants for the

job.

c. LABOUR RELATIONS:- Every worker comes into an

organization with needs and expectations which tend to

influence his behaviour at his place of work. It is the

responsibility of the personnel office to give good counseling

27

to employer and ensure speedy resolutions of conflicts

between workers or workers & management.

d. WAGES ADMINISTRATION:- This involve matching

human skills qualifications, experience and official

responsibilities with monetary and non-monetary

compensation packages for workers. Generally this is done

in line with existing labour legislations, policies on

government salaries and wages, the company’s productivity

level and other such related factors.

e. STAFF TRAINING & DEVELOPMENT:- Each staff

needs to improve on already acquired skills particularly if the

schedule of duties involved using newly introduced

machinery. To develop new skills or improve on skills is for

all categories of workers so as to keep a breast of

development in their areas of work.

f. STAFF PERFORMANCE EVALUATION:- It is the

responsibility of the personnel office to assess the

performance of workers. But because of Complexities in

assessing workers of different skills, this activity is often

delegated to heads who observe the worker more regularly

28

and are more conversant with the workers schedule of

duties.

g. PROMOTION AND DISCIPLINE:- It is the

responsibility of the office to promote or discipline staff.

Even when procedures for promotion begin from the relevant

heads of departments they normally end with the personnel

office who eventually conveys such information. Similarly all

disciplinary measures ending with warning letter, demotions

in ranks, loss of jobs etc. are finalized in the personnel

office.

2.4 IMPORTANCE OF BUSINESS TO THE SOCIETY

The 3rd National Development plan (2001, p.353), define

small businesses as a “manufacturing establishments

employing less than ten people or whose investment in

machinery and equipment do not exceed N600, 000.

Business is a very important instrument to the society it

produces great benefits to the economy. The following are

some of the benefits of business to the society:-

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a. CREATION OF EMPLOYMENT OPPORTUNITIES:-

It is felt that the multiplicity of business will go away in

lessening the high level of unemployment. A close look at

the nature of unemployment will indicate that the number of

the unemployed falls into the group of skilled and semi-

skilled.

J. E. Ndagi (1994,pg:104) “Essentials of research

methodology for Nigeria” postulate that if these group

(above) of people are encouraged and given financial

assistance, they could start their own businesses in specific

areas where effective demand have been identified. And as

more people establish and operate their own business, they

would be in position to employ more of the excess labour

which will definitely reduce the rate of unemployment.

b. REDUCTION IN RURAL –URBAN MIGRATION

Sabir B (2000, PG 79) “entrepreneurship in Nigeria”

emphasis that establishing business in rural areas has been

an advantage in solving the problem of rural-urban

movement, by so doing rural labour is absorbed and the

30

establishment would also depend on the agricultural produce

of the rural dwellers.

This in turn will have a positive impact on agricultural output

and lead to a rise in its income and would encourage rural

dwellers to remain in the locality rather than move to urban

areas in search of wage employment.

c. EVEN DISTRIBUTION OF INDUSTRIES

Ndagi J.E. (1994, pg 47-49) “essentials of research

methodology” observed that the rapid growth in the small

scale businesses may also lead to a more even distribution

of industries nationwide. Taking into consideration that the

capital requirement in starting the business may be low and

with the backing of government policies. More business

operations would take of all over the country.

d. MOBILIZATION OF LOCAL RESOURCES

Chester B .et al (1999.pg:222) “Applied management” brings

to the fore that business has brought into view, the need to

switch emphasis from important dependent large scale

31

industries to small enterprises which can structure their

production emphasis to depend mostly on local sources with

local available resources include raw materials and supplies.

2.5 MODES OF OPERATION IN FAITH PRINTING PRESS

Faith printing press is a sole proprietorship organization, but

in the course of its operation these are level of authority that

official duties must proceed through. In order to access the

level of authority in the organization.

A managing Director who happens to be the proprietor, who

is in-charge of the affairs of the company, heads Faith

printing press. He also takes any/every responsibility for all

profits or losses made out of the business.

