Start up a Business

2.0 Opening Case 64

2.1 Introduction 66
2.2 Preliminary Steps to Start up Business 66
2.3 Top Ten Do's and Don'ts for Start up Business 71
2.4 Business Road Map 71
2.5 Road Map for Starting a New Business in Bangladesh Suggest by Board of 73
Investment (BOI)
2.6 Start up a Business 74
2.6.1 Entrepreneurship (New Business) 75
2.6.2 Small business 75
2.6.3 Home based business 77
2.6.4 Buy a business: 79
2.6.5 Franchising 80
2.7 Business Plan 81
2.7.1 Why Prepare a Business Plan? 81
2.7.2 What to Avoid in Your Business Plan 82
2.7.3 Some suggestions to modify your business plan: 82
2.7.4 Check list of a Successful Business 83
2.7.5 Components of a Business Plan: 85
2.8 Assembly of Resources and Physical Verification 85
2.8.1 Required Space (Lease or Not) 86
2.8.2 Getting Electricity 87
2.9 Where Does the Bangladesh Stand Today Electricity Connection? 88
2.10 Registering Property 88
2.11 Sources of Finance 89
2.11.1 Getting Credit: 89
2.12 General Procedure to Start up a Company 90
2.12.1 Time: 91
2.12.2 Cost: 92
2.12.3 Paid-in minimum capital: 92
2.13 Where does the Bangladesh Stand Today? 93
2.14 Act Governing Business in Bangladesh. 95
2.14.1 Objectives of regulatory and supervisory laws: 95
2.14.2 Various business law regulations in Bangladesh 95
2.16 Are You Satisfied with Your Currently Developed Business? Why? 100
2.16.1 If you are not satisfied, what possible alternatives may you adopt for solving 100
these problems?
2.16.2 How can you implement /carry out your business with newly proposed 101
alternative solution?
2.16.3 How can you understand your business is going on track or wrong track? 102
2.17 Organization of Small Business Startup Costs 102
 Chapter
02

Start up a Business
Chapter outline: Opening Case, Introduction, Preliminary steps to start up Business, Top Ten Do's
and Don'ts for start up business, The Business Road Map, Road map for starting a new business in
Bangladesh Suggested by BOI, Business Plan, Components of business plan, Assembly of
Resources and Physical verification, where does the Bangladesh stand today in electricity
connection?, Sources of Finance, General procedure to start up a company, Where does the
Bangladesh's ranks in doing business? Acts governing business in Bangladesh, Procedures for
starting a business in Bangladesh with the time and cost, Problems in the existing business,
alternative measures to solve the problems, and Organization of startup cost of business.

Learning Goals: After successful completion of this chapter, students will be able to understand;

 The preliminary steps and process to start a new business;

 Business Plan and sources of Business Finance
 Various acts governing business in Bangladesh
 Is the current atmosphere of business on track or not?

2.0 Opening Case

Mr. KM Mahin had a Dhaka, Uttara-based company food-storage company in 2007 when, like
many small business owners, the recession hit him hard. He was about to get married and sold his
small company for half price that is "fifty paisa on the Taka" to fund the couple's brief honeymoon
and first few months of living expenses. Four months after the wedding, his wife was pregnant
and Mahin has joined in a job as an underwriter for a family-run private equity firm to support
their family. But the private equity game during 2007 and 2008 was no picnic. He says the land
developers with which his company worked were going belly-up, so the firm began looking at
funding smaller businesses, one of which was a small shipping company. Mahin took an interest in
the business and, while he was doing research on the company, went out into the field with one
of the company's representative. He had been a sales representative a few years earlier and had a
feeling he could be successful selling shipping services.

In late 2009, Mahin decided to try his hand at the shipping game, leaving his private equity job.
Three years later, he launched a second company, Global Fulfillment Solutions (GFS), to begin
providing fulfillment solutions around the world. Today, the company has grown to more than
BDT 130 million in annual sales, taking on no debt or partners. The road to such growth was
paved with some important decisions and lessons.

