Financial and Non-financial Performance of Small Businesses in Nigeria: An Empirical Evidence of the Role of Environmental Factors

The role small businesses play in the economy of countries are very germane. They enhance the
growth and development of nations through massive job creation, contribution to the Gross Domestic
Product (GDP) and consequently reducing poverty and crime rates. Despite their importance, small
businesses all over the world especially developing countries face diverse challenges that affect their
performance. The objective of this study is to investigate the environmental factors that impact the
financial and non-financial performance of small businesses. A survey method was used to gather
data from two hundred and four small business owners and managers located in selected cities in
Nigeria. Descriptive statistics and correlation analysis were conducted to identify the relationship
between internal and external environmental factors and the performance of small businesses in
Nigeria. The results of the study reveal that inadequate finance, inadequate infrastructure and poor
managerial skills have significant and negative relationship with small businesses' performance.
Meanwhile, inadequate finance is the most significant factor while, inadequate infrastructure is the
least significant factor.
This study emphasizes the need for favourable government policies to support small scale businesses
in easy access to finance and training. Small business owners are advised to regularly attend
workshops, training and seminars for skills update. Government is also implored to fix dilapidated
infrastructure in the country. In the case of this study revealed, inadequate infrastructure least affects
MSEs performance. This appears to be the availability of substitutes for many infrastructural deficits.
For example, there is no stable electricity in Nigeria, but most MSEs can afford at least a small
generator popularly called "I pass my neighbour" to power their businesses. Also it is scarce to get
pipe borne water, but many alternative exists e.g. bottled water, sachet water, buying water in large
quantity from private borehole water suppliers or fetching from wells.