The managing Director delegate parts of its authority to the

press manager. The press manager over sees the affairs of

the press in the absence of the Director. He also supervises

and make sure that all activities in the press room are well

co-coordinated customers are satisfied for future patronage

and that staff welfare are met by company.

32

The production manager comes into focus next, he makes

sure the operators produce the right job to meet customers

satisfaction. Where there are deviations, he corrects the

staff.

Next in the hierarchy is the maintenance engineers who

make sure the machines are in order, he enquires from the

operator’s the state of the machines and effect the

necessary repairs.

Moreso, the press has own cashiers who make daily records

of sales and make deliveries to the book. Also there is a staff

within the reception, he specifies the cost of jobs to the

customers.

The press has the lithographic section, printing section and

finishing sections, in addition to its asset it has a pick-up van

used for deliveries.

The press has a total of twelve staff and 6 apprentices they

resume at 8:00 am and close 6:00 pm daily; they also work

on overtime and are paid weekly for their services.

2.6 SOURCES OF FUNDS FOR FAITH PRINTING PRESS

33

The sources of finance available to business organizations

are numerous. Faith printing press as a sole proprietorship

has limited sources as a result of its composition. The

sources available to the press are outline below.

a. PERSONNEL SAVINGS

A business can be financed through personnel savings. The

proprietor finances the operations of the press through his

savings in the bank. They are always used as last resort,

where he has used up all the available funds on him.

b. LOANS

The proprietor also applies for loans from reputable banks

where he owns account, also using his second house as

collateral. In the bid to finance jobs, capital is a problem, but

where the reputation of the press is respected they easily

obtain these loans with the right collaterals. Over years the

press’s relationship with the banks have being cordial and

this action has really helped to remain in business.

C. RETAINED PROFIT

Faith printing press is a company worthy to be emulated. It

is an organization that has continued to remain in business

34

based on its steady profits realized from its contractual

deals. The proprietor deemed it necessary to plough back his

profit into the industry so as to provide employment

opportunities for Nigerians and also make it possible for its

operations to survive though not without it’s own hard times,

which almost lead to it’s closure.

D. CREDITS

This source of finance has also being of great benefits to the

organization where there is no fund available material

credits are given to the organization e.g papers, inks, films,

plates etc. the organization settle the suppliers at agreed

dates without interests.

2.7. REASONS FOR BUSINESS FAILURE

S. Olokoyo (2000, pg 5) in his book “in his book “Managing

your small scale enterprise successfully” a guide to

entrepreneurs, managers and students emphasis that a

large number of new businesses fold up even before they

operate for three years for the following reasons:-

35

1. Plunging in without first testing the troubled water on a

small scale.

2. Under pricing of goods or services.

3. Under estimating how much time it will take to build a

market.

4. Starting with too little capital.

5. Starting with much capital and being careless in its use.

6. Going into business with little or no experience.

7. Borrowing money without planning how and when to

pay it back etc.

One of the major advantages and characteristics of a

company is that it has perpetual success from which implies

that it can live for a very long time.

When the entity can no longer function effectively with

regard to profit maximization, if its accumulating liability

then to profit the entity is said to have failed in its primary

objectives.

This chapter deals with the reason /causes/types of business

failure which will be discussed in the following paragraphs:-

36

a. Types and symptoms of business failures

Sabir .B. (2000, pg: 47) “entrepreneur in Nigeria” explained

that there are basically two types of business failure,

financial failure and economic failure. A firm is said to have

financial failure if it is suffering from either technical or

bankruptcy insolvency. If a business is unable to meet its

current obligations as they fall due, even though its total

assets exceed its total liabilities, it is technically insolvent.

Bankruptcy insolvency occurs, however, only where a firm’s

total asset could not meet the total liabilities. Economic

failure relates to a situation where firms total revenue do not

cover its total cost. Some symptoms of imminent business

failure includes the following:

a. Deterioting working capital;

b. Declining sales;

c. Declining profit;

d. Higher debt ratio.

