Entrepreneurs may face various challenges in 2023; some are external to their industry and some are intrinsic. As an entrepreneur with experiences from various industries, from trading to manufacturing, I can anticipate some of these challenges ahead of time. Let’s look at them from the perspective of a Bangladeshi businessman.
The biggest challenge, from the beginning of 2023 to the rest of the year, will come from external factors. They are not always under our control and sometimes there is no solution.
However, it is important to be aware of them so that we can avoid the worst possible consequences, while keeping in mind that real challenges will always come. We will look at these factors in light of what 2023 may bring for us.
In December 2022, inflation reached 9%, and as the economy began to recover, high demand for products put undue pressure on prices. To make matters worse, energy costs are rising.
Inflation is a particular concern if we hold large amounts of money. The amount of money is lost because the money is only in the 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, we can store food that we will need later. Or, if you’re looking to invest in improving your business, now might be a better time than later. Thus, idle cash can be invested in other areas without losing its real value.
Other export-oriented industries, most of our local industries are highly dependent on imported raw materials. And because of foreign currency reserves, many companies are unable to maintain enough raw materials where production will be hindered, and layoffs may occur.
Total foreign currency balances with banks fell to $4.5 billion in October, down from $5.2 billion at the end of June this year, according to Bangladesh Bank data. But to maintain that, local industries will face production maintenance issues and fixed costs where layoffs cannot be controlled.
There are also some factors that the industry has inherited. For example, a stable cash flow is essential for a company to survive. And every industry is somehow linked to other industries.
For example, the appliance industry is linked to the packaging industry. So, even if the appliance industry is doing well but the packaging industry is not or vice-versa, the supply chain or the market will be hampered.
Many entrepreneurs struggle to pay bills, workers’ wages, and rent instead of earning a steady income. These problems often stem from late payments. In many cases, the customer wants to pay 30 days after receiving the invoice, and in some cases, 60 days after he receives it.
To reduce this delay, he may have to charge 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 request a deposit at the beginning of the contract.
Funding is an issue that new and established entrepreneurs face. If you are still at an early stage, you may be looking for an angel investor or seed funding. If you are an established business, you may need to cover additional costs or supply costs in time.
If inflation continues to increase in 2023, funding will continue to increase. If you use a line of credit, you can improve its utilization by implementing better cash flow, which should save you a lot on interest payments.
In summary, a businessman’s performance in 2023 will only be impressive if he survives the year by maintaining cash flow, without layoffs, and with proper fund management.
In 2023, we should not look for high profits, but focus on business sustainability. Being a successful entrepreneur is possibly one of the hardest careers one can have but it is also the most rewarding career.
It’s not the money that’s most rewarding, but it’s the satisfaction of overcoming new and ever-evolving obstacles in creative and hard-working ways. So, new entrepreneurs should not lose hope in 2023.
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 the Adjunct Associate Professor of SBE, Independent University Bangladesh.