Determinants of Small Business Failure in the Fast-Moving Consumer Goods Sector in Lagos

This study examines the determinants of small business failure among fast-moving consumer goods enterprises in Lagos State, South West Nigeria, drawing on the experiences of entrepreneurs whose businesses ceased operations within five years of founding. FMCG retailing and distribution is among the most common entry-level business activities in Lagos, yet the failure rate of small FMCG enterprises is high, and understanding the specific causes of failure is essential for entrepreneurs, investors, and policy makers seeking to improve survival rates. The study adopts a retrospective survey design, recruiting 120 entrepreneurs who had operated and subsequently closed FMCG businesses in Apapa, Yaba, and Mushin Local Government Areas. A structured questionnaire examined financial management practices, market knowledge, operational management, and environmental factors during the businesses' operating periods. Data were analysed using descriptive statistics and logistic regression to identify the strongest predictors of failure. Findings identify poor cash flow management as the most consistently cited proximate cause of failure, present in 78 percent of cases. Undercapitalisation at startup, over-reliance on informal trade credit, the impact of periodic naira devaluation on import-dependent FMCG costs, and disruption from market fires and property access disputes are identified as significant structural contributors. Lack of basic record-keeping and financial literacy is identified as a systemic weakness across the sample. Recommendations include mandatory financial literacy training for FMCG market association members in Lagos and reformed access to the MSME Survival Fund. Keywords: small business failure, FMCG, Lagos, cash flow management, entrepreneurial failure.