EFFECT OF EXTERNAL ENVIRONMENTAL FACTORS ON THE PERFORMANCE OF NANO BUSINESSES IN BAJOGA, FUNAKAYE LOCAL GOVERNMENT AREA, GOMBE STATE, NIGERIA

CHAPTER ONE
1.0 INTRODUCTION
1.1 Background to the Study
The role of Small and Medium Enterprises (SMEs) in the national economy cannot be underestimated as they play important role in the global economy (Taiwo, Ayodeji & Yusuf, 2015). It is a non-disputable fact that Nano businesses are the building blocks or foundation of SMEs. For the sake of clarity, the use of the term ‘Nano’ has nothing to do with nanotechnology. It is only to adjudge that Nano is smaller than micro and such level exist within the small business ecosystem. Placing it in the right context, Nano businesses exist as the largest segment within SMEs in Nigeria because of their economic relevance, coverage, and spread (Timi olubiyi, 2021). Simply, it is a form of business without a fancy business plan or a five-year projection to expand and all. These Nano businesses are the various “solopreneurs” and home-based businesses such as make-up artists, event planners, battery chargers, independent dispatch riders, vendors, call centre agents, fashion designer, vulcanizers, drycleaners, corner shop owners, single retail marketers, repairers, painters, business centre operators, market women and men in the various open markets, among others (Timi olubiyi, 2021).
Performance is the ability of an organization to achieve objectives such as high profit, quality product; large market share, good financial outcomes and survival at pre-determined time using relevant strategy for action. Business enterprise performance according to Oghojafor, Olamitunji, and Sulaimon (2011) is how a manager effectively and efficiently utilizes the organisation’s resources so as to achieve the organization's goals and satisfy the stakeholders.
Environmental forces create challenges and opportunities for organization (Pearce & Robinson, 2007). Nevertheless, business owners/managers must respond and adjust to alterations in their surroundings so as to be able to recognize the challenges and opportunity that lies ahead of them in their business environment in order to perform efficiently. The external environment is that system which consists of factors that affect business enterprises from outside such as economic, political,cultural and technological and these environmental factors are beyond the control of the enterprises (Alkali & Abu, 2012; Pearce & Robinson, 2011).
Economic environment according to Omobolanle (2009) refers to those economic factors, such as inflation rate, exchange rate, unemployment rate among others which have overbearing effect on the performance of Nano businesses.
According to Wetherly& Otter (2011). Cultural context is fixed up of collection of activities that people engage in their personal and private lives which include; ethnicity, religion, values, attitude and lifestyles. These environmental patterns of behaviours lead to the foundation of various cultural values in different societies, some of which determine the decision to create new business.
Political environment is viewed via the legal framework where the organisation operates and this is done through the laws and regulations that guides the operations of the business in question.
1.2 Statement Of The Problem
In today’s turbulent business environment, predominantly with the economic recession, inflation, and insecurity, strategy becomes the main source of competitive advantage for businesses and organizations. One of these strategies is understanding business environment particularly the external business environment, and how it affects the performance of businesses most especially Nano businesses
The world economy experienced several unfavourable environments, which lead to low performance of business most especially Nano and Small Scale Enterprises. Most nations are currently showing a diminishing environmental growth and increasing cost of production, which results to collapse of these business firms (Harvie 2004). However, business (Nano and small) suffers from a number of challenges leading to poor business operation.Stagnated growth of business particularly Nano business in Nigeria as a developing country is an issue of great concern (Omolomo, Odunayo and Tobora, 2014). This is because its persistence may serve as a stumbling block to any effort by the government to eradicate poverty and unemployment because of its impact on income distribution and employment generation. In a developing economy like Nigeria, Nano business in particular and SMEs in general represents one of, if not the most important sector of the economy.Also thecultural environment of businesses in the country is porous as there is high preference among consumers for imported goods and the country engages in more importation than exportation (Muktar, Gambo, & Mukhtar, 2015).
These expenses may have a detrimental impact on business development and cause cultural aspect of businesses not to perform adequately. However, according to Casey (2015) SMEs in general and Nano business in particular are faced with critical political decisions and policies that make businesses underperform.Consequently, this provides a basis of combining the three factors (Inflation, Government policy and Educational Background) in this study. This study therefore, shall consider the above mentioned three categories of external business environment as the independent variable measuring external business environment on performance of Nano business in bajoga. The study of this nature becomes imperative to proffer solution, suggestions and perhaps advices for Nano business operators in Bajoga funakaye local government area, Gombe state, Northeast, Nigeria and even beyond, regarding issues bedeviling the sector