Contrary to entrepreneurial lore, Mahin didn't just ditch his day job with no safety net. When he
launched his shipping company, he also went back to his roots, also starting a small wireless
services company. For two years, he sold shipping services by day and wireless services by night
because he knew he could generate income that way. "Then, I'd go find a neighborhood
somewhere and when people started getting home from work, I'd switch shirts and I would sell
our satellite and Internet service door to door so I could feed our family," he says.

When the company first launched, under the name Lively Shipping Solutions, it offered just one
product: A niche product that ships items between one and three pounds via the BD Postal
Service. However, the more time Mahin spent in the market, the more he saw the need for more
comprehensive shipping solutions for larger items, using various transports and shipping
methods. In 2013, he built technology to help shippers get access to other solutions, providing
the core of GFS. Now GFS works with a variety of companies of all sizes in shipping and fulfillment
needs. It provides some shipping options itself, and also aggregates the power of such clients and
helps them develop cost-effective and efficient solutions using their collective volume. As it finds
new needs in the marketplace, it finds ways to service them, but Johnson doesn't try to be all
things to all people when the company is not equipped to do so.

The Company launched a second division, GFS360, in May 2014 as a result of an idea one of
Mahin's contacts presented. Mr. Ryhan, who had been introduced to Mahin by a customer, "was
harassing me" to start a full-service sales channel management, fulfillment, and shipping division,
helping clients get new business, then handling fulfillment and shipping. "So, now we can come to
you and say we're going to reduce your shipping costs, give you a simplified fulfillment rate, and
sell products for you in all these distribution channels we have, where we can sell your products
to Buy Buy Baby, Bed Bath & Beyond, or Overstock.com through all these different marketplaces
and channels," he says. While the new division—launched in within a few months of Ryhan
presenting the idea—is only about 9% of the company's revenue now, Mahin says it has "a nearly
100% closing ratio." He expects it to be about double that by the end of 2016.

Because of his experience in 2007 and 2008, Mahin was averse to taking on any sort of debt or
equity financing. He didn't want to be loaded down with owing other people money. So, if he
needed to make an acquisition or hire a new person, he'd figure out how many new accounts he
needed to sell and then go out and do so. "We're to a point where I feel like we're going to start
entertaining some investors or maybe some strategic partners, but we're in a much better place
to do that because we don't have to give up 51%," he says. "We've proven the model, we know
that it works.

Therefore, important issues to startup a business are:

 Start Smart
 Focus on what you can do well
 Listen to new ideas
 Take on partners and debt cautiously
2.1 Introduction
Bangladesh is gradually becoming an economically strong and financially settled nation. Many
foreign investors are becoming interested in investing in the business sector of the country. Many
companies and investors all over the world have chosen Bangladesh for investment purpose. But
several think doing business in developing countries like Bangladesh seems to be very difficult.
Some observe that the business community of Bangladesh earns a lot of profits. However, the
views of the members of the business community are quite different. They notice a series of
problems, which is being increased day by day. Attempt has been made in the book to highlight
some issues and to guide old and new entrepreneurs in the light of practical experiences on
economy, business and industrialization. To overcome the problems and facilitate business
various public and private agencies are working for ease of the doing business.

Bangladesh positioned 122 among 183 countries in

the ranking of 'Ease of the Doing Business' by the
World Bank. Bangladesh dropped from 118 in 2011
to 122 in the year 2012; it means coming days are
becoming business unfriendly. Economic growth of a
country is largely indebted to business. A business
friendly environment is critical for motivating the
growth of small and medium size enterprises.
Unfortunately, our authority is paying very little heed
to the issue.

Here is a list below -a detailed summary of the bureaucratic and legal hurdles a startup
entrepreneur must overcome in order to incorporate and register a new firm, along with their
associated time and set-up costs in Bangladesh. It examines the procedures, time and cost
involved in launching a commercial or industrial firm with up to 50 employees and start-up capital
of 10 times the economy's per-capita gross national income (GNI). These are only explicit issues.
There are many implicit issues too. Corruptions, red tapism, non-cooperative behavior of
bureaucrats are some to mention. Ok, let's move forward. Hope this article will help Startup
Entrepreneurs greatly.

