Rahima Ali Mukta, Faculty & Award Coordinator
Duke of Edinburgh, American Standard
International School
Our economy is growing fast. Recently if you look around it’s quite difficult to find someone in Dhaka city who is unemployed! I am saying this cause starting from teenagers to middle aged whether male or female doing something to earn money, either a job or regular business and I must include “Online Business”.
I have friends, family members, students with all these amazing business ideas and projects. All of them sounds good all the time, it feels like money is in the air and waiting for you to catch them! I have also seen people getting demotivated whenthey fail getting what they expected to get. Not to mention growing economy means increasing market competition. Everyone wants a piece of the market share!
But I must say most of these startup businesses do not survive for longer period of time. As a business faculty and an entrepreneur I have come up with some points regarding how to succeed in a business and try to rationalize why many businesses fail at the early stage.
What a business needs to succeed:
The keys to business success are effectiveness in the following areas:
Enterprise: the ability to see possible opportunities in the market for transforming inputs to outputs and gaining a reward that takes into account the risks and choices involved. RESEARCH! Just do NOT jump into any new thing when you just see others are doing well in that sector.
Organization: the ability to choose the appropriate resources and combine them together profitably to produce products at a price the consumer is willing to pay. Here I must say I myself have seen some products such as bags, dresses etc. that we can get in cheaper price in shopping centers online page owners are charging way more money than the market price. I have seen consumers keep asking them why you are charging this much but most of the time owners fail to reply any proper answer for that question.
Financial monitoring: keeping track of the flows of money in the organization so that decisions on resources can be made knowing the real opportunity cost. New online business owner most of the time do not know what are their opportunity costs. You need to know about your best alternative forgone.Human resource management (HRM):so that the right number of appropriately skilled and trained people are hired.
Marketing: so that products meet the consumers’ needs in terms of design, price, availability, information and value.
Objectives: so that appropriate organization structure and strategy can be used. If you ask someone why do you do business, he or she will say for profit. Profit is a vital thing but it can’t be the only thing. The most common objectives for businesses in the private sector are to achieve:
• Business survival
• Profit
• Returns to shareholders
• Growth of the business
• Market share
• Service to the community
Coordination: so that all the functional areas (finance, marketing, operations, HRM) work together to achieve corporate objectives.
Why many businesses fail early on?
As many as 60% of businesses fail in the first 2 years. Common reasons include:
• Lack of well-researched objectives and business plan.
• Too little cash (cannot afford appropriate resources), or too much cash (spent on wasteful resources)
• Too much borrowing, leading to high interest payments
• Cash-flow difficulties (spending at the wrong time or not getting payments quickly enough)
• Unexpected growth too soon, which stretches resources
• Unplanned-for competition and lack of market knowledge and research
• Poor marketing, i.e too much, too little or not appropriate
• Poor initial location decision or credit arrangements
• Lack of experience and underestimation of time and money pressure
• Not enough passion, commitment or risk management
Hope these will help you further with your business. Main thing is not losing hope and always be positive.