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A challenging year ahead for an entrepreneur

by Ozva Admin
A challenging year ahead for an entrepreneur

Entrepreneurs may face a variety of challenges in 2023; some outside of your industry and some intrinsic. As an entrepreneur with experience in various industries, from retail to manufacturing, I can expect some of these challenges in advance. Let’s take a look from the perspective of a Bangladeshi businessman.

The biggest challenges, from the beginning of 2023 through the rest of the year, will come from external factors. These are not always within our control and sometimes there is no solution.

However, it is important to be aware of them to avoid the worst possible consequences, keeping in mind that there will always be real challenges. We’ll take a look at these factors in light of what 2023 could bring us.

In December 2022, inflation approached 9%, and as the economy began to recover, high demand for products put undue pressure on prices. To make matters worse, energy costs have skyrocketed.

Inflation is a particular concern if we have large amounts of cash. The value of money is lost because the money is only in the checking account. On the other hand, the goods and materials needed for production become more expensive.

To limit the negative effects of inflation, we may try to keep liquidity as low as possible. For example, now we can stock up on food that we will need later. Or, if you’re looking to invest to improve your business, now might be a better time than later. The idle cash can then be invested elsewhere without losing its real value.

In addition to the export-oriented industry, most of our local industries are highly dependent on imported raw materials. And due to foreign exchange reserves, many companies cannot keep enough raw materials, so production will be hampered and layoffs may occur.

The gross balance of foreign currency with banks fell to $4.5 billion in October, down from $5.2 billion at the end of June this year, according to data from the Bangladesh Bank. But to maintain that, local industries will face problems in maintaining production and fixed costs for which layoffs cannot be controlled.

There are also some factors that are inherited by the industry. For example, a stable cash flow is essential for a business to survive. And every industry is linked in some way to some other industry.

For example, the home appliance industry is linked to the packaging industry. Therefore, even if the home appliance industry is doing well but the packaging industry is not or vice versa, the supply chain or the market will be hampered.

Many business owners struggle to pay bills, workers’ wages, and rent instead of earning a steady income. These problems usually arise from late payments. In many cases, the customer wants to pay 30 days after receiving the invoice, and in some cases 60 days after receiving the invoice.

To mitigate this delay, you may need to bill every 15 days instead of every month. This is a breakdown of the wait time from one payment to the next. Another option is to require a deposit at the beginning of the contract.

Financing is a problem faced by both new and established entrepreneurs. If you are still in the early stages, you may be looking for an angel investor or seed funding. If you are an established businessman, you may need to cover additional expenses or supply costs on time.

If inflation continues to rise in 2023, financing will continue to become more expensive. If you are going to use a line of credit, you can improve its use by implementing a more efficient cash flow, which should save you a lot in interest payments.

In summary, the performance of an entrepreneur in 2023 will be wonderful only if he can survive the year by maintaining cash flow, without layoffs and with proper management of funds.

In 2023, we should not be looking for a high profit margin, but rather focus on staying in business. Being a successful entrepreneur is possibly one of the toughest careers one can have, but it is also the most fulfilling career.

It is not the money that satisfies the most, but the satisfaction of overcoming new and constantly emerging obstacles in creative and industrious ways. So new entrepreneurs should not lose hope in 2023.

Sketch: TBS

Sketch: TBS

Sketch: TBS

The author is the Managing Director of Miyako Appliance Limited, Bangladesh and the first Doctor of Business Administration from IBA, University of Dhaka. He is also an Adjunct Associate Professor at SBE, Bangladesh Independent University.

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