2.2 Preliminary Steps to Start up Business

Deciding on and start up Business: Deciding on and start up business includes three parts like,
Part One: evaluating proposed business, Part Two: before you start, Part Three: operating pitfalls
Each and every part has different steps. One should follow these steps according to sequence to
start up new business. The following diagram shows different steps to starting a business.
 Part-One Part-Two
EVALUATING PROPOSED BEFORE YOU START
BUSINESS 4. Financing the business.
1. Deciding on a business 5. Business organization
2. The business plan 6. Licenses and permits
3. Home based businesses 7. Business insurance
8. Communication tools
9. Buying a business or franchise

Part-Three
OPERATING PITFALLS:
10. Location and leasing
11. Accounting and cash flow
12. E-Commerce
13. Opening and marketing
14. Managing employees
15. Expanding and handling problems

Figure: Steps to start business

Part One: Evaluating the business

1: Deciding on a business: The most common serious mistake made in business is not picking the
right one to begin with. Basic task of a businessman is to identify the characteristics of a
successful entrepreneur. You have to follow a standard steps to decide about a business:

 Decide whether you really want to be in business

 Decide what business and where
 Decide whether to start full-time or moonlight (part time)

Select a fit strategy for Business on time to watch out the things from people at the time of
transition.

2: The businesses plan: This key ingredient for a successful business is too often skipped. This
section includes how to create your own individualized business plan and provide the tools to
make it easy. Hence you should observe following sub steps that are necessary to start up
business. Business Plan is a written document for business to start up which should have vision
statement, the people, and business profile and economic assessment. Business Plan should
include the following necessary factors:

 A sound business concept

 Understanding your market
 Healthy, growing and stable industry
 Capable management
  Able financial control
 Consistent business focus
 Mindset to anticipate change
 Plans for online business

3: Home based businesses: In this stage, you have to review the do's and don'ts of operating a
home based business and will also state the case for not quitting your job at all. But keep in mind
that operating at home will still require business skills just like any other business

Part Two: Before you start

4: Financing the business: You should locate, negotiate and maintain sources of money to get you
started and help you expand your business. You should find out the sources of fund from banks,
non bank FIs, NGO, and friends which can be unsecured loans, secured loans or collateral which
depends on repayment plan. The future activities after getting the money should also get
consideration after taking suggestion from the experts.

5: Business organization: Businessmen have to decide the form of business that is right for them.
Decision that every entrepreneur must make should be related with:

 Whether to go into business alone or with a partner.

 What type of business organization to use for the business: proprietorship, partnership,
corporation or Limited Liability Company?
 What professional advisors to select: Attorney, Accountant, Payroll service providers and
Other Professionals?

6: Licenses and permits: Choose a suitable name for your business and find out what licenses and
permits you may require, and how to get them.

 Local Licenses and Permits

 State Licenses and Permits
 Where do I go to get a license?
 How about if I am working from home?

Business Name or DBA (Doing Business As) should be incorporated in the license with proper
procedure which can ensure the trademark.

7: Business insurance: This section will explain in simple terms the various forms of insurance you
will need and explain the importance of each of them. You will get Insurance coverage for
Businesses in different areas like:

 Business Property Insurance

 Liability Insurance
 Worker's Compensation Insurance
 Other Insurance Coverage
 Excess Liability Coverage
 Employment Practices Liability Coverage
 Life Insurance
8: Communication tools: Communication is key to any business success. You have to know basic
communication tools and equipment aspects of business. Communication may be formal or
informal, external or internal, vertical or horizontal, written or oral. You can use lots of
communication tool for this purpose:

 Landline telephones
 Cell phones
 Smart phone
 Video and web conferencing
 Social networking sites
 E-mail
 Online chat tools
 Fax

Computers (Desktop, Laptop, Notebooks/Net books, Tablet, Handheld), Internet (Browsers) and
Technology Planning can be used to work with communication tools and equipment.