B. STATISTICS ON BUSINESS FAILURE

37

It is relatively easier to obtain statistics on the mortality rate

of businesses in the Western European countries than in

Nigeria say “Sabir” most of the research in Nigeria deals with

the type, classification and registration of businesses, with

very little information on their performance rates or failure.

38

Table 1.1

Distribution of factors claimed to be responsible for business

failure of a selected sample.

Factors Number who give the factor as their main

cause of failure

Percentage

Luck 10 15.87Insufficient money 12 19.05Insufficient preparation

6 9.52

Lack of business connection

15 23.81

Low level of business education

5 7.94

Lack of experience 6 9.52Poor health 4 6.35Lack of management ability

3 4.76

Other factors 2 3.18Total respondents 63 100.00

Table 1.1

Sabir.B (2000:pg:44) put forward the following explanation

for the table.

It is noteworthy that almost 24% of our sampled

entrepreneurs indicated lack of business connection as their

39

number one cause of business failure. It is not dear from the

conclusion whether lack of business connection signifies

inability on the part of the particular entrepreneur to foster

fruitful relationships or whether some non- business

considerations predominate in the selection and

maintenance of would be customers. When it is noted that

almost 16% of the respondents also ascribe the cause of

their business failure to luck, while some people interviewed

in Nigeria especially in the retailing, wholesaling, distribution

and contracting sector is more of who you know, to what

party you belong and from what state you come from, rather

than whether that you perform effectively.

The result also reveal that over 19% of our sample agreed

that lack of money was the primary cause of their failure

though experience has shown that understanding how to use

money your own and that which you can borrow is key

function for success.

The level of ignorance of some entrepreneurs in record

keeping and financial management is appealing. Many of

40

them cannot or do not want to employ the services of

qualified accounts.

The result is that many businesses operate in confusion,

unable to differentiate between periodic gains and loses.

Profit tend to be overstated most of the time, and personal

expenses often are not distinguishable from business

expenses.

In the investigation about 10% confessed their lack of prior

business experience constitute their main worry. To know

the trick and the short cuts in business practices, there is no

alternative to experience.

Surprisingly, even some cases even fatal to their businesses.

Being in business is plain handiwork demanding full

commitment and diligence.

It is revealing and interesting to note that under factors

responsible for success, management ability was rated

first(by 22% of respondents) followed by experience (10%).

Government support and hand work comes closely after

41

experience(over 14%) to bracket the third rating. The fifth

factor in the list of priority was luck. It is significant that

almost 13% of sampled respondents mentioned luck as the

cause of their success. However only 6.35% mentioned their

connection with influential people.

When a business fails, the owner simply stops functioning.

This is true especially since there is no legal requirement

enforcing the registration of failure. Only publicly quoted

companies have to give notice of the intention to wind up.

Chioma. O.C a professional in (2005 on our guest program)

observes the rate of business discontinuance in Nigeria

believes that a greater number of people who enter the

business that a greater number of people who enter the

business world in Nigeria every year fail than succeed. Table

1.1, despite their limited sample provides an inside to the

pattern of this trend.

(c) FINANCE CONSTRAINTS

42

Finance is the backbone of any entity and where this is

lacking or inadequate the entity will lack enough finance to

run its activities properly, also it will not be able to increase

it’s working capital and this could force it into pre-mature

liquidation.

d. LACK OF GOOD MANAGEMENT

Cole G.A. (2003,pg 67) “management theory and practice”

put forward the fact that lack of good management is

another prominent factors which affects business

organizations in the sphere of appointing managers of the

firm. The appointment of these to run the affair of the entity

should be base on the number of shares held and proves

ability to manage the entity and not on the bases of

familiarity. Influence, recognition e.t.c. A director should be

able to plan and control the entity effectively and where this

is lacking then, the entity is due for main collapse.

e. INABILITY TO KEEP BOOKS OF ACCOUNT

Kootz.H.Whehrich .H. (2003) “management 12th edition

postulates inability to keep books of account this will

definitely have an effect on the business especially where

43

the volume of transaction is very large. If the firm does not

keep proper book of account it will not be able to ascertain

whether the business has made a profit or loss in a particular

year. All transaction should be recorded on a daily basis and

on double principle.

