Corona crisis can be a best opportunity to start own business
The Covid-19 pandemic has heavily impacted household and individual level earnings in Bangladesh with around 13 per cent of people have become unemployed; lower and middle-income classes have been experiencing a significant drop in income for the last few months. Consequently, the disposable income of the country people is following a declining trend. Meanwhile, the national poverty is forecasted to increase by 25.13 per cent, claimed by Bangladesh Institute of Development Studies (BIDS).
The pandemic has taken a heavy toll on almost all sectors of the economy, inter alia, most notably, it has caused a reduction of exports by 16.93 per cent, imports by 17 percent, and also a decline of average revenue for all SMEs by 66 per cent in 2020 compared to 2019. Exceptionally, only remittance inflow has seen an 11 per cent increase this year.
As the domestic market has not grown as it was expected, the hardest hit 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 experienced a significant pay-cut up to 40 percent due to lay-off followed by the employer, many have lost their jobs, some are not even getting salaries for the last five months.
This critical situation has put the middle-class into a classical dilemma again--whether to continue the job that has been a comfort zone for a long time, forgetting all the mishaps, or start a new business amid the gap between required investment and savings or go for doing them both simultaneously? Better to say, the private sector's employees, are willing to do something new so that they can bring back their previous level of income during this prevailing Coronavirus-torn economic situation.
Well, the rule of thumb to follow before opening up any business is to first, seeing the macroeconomic condition of the country, whether it is stable or slipping away; and the second one is- 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 economic downturn, but to recall the past business success stories, we see that the General Motors launched in 1908, when the US economy was in chaos after the financial crisis of 1907. Meanwhile, Burger King tossed its first patty in 1953, when the US was again in a hollow. So, a recession sometimes stands for an opportunity for a true entrepreneur, nothing less than that.
Nevertheless, an individual turning to be an entrepreneur should consider below-mentioned three major aspects- before starting a business:
Active income channel vs. passive income channel: During the economic recession of December 2007- June 2009, it had been seen that people all over the world were trying to increase their income portfolio in diverse ways, which left good learning for us to follow. And for diversifying the income portfolio, you can first split your income channels into two broad categories: i) Active Income Channel, ii) Passive Income Channel.
Many of us find doing job monotonous and count it as working for someone else's prosperity! But, putting it another way, when you are working in a place, investing your precious time and brain-sweating efforts there and ultimately ending up with a secured and decent amount of income every month, then you can count it as a part of your 'Active Income Channel'.
Whereas 'Passive Income Channel' usually refers to the mode of participation in an income-generating activity, that does not require you to participate there actively on a daily basis. For example, passive income can be ensured by opening a fixed deposit scheme in a commercial bank or national savings certificate bought from Bangladesh Bank, through an investment made in the bond/stock market, also can take a form of investment in a business initiative led and supervised by your other business-partners.
On top of that, you can also diversify your active income channel, like, if you have cooking skills, then by using social network platforms such as Facebook, Instagram, LinkedIn, etc., you can promote photos of your cooked dishes and thereby taking orders by running a home-based business from there. You can make a good chunk of money out of that.
Likewise, if you have research and writing skills in a particular subject or multidisciplinary subject, then, in your spare time, you can earn money by writing content and script on various issues for different websites like Fiverr, Upwork, Freelancer, etc.
Fortunately, in this digital world, an individual can work remotely but earn globally!
Competitive market vs brand value: Nowadays, the market is very competitive, and just a bit of a high price can take away your potential customer. But, at the same time, building a brand is crucial, a good brand value convinces and inspires people to buy a quality product even if it has a high price tag. As an entrepreneur, you must have to make a balance between product quality and the offered price that will surely lead to creating a better brand value. Furthermore, bringing innovation to products or services is also required to address people's forecasted preferences that change frequently, and thus it will facilitate your business to sustain in the long run.
Proper business planning and suitable business partner: The success of a business venture depends almost entirely on the proper business planning and proactive business partners who are eager to pursue the same vision. Many successful entrepreneurs like LinkedIn Cofounder and Executive Chairperson, Reid Hoffman had waited for years to begin LinkedIn while going through experimenting with several small projects to come up with an innovative business plan.
So, as an entrepreneur, you will need to sketch your business plan properly based on the market research findings. Likewise, it is not necessarily needed to rush on a business instantly just to learn from failures as you may not have that investment-back up always to absorb the business shocks and start again. In this case, you can also learn from others' experiences shared in different platforms, or if you would like to take hands-on experiences, you simply can go for grabbing an internship opportunity in your targeted business domain.
Alongside this, you can consider tagging some experienced business leaders as advisors with your start-up, who can assist you in expanding your financing networks to utilize when required for scaling up your existing business. Most importantly, building a good network will also enable you to foresee the market.
However, it is encouraging to observe that the export earnings in July this year stood at US$ 3.91 billion which was US$ 3.88 billion in the same month of 2019 and 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-ul-Adha -- highest figure ever, that the country received in a month.
This duo indicates that the domestic market has a fast-paced potential to recover the COVID-19 hit soon if export and remittance receipts continue to grow, that can be also viewed as a piece of good news for starting a business!
Enamul Hafiz Latifee is the Deputy Secretary, Trade Facilitation and SME Development Departments,
Dhaka Chamber of Commerce and Industry (DCCI).
Md Sajib Hossain is Senior Assistant Secretary, Research and Development Cell, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).