9: Buying a business or franchise: You have to learn how to make objective decisions when
considering the purchase of a business or a franchise--and how to evaluate how much you should
pay. You will have to consider the followings at the time of buying a business:

 Opportunities
 Financial ability
 Evaluating a business
 Sources of business financing
 Other factors to consider in determining value
 Buying an existing business vs. buying a new business

At the time of franchising, you have to consider the Pro's and Con's of Buying a Franchise.
Purchasing or franchising of business on some suggested activities like visit different operations,
attend trade shows, understand your intended business, and analyze any appropriate existing
business and analyze a franchised operation.

Part Three: Operating pitfalls

10: Location and leasing: A wonderful business can be crippled by a poor location or a poorly
negotiated lease. You will learn how to create your own site model and the important aspects of a
lease agreement. You have to know the location criteria for Home Based Business, Manufacturing,
Warehousing or Industrial Business, Retail Business. Leasing checklist include some points to
consider before signing a lease or purchasing property in addition with basic lease provisions and
rent or buy considerations,
11: Accounting and cash flow: Before you start your business, you will need to learn how to keep
score (basic accounting) and how to maintain cash in your bank account (cash flow control.
Methods of Accounting may be Cash Basis Method or Accrual Method. You have to keep for tax
liability issues and for internal control. You will also require bank account reconciliation and
should focus on employee benefits policy

12: E-Commerce: E-Commerce is the fastest growing segment of our economy. It allows even the
smallest business to reach a global audience with its product or message with minimal cost. You
have to set up a website for:

 Registering your domain name

 Hosting your website
 Building your website
 Hiring a professional website developer
 Designing your own website

Keep in your mind that the site should be easy to use and should include the content and also get
customer feedback. Online marketing strategy should have appropriate search engines.

13: Opening and marketing: You are furnished with check-off lists to maximize your marketing
results and avoid the most common mistakes made in opening a business. Marketing activities
should focus on:

 Pinpoint your customers

 Recruit the "good" employees
 Train your employees thoroughly in marketing skills
 What and how to buy
 E-commerce
 Promotion and advertising
 Mailing lists

14: Managing employees: It is not possible in this session to include all the complexities and legal
rules pertaining to employees. Since employees play such a large role in achieving success, we
recommend you maintain ongoing access to a labor lawyer to keep you current on labor matters
including hiring and firing employees. It is far better to avoid mistakes by securing legal advice
before labor issues or claims are raised than to deal with expensive consequences later.

15: Expanding your business and handling problems: A growing business needs to have
appropriate expansion policies in place, plans to motivate key employees and know-how in
handling common business problems. Here's the advice from been-there-done-that experts.
Common business problems:

 Uncontrolled cash flow

 Drop in sales or insufficient sales
 Higher costs
 New competition
  Business recessions
 Incompetent managers or employees
 Dishonesty, theft

2.3 Top Ten Do's and Don'ts for Start up Business

a) Do's

1. Live frugally and begin saving up money for operating your business.
2. Learn your business by working for someone else in the same business first.
3. Consider the benefits of starting a moonlight business.
4. Consider the advantages of operating a family business.
5. Objectively measure your skills and training against potential competition.
6. Consider subcontracting to low cost suppliers if you're manufacturing a product.
7. Test market your product or service before starting or expanding.
8. Make a "for" and "against" list describing the business you are in or considering.
9. Talk to lots of people for advice.
10. Make a comparative analysis of all opportunities you are considering.

b) Don'ts
1. Quit your job before you have completed start-up plans.
2. Consider operating a business in a field you do not enjoy.
3. Risk all the family assets. Limit your liabilities to a predetermined amount.
4. Compete with your employer in a moonlight business.
5. Be in a hurry to select a business. There is no penalty for missed opportunities.
6. Select a business that is too high a risk or hurdle. Go for the 2-foot hurdle.
7. Operate a business in which you must have the lowest price to succeed.
8. Neglect to learn the negative aspects of an intended business.
9. Permit entrepreneurial self-confidence to outweigh careful diligence.
10. Allow the promise of a conceptual high reward to deter reality-testing first.