f. EMBEZZLEMENT OF FUNDS

Chester.B.et al(1994,pg :153) “Applied Management”

explains that it is a situation where funds of the company

will be greatly reduced and this affects other areas where

finance is urgently needed and this could lead to liquidation

of the firm.

g. LACK/ SHORTAGE OF RAW MATERIALS

Ndagi J.E. (1994, pg: 33) “essentials of research

methodology” observed that raw materials sourcing can

make or mar any company, in that without it the company

can not continue to operate, the absence of which paralyses

the company, because it is a basic requirement

44

REFERENCES

1. Allsopp Micheal.J (1999) Survival in Business London books ltd pg 11-152. Anyanwu J C (1990) Averting bank failures in the

business times pg 133. Chester. B. et al (1999) Applied management pg :153 – 222

4. Cole G.A (2000) management theory and practice Elst publishing pg 67

5. Chioma. O.C(2005) Our guest program. October.6. Frezer.J (1990) The management of business finance London pitman publishing ltd, p.49-537. Hornby A.S (2002) Oxford Advance learners dictionary of current English Oxford university press pg 1148. Ibadan press (2001) National Development plan vol.1, pg 353 9. Kootz.H.Whehrich.H (2003) Management 12th edition – Mcgraw Hill publishers, New York 10. Kotler & Armstong. G (2002) Principles of marketing Eastern co Edition Publishers Russie, pg 311. Ndagi J.C (2003) Essentials of research Methodology for Nigeria education –university press,

Ibadan Nigeria.12. Olokoyo.S. (2000) Managing your small scale Enterprises successfully. pg 5-13

13. Sabir. B. (2000) Entrepreneurship in Nigeria Jinjiri

publishers, pg 44

45

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 INTRODUCTION

This chapter explains the various method used by the

researcher in collecting information necessary for the

validation of the findings in this research study.

Data collection is an important aspect of a research project

work. The research type employ in determining this research

work is descriptive. This is concern with the collection of

data for the purpose of describing and interpreting existing

conditions, prevailing practices on going process e.t.c.

The study is mainly based on data and information sourced

through preliminary survey, investigation, interviews and

questionnaires, the research observes the case study and

attempts to learn about the operations of the printing press.

Preliminary survey compared with observation fields a

broader range of information are effective for a greater

number of the research problem.

46

3.1 RESEARCH DESIGN

The method of data collection for this project write-up is both

primary and secondary

i. PRIMARY DATA

The primary data used in this work is through survey and

empirical method. The survey method was used specifically

because it is convenient and efficient investigative tool in a

realistic settings while employing relevant variables and use

of multi- variant statistics to analyze the data. Especially it

sought for information from Faith printing press and other

printing ventures around. The research conducted a

personal interview with some executive and staff of Faith

printing press.

ii. SECONDARY DATA

The secondary data collected for this project work was the

information obtained from some relevant textbooks

pamphlets of commerce ministries newspapers. Relevant

textbooks where intensively used by the researcher in the

course of this project, besides, the information gathered

47

from the organization and some relevant small-scale

ventures around Uyo, aided the researches substantially in

his conclusion and recommendations.

3.2 POPULATION SAMPLE SIZE OF THE STUDY

The population of this study consist of two branches of Faith

printing press at Uyo and Abuja. More attention is paid to the

branch in Uyo with a population sample of twelve (12)

workers out of a total of forty-three (43) therefore sampling

is based on Uyo branch as a chosen sample and study.

3.3 SAMPLING TECHNIQUES USED

The research decided to use simply random sampling, which

is a “method of drawing a proportion” (sampling) of a

population so that each member of the population has equal

chance of being selected. The researcher also employ the

use of convenience sampling as the technique used for the

data collection because it is unbiased and convenience to

the researchers and no member of the population has more

chance of being selected than the other.

48

3.4 INSTRUMENT USED IN DATA COLLECTION

Questionnaire was the instrument used in the data collection

by the researcher, which contains 16 questions written in

simple English for the easy understanding of respondents.