1.3 Research Questions
In line with the above research problem stated, the following research questions were asked:
I. Does Inflation have any effect on the Financial Performance of Nano business in Bajoga, Funakaye Local Government Area?
II. Does Naira Re-design policy ha any effect on the Financial Performance of Nanobusiness in bajoga, Funakaye Local Government Area?
III. Does Educational Background have any effect on the Financial Performance of Nano business in Bajoga, Funakaye Local Government Area?
1.4 Objectives of the Study
The main objective of the study is to examine the Effect of External Business Environment on the Financial Performance of Nano businesses in Funakaye Local Government Area. Specifically, the study was guided by the following objectives, to:
I. determine the effect of Inflation on the Financial Performance of Nano business in Funakaye Local Government Area
II. examine the effect of Naira re-design policy on the Financial performance of Nano businesses in Funakaye Local Government Area.
III. Determine the effect ofEducational Background on the Financial Performance of Nano businesses in Funakaye Local Government Area.
1.5 Hypotheses of the Study
Based on the objectives, the following hypotheses were formulated in null form:
H01: Inflation has no significant effect on the Financial Performance of Nano businesses in Funakaye Local Government Area.
H02: Naira re-design policy has no significant effect on the Financial performance of Nano businesses in Funakaye local government area.
H03: Educational Background has no significant effect on the Financial Performance of Nano businesses in Funakaye Local Government Area.
1.6 Significance of the Study
This present study set out to confirm the contingency theory, by studying the best way on the environmental factors that make Nano business perform effectively. This study thus shall theoretically enhance the body of knowledge by combining economic, cultural and legal framework in the model. Furthermore, most previous related researches studied these environmental factors differently. In addition, studies that have considered these environmental factors have looked at the large enterprise. This study thus contributes to the body of knowledge by combining the environmental factors on performance of Nano business as there is scarcity of related studies that have look at the combination of these three environmental factors on one model.
The study shall be of benefit to Nano business owners/managers operating in Bajoga and Gombe state at large, it shall providee ways on how to survey the business environment appropriately thus ensuring that the objectives are achieved.
Furthermore, the study may enable future researchers, academicians and students to understand the impact and importance of these three external business environment (economic, cultural and legal) on the performance of Nano businesses.
1.7 Scope of the Study
The scope of this study will cover only Nano businesses in Bajoga, Funakaye local government area of Gombe state.This study was carried out in Bajoga, Funakaye Local Government Area, Gombe State, Nigeria,Bajoga is the administrative headquarter of Funakaye Local Government Area located in the Northern part of Gombe State,it has an area of 3.408km² and a population of 116,630 people (Census 2006).Bajoga was chosen because the researcher believed that it is one of the local government administrative headquarter that isamong the Local Government Area with high concentration of Nano businesses in Gombe State. The variables used in this study includes: Inflation, Naira re-design policy and Educational Background.
The study is also limited to the owners of Nano businesses in Bajoga Funakaye Local Government Area in Gombe State.
1.8 DEFINITION OF TERMS
Financial performance: it’s a subjective measure of how well a firm can use assets from its primary mode of business and generate revenue.
Inflation: This is the rate of increase in prices over a given period of time
Business Environmental Factors: it’s the sum total of all external and internal factors that affects or influences business
Nano Business: it’s usually a kind of business that is made up of 1-3 persons with even less than 50,000 Naira initial capital outlay.
Naira re-design policy: It’s a Policy aimed at improving Nigeria’s monetary policy, promote cashless transactions, and enhance the Naira’s credibility.
 
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
In this chapter, we shall be presenting a conceptual review, conceptual model of the project topic: Effect of External Environmental Factors on the Performance of Nano business in Bajoga, Funakaye Local Government Area of Gombe State, and likewise theoretical and Empirical review of the afore mentioned topic, coupled with the gaps in the literature. The section shall also establish a relationship between External Environment and performance of Nano businesses.
2.1 CONCEPTUAL REVIEW
2.1.1. PERFORMANCE
Simply is the achievement of quantified objectives, it is in two forms, which are monetary and non- monetary performance. The monetary aspects of performance can be measured in terms of increase in profits, sales volume, revenue, market share, and product quality etc. while the non-monetary aspects can also be measured in terms of number of employees, expansion, survival etc. Performance is not only a matter of what people achieves but also how they are achieving it. A high performance result comes from appropriate behavior and the effective use of required knowledge, skills and competencies.

    Date: 2026-08-02 00:00:00.000000