2.4 Business Road Map

A business road map is a planning tool that outlines a company's goals and its strategy for
achieving them. It has a less formalized structure than a business plan, and might take the form of
a graphic, a website, a flowchart or a traditional document. Its emphasis is on activities and
decision-making, rather than on financial projections. When used effectively the road map not
only helps with planning for the future, but also becomes a tool used to measure progress and to
train employees on making decisions that are in line with company strategy.
A road map is a visual representation of the CEO's vision for how the company will attain its goals.
The process of creating it begins with information gathering, both from the CEO and from the
managers who understand the company's competitive landscape, financial health, strategy and
operational competencies. Questions to ask include: What is our short-, medium- and long-term
goals? What is our financial health? Where have we been reinvesting our earnings in the past?
What opportunities do we see on the horizon? Where do we need to do better? How do we want
to grow?

While a road map will be as unique as the business it describes, it should contain at least a few
standard sections: strategic goals, reinvestment strategy, growth strategy, financial targets and
operational targets. Each section will include the company's goals for that area and the specific
types of activities and decisions the company will make in order to reach the goal. For example, a
company's growth strategy might include expanding into a related market through acquisition.
The road map sets this as a goal and then includes a few high-level activities and deadlines along
the path, such as identifying three possible acquisition targets by year's end. Graphical road maps
can be posted visibly as a constant reminder of the kinds of activities that are valuable to the
company. All employees should understand the road map and exactly what they can do in their
daily tasks to help the business achieve its goals.

Management should review the road map periodically--perhaps monthly or quarterly--in order to
assess the company's progress against its goals. If the competitive situation has changed, the map
should be revised and the changes communicated to the employees. Road maps should be living
documents. To start a business it is wise to set the road map. Road map is the steps that one
needs to identify; charting the steps and sequences that are expected to follow to reach the
target and objectives with efficiency and effectiveness, the road map in general may be as follows:

The Roadmap
1. Direction: Choose your business topic and define your audience
Phase 1: Find and 2. Connection: Leverage community tools for support, friendship and
develop your accountability
business ides, build 3. Planning: Define the problem and create a smart plan for your
a solid foundation business
4. Set Up: Name, establish and launch your business


Phase 2: Launch 5. Audience: Choose an audience channel and grow your audience base
your business, earn 6. Product: Plan and build your first small product to test your
through to support audience's interest
your self 7. Money: Launch your product and grow revenue to support yourself


Phase 3: Optimize
and grow to
8. Growth: A growth cycle to increase reach and revenue
increased
9. Scale: Rapidly accelerate your business growth, make it last
profitability and
sustainability
Figure; 2.2: Business Road Map
2.5: Road Map for Starting a New Business in Bangladesh Suggest by Board of
Investment (BOI)
The Board of Investment (BOI) is the government agency responsible for promoting business
opportunities in Bangladesh to investors everywhere. We are here to facilitate the process from
first enquiry through registration to implementation and beyond. We can do the following for you

 Help with information tailor made to your business area.

 Advise you about the best place to locate your business.
 Introduce you to the most relevant organizations, government agencies and BEPZA, the
agency responsible for the export processing zones (EPZ).
 Help you register your investment intentions with the BOI (unless your investment
qualifies to be best located in an EPZ), so that you are eligible for all the various incentives
on offer you need.

The chart shows the five basic steps you will probably want to go through to start your business in
Bangladesh.

Step 1. Information Searches and Registration

 There are many information sources. These days you will probably start with the internet.
BOI can also help and suggest other government agencies, chambers of commerce, and
professional associations, international organizations such as the World Bank, Asian
Development Bank, UNCTAD and IFC. There are independent consultants too.
 Register your intentions. Investors are advised to apply to the BOI for registration as early
as possible in order to benefit from the many incentives and tax concessions available.
The application form can be found online at this website.

