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Entrepreneurs may face a variety of challenges in 2023. Some are outside the industry, some are unique. As an entrepreneur with experience in a variety of industries, from trading to manufacturing, some of these challenges are predictable. Let’s look at them from the perspective of Bangladeshi entrepreneurs.
The biggest challenges from the beginning to the end of 2023 will come from external factors. These are not always under our control and we may not have a solution.
However, it is important to keep in mind that real-world challenges will always be there and to be aware of them so that the worst possible outcomes can be avoided. We look at these factors in light of the possibilities 2023 holds for us.
With inflation approaching 9% in December 2022 and the economy starting to recover, high demand for the product put undue pressure on prices. To make matters worse, energy costs were skyrocketing.
Inflation is a particular concern if you hold large amounts of cash. Money loses its value because it is only in your checking account. On the other hand, the goods and materials required for production become more expensive.
To limit the negative effects of inflation, we can try to keep liquidity as low as possible. For example, you can now stock up on food that you will need later. Or, if you’re looking to invest in improving your business, now might be a better time than later. So idle cash can be invested elsewhere without losing its true value.
Except for export-oriented industries, most local industries rely heavily on imported raw materials. Also, because of foreign exchange reserves, many companies are unable to maintain enough raw materials that impede production, which could result in layoffs.
According to data from Bangladesh Bank, the bank’s total foreign currency balances fell from $5.2 billion at the end of June this year to $4.5 billion in October. But in order to sustain it, the local industry will face the problem of maintaining production and fixed costs that are out of control due to job cuts.
There are also factors that are inherited by the industry. For example, stable cash flow is essential for a company’s survival. And each industry is in some way connected to other industries.
For example, the consumer electronics industry is linked to the packaging industry. So whether the consumer electronics industry is doing well or the packaging industry is not doing well, or vice versa, supply chains and markets are hampered.
Many entrepreneurs 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 payment 30 days after receiving the invoice, and in some cases he wants payment 60 days after receiving it.
To mitigate this delay, you may need to bill every 15th day instead of every month. This is the breakdown of latency from one payment to the next. Another option is to require a deposit at the start of the contract.
Funding is a problem faced by both new and established entrepreneurs. If you’re still in the early stages, you may be looking for angel investors or seed funding. If you are an established entrepreneur, you may need to cover additional expenses and supply costs on time.
If inflation continues to rise in 2023, funding costs will be even higher. If you use credit lines, you can improve their use by implementing more efficient cash flow. This can save you a lot of money on interest payments.
In summary, entrepreneurs will only do well in 2023 if they manage to get through the year by maintaining cash flow, not laying off, and good financial management.
In 2023, the focus should be on sustaining the business rather than chasing high margins. Being a successful entrepreneur is probably one of his most difficult careers, but also one of his most satisfying.
The most fulfilling thing isn’t the money, but the satisfaction of overcoming new obstacles that constantly appear in creative and hard-working ways. Therefore, the new entrepreneur should not lose hope in 2023.
Sketch: TBS
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Sketch: TBS
The author is the Managing Director of Miyako Appliances Limited, Bangladesh and the first Doctor of Business Administration, IBA, University of Dhaka. He is also Adjunct Associate Professor in his SBE at Bangladesh Independent University.
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