The Covid-19 pandemic has heavily impacted household and individual level earnings in Bangladesh as about 13.0 per cent of the people have reportedly become unemployed in the last few months. Consequentially, national poverty is forecast to increase by 25.13 per cent, according to Bangladesh Institute of Development Studies (BIDS). Meanwhile, the pandemic has taken a toll on all other areas of the country, as it caused a reduction of exports by 16.93 per cent, imports by 17.0 per cent, and also decreased average revenue for all SMEs by 66.0 per cent in 2020 compared to 2019. These indicators at the core demonstrate that disposable income of the people is experiencing a slide. Certainly, the hardest has to be absorbed by the private sector, especially, the cottage, micro, small and medium enterprises (CMSMEs).
Adding up more pains to this scene, private job-holders have observed a significant pay-cut-- up to 40.0 per cent due to lay-off followed by the employers. Many have lost their jobs, some are not getting salaries for last five months, and some have been deprived of even the festival bonuses.
This critical situation has put the middle-class into a classical dilemma- whether to continue with the existing job forgetting all mishaps as that job has been a comfort zone for a long time or start a new business though there is a gap between required investment and savings, or else, go for both at the same time?
One may assume that private sector employees are willing to do something new so that they can bring back their previous level of income in this tight situation.
Well, the rule of thumb to follow before opening up any business is first, to see the macroeconomic condition of the country, whether it is stable or slipping away; and second, what are the challenges that other similar business-domain entrepreneurs are facing and how they are overcoming those.
However, being pessimistic, many are unwilling to make investments during this global recession, but if we recall some of the past business success stories, we see that the General Motors was launched in 1908, when the US economy was in shatters after the financial crisis of 1907. Meanwhile, Burger King tossed its first patty in 1953, when the US was again in a downturn. So, a recession otherwise implies an opportunity for a true entrepreneur!
Nevertheless, an individual planning to be an entrepreneur should consider three major aspects before starting a business:
ACTIVE INCOME AND PASSIVE INCOME: We had seen during the great economic recession of December 2007- June 2009 that people all over the world were trying to increase their income following different ways, which left good learning for us to follow-- to diversify the income portfolio. And to diversify the income portfolio, you can first split your income channels into two broadways: (i) Active Income Channel, (ii) Passive Income Channel.
Many of us find doing job monotonous and count it as working for others' prosperity! But, let us put it in another way-- when you work at a place, you actually invest your much precious time and energy that ultimately fetch a you a secured amount every month. From this point of view, it is a good business, which gives you a sure profit! However, this kind of earning through active and regular involvement is termed 'Active Income'.
On the other side, while we talk about 'Passive Income', we actually refer to an income-generating mode of participation in which, one does not have to look after an activity regularly but, still it will benefit him with a profit or earning. For example, it can be a profit earned from fixed deposit scheme opened in a bank or national savings certificate bought from Bangladesh Bank, it can be in a mode of stock or bond market investment, or else, it can be also an investment made in a business initiative.
You can diversify your active income channel too, like, if you have the cooking skill, then by using social platforms-- Facebook, Instagram, you can promote photos of your dishes and take orders from there. Many are now making a good chunk of money out of that and also in most of the cases, the end-eaters are really happy with the food items received as they come as eye-catchy and delicious as the restaurants offer. Some are utilising their marketing skills to retail clothes, cosmetics, and lifestyle accessories. The advantage of running social media commerce is that the business risk is less as it does not require a big investment and it enables wider customer-base to reach.
Similarly, if anyone possesses research and writing skills in a particular subject or multidisciplinary subject, he or she can earn money in outsourcing websites like Fiverr, Upwork, Freelancer etc., by writing content and scripts just deploying spare time efficiently. Fortunately, in this digital world, an individual can work remotely but earn globally.
COMPETITIVE MARKET VS BRAND VALUE: Nowadays, market is very competitive; just a bit of a high price can take away a potential customer. But, at the same time, strong and fascinating brand value convince and inspire people to buy a quality product even if it has a high price tag. As an entrepreneur, you have to create a balance between product quality and the offered price. Very importantly, innovation is required to address people's preferences that change frequently and should act accordingly on the entire value chain process, from production to marketing and distribution in order to strengthen market position.
As we can see, in Bangladesh, just before 6-7 months to Eid-Al-Adha, there is a trend that many people undertake cow or buffalo fattening projects and recently, some are taking Biofloc projects. Any such initiative is laudable, but before bringing this into reality, an agri or aquaculture entrepreneur has to consider: distance of the project area from the market, price of the product at the market, transportation mode and related costs, as well as costs and quality of the animal feeds and other materials required to establish and sustain the project.
BUSINESS PLANNING AND BUSINESS PARTNER: The success of a business or any venture depends almost entirely on proper business planning and proactive business partners who are eager to pursue the same business vision. Many successful entrepreneurs like LinkedIn Cofounder and Executive Chairperson, Reid Hoffman had waited for years to start a business while going through experimenting with several small projects to come up with an innovative business plan.
When you are going to start a business, you will get two pieces of advice from the people around you for free: (1) Business is not for you, you will not be successful; (2) There is nothing to plan much about business, just start a business right now, you will automatically learn from failures. As an entrepreneur, if you sketch your business plan properly according to the market research findings, you will be knowing better than others about achieving success. You can also learn from others' experiences shared at different platforms, or if you want to take hands-on experiences, you can go for grabbing an internship opportunity in your targeted business domain.
Alongside business plan, your business partners will help you to give you more inputs in shaping your business as a sustainable one, and you can also consider tagging some experienced business leaders who can assist you in expanding your financing networks for scaling up your business. A good network will also help you to foresee the market and make a good business continuity plan.
It should be mentioned here that export earnings in July this year stood at US$ 3.91 billion which was US$ 3.88 billion in the same month of 2019-- thus registered 13.40 per cent growth over July's strategic target of US$ 3.44 billion. And also, the inflow of remittances crossed US$ 2.50 billion-mark in July-- before the celebration of Eid-Al-Adha -- highest ever the country received in a month. This duo indicates that the domestic market has a good potential to recover from the Covid-19 hit sooner if export and remittance receipts continue this pace. This can be viewed as a piece of good news for starting a business!
Enamul Hafiz Latifee is the Deputy Secretary, Dhaka Chamber of Commerce and Industry (DCCI). email@example.com.
Md. Sajib Hossain is Senior Assistant Secretary, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
Views expressed here are not of the organisations the writers work for.