Step 2. A Fact-Finding Visit

 Make a physical verification of your researches by visiting Bangladesh. Make your own
travel arrangements or let BOI arrange things for you and benefit from our Welcoming
Service.
 Business travelers may request a visa for limited or multiple entries which can vary from
one month to five years. Given certain conditions there is also the possibility of a landing
permit and visa on arrival. BOI or the Bangladesh diplomatic mission in your country can
advise you on this.
 On arrival investors can take advantage of in-depth BOI counseling. Professional
investment and business counselors can offer advice and practical assistance over the
phone, via email or fax or, best of all, at a personal meeting in the BOI offices here in
Dhaka, Chittagong, Sylhet, Rajshahi, Khulna and Barisal.

Step 3. Getting Started

 You will need to set up an appropriate company structure. By this stage you will know if
you are going to operate as a branch/liaison representative office (or Buying House) or if
you will be establishing an industrial project. This is relevant to the type of business
structure you will then need to form.
 Incorporation. Business in Bangladesh can be carried out by a company formed and
incorporated locally or by a company incorporated abroad but registered in Bangladesh.
  The incorporation or registration is done by the Registrar of Joint Stock Companies and
Firms (RJSC&F).
 Companies may be private or public limited companies or unlimited companies. In
establishing a place of business of a foreign company, the company has to be registered
with the RJSC&F as the place of business. Such registration is required in respect of
capital issue and obtaining clearance from the Bangladesh Bank.
 To open or extend a branch/liaison representative office of a foreign company, the
company has to apply to the BOI.

Step 4. Business/Plant Set-up: BOI can help with the following:

 Obtaining industrial plots.
 Approval of foreign loans, supplier's credit, PAYE schemes etc.
 Obtaining utility connections: water, gas, electricity, phones.
 Registration for certification for importing raw materials.
 Work permits for foreign nationals and key staff.
 Registration with the Factories Act which regulates work conditions.
 Registration with environmental legislation.
 Remittance of royalty, technical know how and technical assistance fees.

Step 5. Commercial Operation:

 After starting commercial operations BOI will be following up with what you need
subsequently.
 Investors need to a submit half-yearly performance report to the BOI on production and
employment in their projects. Any changes to the information provided in the registration
should be indicated to the BOI.

2.6 Start up a Business

Some want to spend more time with family, and starting a business allows them to do that. Some
find it exhausting to be outside the house all day, dealing with traffic, co-workers, meetings and
interruptions. Some people hate answering to a boss all the time- needing permission to schedule
a dentist appointment or take the day off when they're sick. Some people are demotivated by the
security of a regular paycheck and prefer the challenge of the direct rewards or losses that
entrepreneurs see from their efforts.

Maybe you want to build an empire and become famous, or create a wealth-generation machine
that you can pass on to your children. Or perhaps you can't convince anyone to recognize your
unique vision and you've decided that it will never come to fruition unless you strike out on your
own. Or maybe you're thinking of self-employment because you've been unemployed for so long
that you feel that you've exhausted all the other options.

Becoming a small business owner has unique challenges and rewards that aren't right for
everyone. You must be driven, disciplined and able to identify a product or service that people
need - one that they will pay enough for to allow you to live comfortably. You have to develop
marketing skills and be able to find your own work, because it won't fall into your lap until after
you're well established. Business owners need to understand how to budget, keep records and
handle small business taxes. They must familiarize themselves with employment laws if they want
to hire staff. They also need a plan for protecting their business and everything that's tied to it if
something goes wrong. A business may be started mainly under the following ways:

a. Starting a business as an entrepreneurship.

b. Small business

c. Home based business

d. Buying an existing business

e. Franchising.

2.6.1 Entrepreneurship (New Business)

An entrepreneur is a person who creates a new business in the face of risk and uncertainty for the
purpose of achieving profit and growth by identifying opportunities and assembling the necessary
resources to capitalize on them. Entrepreneurs usually start with nothing more than an idea,
often a simple one, and then assemble the resources necessary to transform that idea into a
sustainable business.