Alternative answers were provided for each question and few

cases, spaces were also provided for respondents.

3.5 PROCEDURES FOR THE ADMINISTRATION OF THE

INSTRUMENT

The two procedures which the researchers use was primary

and secondary sources of data collection for the study:

The primary sources of data is questionnaire and journals,

newspapers, and discussions with colleagues.

The secondary sources of data used include textbooks,

journals, dictionary etc.

49

Details of the administration of the questionnaire are shown

below.

Respondents Number of questionnaire administered

Number of questionnaire returned

Percentage of response %

Top management

1 1 25

Senior staff 3 3 8.2Junior staff 8 8 66.8Total 12 12 100

3.6 STATISTICAL TECHNIQUES USED

The data collected were tabulated and analyzed using

enumeration statistics, it involves the use of percentage

ratios and averages. The procedures enumerated were used

to ensure the validity and reliability of the data collected and

the researchers also make use chi-square method to show

the hypothesis.

50

CHAPTER FOURPRESENTATION AND ANALYSIS OF DATA

4.0 INTRODUCTION

The sample size of this research is twelve (12) and 12

questionnaires were administered, out of which all were

returned. The respondents were made up of 7 males

representing 58.3% and 5 females representing 41.7%.

Majority of the respondents fall within the age group of 18-

25 years representing 75% of the total sample and the

remaining 25% fall within the age of 26-45 years

respectively.

Data on their respective positions in the company shows

10% of the respondents are the top management, 20% as

line managers and another 20% as supervisors while the

bulk of 50% are lower level/junior workers.

TABLE 1Responses Frequency PercentageManaging director 1 10Manager 3 20Supervisor 3 20Junior staff 7 50Total 12 100

51

Source: questionnaire administered

It is clear from the above table that 50% of the respondents

are junior workers, while 10% represent the top

management level, 40% representing six of the respondents

account for the manager and supervisors. This also shows

that about 70% of the workers fall under workers category,

since even the supervisors will be supervising and rendering

touches here and there.

For how long have they been working in the company, shows

their responses in the following data

TABLE 2

Responses Frequency Percentage1-5yrs 3 256-10yrs 4 33.311 and above 5 41.7Total 12 100

Source: questionnaire administered

It is clear from the above table that 75 respondents have

being with the company for about 6-11 years while three of

the respondents representing 25% total sample have been

with the press for just 1-5 years. This shows that the majority

52

of staffs have stayed with the press for a long period and this

will naturally make them see it as part of their lives and they

may not be in support of either new comers and fresh brains.

TABLE 3RESPONDENTS

1-5 0% 6-10 % 11-15 % 16-20 %

Top management

------ ----- ----- ----- 1 8% ----- -----

Senior staff ------ ---- ----- 8% 2 17% ----- -----Junior staff ------- ----- ----- ----- 3 67% ----- -----Total ------- ----- 1 11 92% -----

When the question on the company’s staff strength asked,

the respondents claim that it is 5 or so while 1 of the

respondent felt that it’s about 6-10 staffs while eleven (11)

of the respondents representing about 92% indicated that

the staff strength is about (11) eleven to fifteen and finally

non of the respondents indicated the range of 16-20 staff

strength.

TABLE 4On how many of the staff are either skilled or unskilled.

RESPONSES Frequency PercentageSkilled 4 33.3Un skilled 8 66.7Total 12 100

Source – questionnaire administered.

53

From the table above, it shows that 8 of the 12 respondents

representing 66.7% are unskilled staff, while 4 of the 12

respondents representing 33.3% indicate the number of the

skilled staffs. What the company needs is to the skilled

workers.

