Startups boom but go bust for caregivers' neglect

Startups are coming up in encouraging numbers in the SME sector but many entrepreneurs are failing to sustain and closing their businesses within a year or two, for lacking in tricks of the trade, sources said.

According to sector-insiders and experts, the expected growth of Bangladesh's once-thriving cottage, small and medium enterprises is getting stymied for a lack of effective marketing knowledge, necessary strategies and training of the entrepreneurs.

In the context of Bangladesh, says South Asian Network on Economic Modeling (SANEM) executive director (ED) Dr Selim Raihan in the light of an anatomy of the sector, the challenges facing new SME entrepreneurs, particularly in the area of marketing, are indeed critical.

"Many small business owners begin their ventures with enthusiasm but without sufficient knowledge or strategic planning in marketing. As a result, they struggle to identify target customers, position their products effectively, and compete with established brands," he says about the Achilles' heel that kills startups in the otherwise-potential sector.

The economist, with expertise in economic structuring, says the lack of marketing knowledge for feeding products produced by the sector's owners is a widespread and major problem facing small businesses, which could lead to business failure in the sector.

Although the SMEs are drivers of economic growth and job creation in the country, most SME owners lack formal knowledge and strategic skills in products marketing. They often do not understand the difference between conventional and unconventional marketing methods.

Moreover, due to limited knowledge about the domestic and international markets of the product, they lag behind in product promotion and market linkages, he says, adding that for a lack of adequate knowledge about modern technology, entrepreneurs concerned cannot improve the quality of products and create versatile products tailored to the needs of the buyers.

Effective branding and attractive packaging, determining profitable prices are essential to survive on the competitive market. But SMEs usually pay less attention to this aspect or cannot create quality packaging for lack of financial budget, as per a document produced by the SME Foundation.

There as been a widespread expansion of online marketing and e-commerce platforms these days with faster advances in communications technology. But many SMEs are found still lagging behind in implementing digital marketing strategies.

Because of inadequate budget for conducting marketing activities, inability to bear advertising and promotion costs are major challenges for SMEs. It is often difficult to compete with big brands and foreign products on the market.

Sometimes, even though they are able to produce products according to market demand, SME entrepreneurs face challenges in procuring raw materials and marketing their produced goods for a lack of policy support from various institutions.

The experts suggest taking requisite steps to increase and improve marketing skills and required strategies, organising training and workshop, providing marketing-consulting services, supportive policies and institutional support, special incentives and facilities for SME products marketing by the government.

They also recommend expansion of digital marketing, effective use of social -media platforms, including Facebook and Instagram, product listing on e-commerce websites/B2B websites, improvement in product diversity and quality, product design according to customer needs through market research.

Mr. Raihan thinks that, often, SME entrepreneurs lack understanding of digital marketing, customer behaviour, branding, and distribution channels. This knowledge gap leads to poor sales performance, cash-flow issues, and ultimately business failure within the first one or two years.

For weathering the adversities, the SANEM ED opines that a multi-faceted approach is needed. Firstly, aspiring entrepreneurs must be encouraged and supported to undergo training on basic business skills, particularly in marketing, sales strategy, and customer- relationship management. Secondly, there needs to be greater collaboration between government agencies, educational institutions, and the private sector to develop localized and practical training materials tailored for SMEs.

The SME Foundation document suggests increasing product quality and complying with international standards, creative and eco-friendly packaging innovation, organization of fairs/product exhibitions in local and international markets, dissemination of improved courier and logistics services especially in rural areas.

The experts advise overcoming product -marketing challenges through the combined efforts by government, non-governmental organizations, financial institutions and SME entrepreneurs.

To address the various challenges of SME product marketing, the SME Foundation has been providing training in the production of quality products with the help of modern technology since its inception. For the marketing of products of SME entrepreneurs from all over the country, according to SME Foundation officials, the Foundation organises the National SME Product Fair, Divisional SME Product Fair, Heritage Handloom Festival and Buyer-Seller Match-Making Programme in Dhaka, according the document.

In addition, to facilitate the entry of SME entrepreneurs' products into the international market, the SME Foundation supports the participation of SME entrepreneurs in the Dhaka International Trade Fair and international fairs in various countries.

The SME Foundation has so far organized 11 national SME product fairs, 91 regional and divisional SME product fairs, and 4 heritage handloom festivals to expand the market for entrepreneurs.

Managing director Anwar Hossain Chowdhury said there have many problems in the SME business sector. The entrepreneurs have no necessary knowledge and information about products marketing that is a big problem.

He added that after producing products, such entrepreneurs cannot sell the items among the clients due to lack required strategies.

He recommended setting up a SME products exhibition centre as there is no centre in the country currently. Where they will arrange their products and buyers will come and see them and place orders from display hub.

Mr. Chowdhury due to lack of information on related policies, law and rules are also hindered the export growth of the SME items despite huge demand in the global market

In the fiscal budget for 2025-26, now days away, the SME Foundation has sought an allocation of Tk 5.0 billion to help enhance the contribution of SME sector to the country's economy.

According to the preliminary report of the Economic Census 2024 of the Bangladesh Bureau of Statistics, there are some 11.8 million Cottage, micro, small, and medium enterprises (CMSMEs) which contribute to around 30 per cent of the country's gross domestic product (GDP).

A previous survey, carried out in 2013, shows that the SME sector employs over 20 million people, which accounts for nearly 85 per cent of total industrial- sector employment.

President of Small and Medium Enterprises Owners Association of Bangladesh Md Ali Zaman said they who are professional in the SME sector, they are continuing business anyhow. But, the main problem is competition with large industrial group. SMEs cannot survive by marketing with large companies. As a result, ultimately, the business has to be wound up.

He suggested making the Competition Commission effective and implementing the competition law-2012 properly.

According to the Economic Survey 2024, about 6.47 per cent (or 0.77 million) of the country's 11.88 million SME entrepreneurs are women.

Selim Raihan observes failure to conduct proper market research before launching their products, which further limits their ability to sustain operations in a competitive environment.

The SANEM ED believes that the government can play a significant role by institutionalizing SME development centers across the country that offer continuous learning, business counselling, and marketing support services.

Additionally, the government should invest in building digital platforms where SMEs can showcase and sell their products, thereby reducing their dependence on traditional, costly marketing channels, says the professor of Dhaka University.

The SANEM chief director has emphasized that simplified access to market data, consumer insights, and e-commerce tools can empower entrepreneurs to make informed decisions. Also, financial support through grants or soft loans earmarked for marketing and product development can ease initial burdens.

"If such systemic support is provided, many SMEs in Bangladesh will not only survive but thrive on a competitive market."

Taslima Miji, founder-managing director of Leatherina, thinks there are many problems in the SME sector. She opines that new SME entrepreneurs with potential can be given tax holidays for a certain period.

"The government may offer exemptions to the sector that can add value to the economy so that they can run business after starting a new one," she notes.

Currently, there are more than 10 million SMEs across the country.

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