Examining the Causes of Small Medium Enterprises Failure in Garowe-Puntland Somalia

Purpose: Small business failure has been a persistent problem in Somalia in general, and in Garowe, Puntland in particular, for many years. Therefore, this study was conducted to identify both internal and external factors contributing to small business failure in Garowe, Puntland. Design/Methodology/Approach: This study employed a survey research design, using questionnaires to collect data from 120 respondents who were owners of failed small businesses. The data were analyzed using descriptive statistical tools with the help of SPSS version 21. In addition, the Relative Importance Index (RII) was applied to identify the eight most significant internal and external factors contributing to small business failure in Garowe, Puntland. Findings: With regard to the factors that caused small business failure, the study found that the most significant internal and external causes were bad debt repayment and poor business location. Other major contributing factors included the lack of a business plan, limited business innovation, high operating expenses such as wages and rent, high taxation, political instability, and elevated interest rates. Practical Implications: The findings highlight the importance of preparing business plans, adopting innovation, and carefully selecting business locations before starting operations. Owners should strengthen their financial management skills to reduce risks related to bad debts and high operating expenses. Originality/Value: The study provides a practical guide for aspiring entrepreneurs on the key pitfalls to avoid, particularly regarding poor planning, site selection, and inadequate innovation.