TABLE 5 How many of your staff are educationally qualified in?Responses Frequency PercentagePrinting technology 4 33.3Business management 6 50Other fields of study 2 16.7Total 12 100Source- questionnaire administered

From the above table, it shows that the only 4 of the

respondent representing 33.3% of the sample, claim that the

company has staff qualified in printing technology, while

50% of respondent claimed such staffs are qualified in

business management while 16.7% a test to the fact that the

company also has staffs qualified in other areas. This shows

that the company should recruit more staffs that are well

qualified in printing technology, this is for the fact that such

steps will help in fast turning the companies activities the

54

printing quality will increase in line with modern work, there

will also be on time finishing of jobs. The 16.7% of other

should be increase to accommodate accountants and

mechanical engineers.

TABLE 6How would you rate the company’s annual turnover?RESPONSES Frequency PercentageHigh ------ ------Moderate/ median 9 67.0%Low 3 33.0% Total 12 100 Sources –Questionnaire administered

From the above table it shows that 67% of respondent claimed

that the company’s annual turnover has been moderate while

33.3% claim that there has being low turnover from the

responses it suggest that the company’s turn out has never

being high, because there was not a single respondent claiming

such. Therefore the company will have to find ways to increase

turnover to avoid bankruptcy or failure.

TABLE 7On the question which says that in your own opinion/ views what is your company’s production capacity.Responses Frequency PercentageLarge scale capacity

3 25

Small scale 3 25

55

production capacityModerate Capacity 6 50Total 12 100%Source: - Questionnaire administered

From the above table, it can be seen that 50% of the

respondents claimed that the company has the production

capacity of moderacy. While 25% representing 3 agreed that

the company’s production capacity is large-scale production.

25 % also agreed that the company production capacity is

small scale. This means that the company will have to increase

production to at least 75% large-scale production to be able to

stay top in the market.

TABLE 8

Profit maximization is every organization’s goal in what

ways do Faith printing press achieve this goal?

Responses Frequency PercentageQuality production 4 33.4%On time delivery/deadline

1 38.5

Quality consideration

6 50

Others 1 8.3Total 12 100

Source – Questionnaire administered

56

From table 8 the conclusion is that quantity production is a

top priority in Faith, which must be affecting it because

quality production is lacking behind, i e the company prefer

to mass produce than to consider quality in such production,

while quality is what they need to make a name. 8.3% of the

respondents feels that the company delivers on time which

is very small a time they ever meet such an objective, which

is suppose to be taken seriously.

TABLE 9Has business patronage been good so far?

Responses Frequency PercentageCertainly 3 25Mildly 5 41.5Not good 4 33.3Total 12 100Source:-Questionnaire administered

It is clear from the above table that 41.7 of the respondents

feels that business has not been that good but manageable.

25 % of respondents feels that the patronage has certainly

been ok, while 33.3% of respondents representing 4 staffs

claims that patronage needs a revival before it will finally

slumped.

TABLE 10

57

On the question of what major steps has been taken to increase patronage?. The following data was obtained and tabulated.

Responses Frequency Percentage

Advert placement 3 16.7Increase /easy communication 1 8.3Accessible road net work 8 75Total 12 100

Source:-Questionnaire administered

From the table above the result of the respondents shows

that 75% representing 8 all agree that road net work is to be

addressed if the company seek to increase patronage i.e the

company lack motorable road to attack customers or even

the lack of it is scaring away customers, while 16.7% of

respondents representing 3 feels that advert placement will

definitely increase patronage. The remaining 8.3% claims

that to increase patronage the company needs to

communicate more with the outside world.

TABLE 11Are the machineries and equipments used for production purposes up-to-date.

Responses Frequency PercentageYes 4 33.3No 5 50Not all of it 3 16.7Total 12 100

58

Source: questionnaire administered

The table above shows that 33.3% of the respondents all

agree that the machineries and equipment used by the

company are obsolete while 50% of the respondents feel

that the equipments are up to date. 16.7% representing 3

respondents claim that not all of it are up - to – date or in

good shape. This shows that the company will have to

update or even replace its machineries to be able to increase

production.

59

TABLE 12How does the company source for its capital?

Responses Frequency PercentageBank loans 4 33.3Family sources - -Personal saving 8 66.7Total 12 100

Source: questionnaire

From the table above it can be seen that respondents

representing 66.7% claim that the company’s source of

capital is from personal savings, while 33.3% respondents

representing 4 claim that the company’s source of capital is

from bank loans obtained by the company, maybe what the

company needs is that it should seek for more of the bank

loans so as to replace its obsolete machines, repair the road

which will in turn bring about more patronage and help in

the company to stay in business.

TABLE 13The relationship between the staff and management can best be described as?

Responses Frequency PercentageCordial 9 67Stable 2 20Unstable 1 1.3Total 100

Source: questionnaire administered

60

The table shows that 67% of the respondents claims that the

staff and management relationship has been cordial, while

20% feels that its only been stable and respondents 1.3%

claims that its unstable. What the company needs is that

those 1.3 that felt their working relationship has being

unstable should brought on board so as to discourage any

disaffection among the company workers.

TABLE 14In what ways has the company tried to motivate its staff.

Responses Frequency Percentage

Over-time payments 5 41.6Free health care provision 4 33.4Affordable education for dependents

- -

Gifts to staff during `ceremonies

3 25

Total 12 100Source: questionnaire administered

From the above table 41.6% of respondents representing 5

claims that the company’s motivational tool as been the

payment of over-times. While 33.4% of the respondents

claims that the company has been giving/providing them

with free health care to motivate them and 25% claims that

the company has made free gifts available for everyone

61

during celebrations/ceremonies it also shows that the

company has never made any arrangement for affordable

education of their dependents. The company needs to

increase the medical care been given as at now, because the

health of the workers definitely means fast and efficient job,

while bad health condition means less production and less

turnover. The company may also look in the possibility of

providing affordable education or other alternative

arrangement.

TABLE 15It was asked that what are the strategies employed to provide stable power supply? The responses thus:

Responses Frequency Percentage %Diesel generator 3 25Petrol generator 1 8.2Electricity 8 66.8Total 12 100

Source: questionnaire administered

From the above table it can be seen that 25% of the

respondents represent 3 claims that diesel generator is the

strategy the company has put in-place to for tale power

failure. 82% of the respondents disagree and said petrol

62

generator is what the company use sustain power, while

66.8% claims that all they had is electricity power supply,

which they so much relay on, to which we all know will not

favour any form of business. The company will have to weigh

between the use of diesel and petrol type of generator,

compare price, affordability and availability.

TABLE 16

Did you think that Faith printing has the following

business qualities?

Responses Respondents Frequency

Percentage

Good management Junior staffs 8 66.8Efficient supervisors Top

management1 8.2

Capital strength Senior staff 3 25Total All 12 100

Source: questionnaire administered

From the above table it can be seen that 66.8% of the

respondents who are junior staff claim that the management

team of Faith is nothing to write home about, while 25% of

respondents representing the senior staff claim that Faith

lacks capital and top management with 8.2% claims that the

63

problem is that Faith printing press lack sufficient

supervisors. What need to be done is co-operation instead of

pointing accusing fingers at each other.

64

4.1 TEST OF HYPOTHESIS

Testing of hypothesis refers to the testing or trying to draw

a conclusion about the hypothesis stated earlier on or put

forward in chapter one. It is however important to note that

any conclusion reached at this stage is strictly based on data

collection and analysis in the research work with the staff of

the case study. In chapter one tentative statement were

drawn to serve as a guide to the conduct of this research

work. These hypotheses therefore are to be tested as

against the data collected and see whether they can be

validated or otherwise.

a. First hypothesis, which states that “efficient

management of resources could have prevented failure

of printing press”.

HYPOTHESIS 1

H1: In efficient management of resources could not lead to

failure of Faith press.

H0: Inefficient management of resources could lead to

failure of Faith printing press.

65

In testing the validity of the statement can be analysed from

the following perspective of respondents in table 16 where

75% of the respondents agree that inefficiency and lack of

good management and inefficient supervising leads to

failure of Faith printing press. The hypothesis will be tested

using chi-square (2) testing 95% confidence level i.e.

assume it to be 95% accurate with 5% risk of error.

4.2 TEST OF HYPOTHESIS OBSERVED AND EXPECTED

FREQUENCY TABLE BASED ON TABLE SIXTEEN

Responses Manageme

nt

Staff Total

row

Good management 19 23 41

Efficient supervisor 7 5 12

Inefficient resource 0 3 3

Capital strength 5 21 26

Column total 31 52 83

Source: survey data

The expected frequency are observed using the formula

Row total x Column total Total observed

66

The level of confidence x=0.05

Degree of frequency df =(r-1) (c-1)(4-1)(2-1)=2

Testing statistics= 2 = (0-e) 2 E

Where 0= observed frequency

E=expected frequency

2= chi-square

Decision rule = you can accept H0 if your calculated value2 is

less than 2 value in the table i.e. accept H0 if 2<7.81

Computation

0 E 0-E (0-E) (0-E) 2 E

19 15.3 3.7 13.69 0.89

7 4.5 2.5 6.25 1.39

0 1.1 -1.1 -1.21 -1.1

5 7.8 -2.8 -7.84 1.01

23 14.4 8.6 73.96 5.14

5 3.1 1.9 3.61 1.16

3 0 3 9 9

21 13.2 7.8 60.84 4.61

Y2=20.08

67

4.3 CONCLUSION:

Since the calculated value of 2 is greater than the table

value (7.81), we therefore reject H0 and accept H1 and

conclude that efficient management of resources could have

prevented failure of Faith printing press.

Therefore efficient management of resources contributed in a

meaningful way of managing of Faith printing press.

68

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSIONS &

RECOMMENDATIONS

5.0 INTRODUCTION

From chapter four, the result are presented in this chapter

with variable conclusions drawn from the research findings

and appropriate recommendations for the improvement of

business and also providing possible solutions that will avert

business failures.

5.1 SUMMARY OF MAJOR FINDINGS

From chapter four, the following are the findings that are

related to the hypothesis of the research work.

From table iv it was found out that the company is largely

made up of unskilled staff (66.7%) as a result there is a poor

management. Also table 5 reaffirmed that only 50% of the

staffs are educationally sound in business management

rather printing technology.

69

The respondent in table 12 indicate the need for further

capital to implement its operations.

In table 16, the respondents accounting for about 66.8 felt

that the company in need of good management finally in

table 15 the respondent appear to all agreed that the

company relay much on electricity which we all know is

epileptic. The company also used generator to combat

electricity failure, which is 25% and inadequate and sub-

standard to implement the companies line of operations.

5.2 CONCLUSIONS

This project work was carried out to know the problems of

business failure and possible solutions with part reference to

Faith printing press Uyo.

The method used in collecting questionnaires were analysed

in the forth chapter and hypothesis testing was also made in

the same chapter and conclusion made also.

5.3 RECOMMENDATIONS

70

This aspect of project deals with the problematic areas

highlighted and brought to focus during this study. It is

anticipated that areas of weakness will be improved upon if

the recommendations listed below are fully implemented:-

1. It is recommended that efforts should be made to

employ educationally sound staffs in printing

technology to ensure efficiency and effectiveness in her

operations.

2. Since the analysis also shows that poor infrastructure is

contributing to the company’s failure, the company

should find ways of repairing the road or notifying the

appropriate authorities concern to come and see to the

matter.

3. Retained profits and other sources of funds should be

devised by the company to fund it’s operations.

4. Highly modernized diesel generator should be put in

place to prevent further power failure.

71

BIBLIOGRAPHY

ALLSOPP M. J(1999) Survival in Business London books L T D

London.

APPLEBY .B.C (1981) Modern Business Administration Pitman

publishing company ltd. London.

JAMES .J.C (1999) Marketing Channels (2 nd edition)

Petroleum publishing company

Oklahomu.

PIGORS .P et al (2002) Personal Administration. A point of

view and a method Mcgraw hill, New

York,

PETER P. B (2000) Management of Small Business. Harpen

and bow press New York,

WORTHINGTON et all(2002) Business Environment Pitman

publishing company ltd London.

72

73