Advantages of entrepreneurship to start up a business: The entrepreneurs who owns and

operate small business posses some typical fractures and completive advantages over the
corporations. In such context the features and advantages in short are the following.

i) Innovation: Entrepreneurs are frequently innovators from products and for process. Here the
striking fracture is that such entrepreneurs in general may have new idea about product, service,
process that are likely to be encouraged by large corporation.

ii) Flexibility: Decision making in small business depends on one or two persons. It helps quick
decision in one hand and adjudging to the demand and circumstance at ease on the other.

iii) Personalized attention: Entrepreneurs are responsible from start of the work to completion
takes, can take & need to take personal & keen interest & close supervision on works.

iv) Independence: Entrepreneurs are independent as to his judgment, selection of mode of

operation, control, supervision i.e. overall programming & management.

v) Cost conscious & Stewardship: An entrepreneur of small business naturally be cost conscious
as he has to arrange & manage finance. He will start the activities in an efficient way which will
ultimately give him financial reward & financial satisfaction.

2.6.2 Small business

Small business all over the world occupies a significant place in the business arena. Small business
is characterized by independence of owner, small operation size but seems not to have universal
definition. Despite problem of definition and determining number of enterprises in different
countries, yet if can surely be said that such business play a strong role in the economy of each
and every country. In general it is said that small baseness is one which has less capital
independently owned, managed and operated.
Starting a small Business: A number of factors need to be /should be considered by a person who
wants to start a small business. Following chart shows it at a glance.

Figure: Process of Starting business with small

A brief description of these is now in order

i) Experience: A would be owner of a business need to know as much possible about his chosen
business as possible through collecting information, observation and if possible getting
practical experience in working or attending an existing one.

ii) Capital: Adequate capital need to be arranged from his personal fund or though loan . In this
context quantum need to be assessed with careful estimate.

iii) Location: It is side to a new entrepreneur that '' pick'' a site for operation, a spot that favor
the type of customer you seek & product/services you would deal with. Business site
neighbor's surroundings need to be congenial as to operation, service & safety.

iv) Inventory management: Business must gather products & relevant essentials to sell/
distribute as & when demanded by customers. So inventory management is to be assured in
such a way that will meet demand and also prevent loss in weight, quality, damage etc.

v) Customer Demographics: One of the important thing in marketing is the assertion that ''know
the customers demographic.'' these are statistics relevant to age, income, marital status,
habit, etc. In sales promotion & advertisement these are also needed to be considered.

vi) Competition: Competition will be there in general. So what is necessary is to face it and plan
in a overcome detrimental effect and help growth and stability.

vii) Record keeping: A successful business must ensure its proper record keeping. It shall have to
install suitable effective system failing which fraud and inefficiency will creep into, giving rise
to failure.
vii) Condition of business, if purchased: It may be that an entrepreneur likes to start a business
by purchasing an existing one. In this context he must investigate the business thoroughly,
assess it in terms of financial worth, operational prospects, etc .

i) Incompetence of the entrepreneur / owner

ii) Lack of management experience
iii) Unbalanced experience
iv) Neglect, fraud etc. in operation, management and record keeping line
v) Lack of experience in the concerned line of business
vi) Selection of wrong site
vii) Natural disaster and other reasons.

Problems of small business ownership:

Independence, satisfaction, advantages etc. of small business are seen substantial. But it has to
face some limitation & problems. The important once are as follows.

i) Lack of experience: Experience always pay. But a small business entrepreneur may be quite
fresh, may not have clear idea about business environment, public relation & thus may face
problems in decision making & working efficiently.

ii) Lack of management skill: Good management is very important for such an endeavor.
entrepreneur/ owner of small business typically lacks expertise in management, he may face
problems relevant to accounts, taxes, legal formalities, advertisement and the like in some
such fields. These may adversely affect project & management performance.

iii) Inadequate finance: Finance is the life blood. Money is needed for preliminary expenses ,
setup requirements ,currents operation & fund for procurement /production & marketing .
Though in such type of business comparatively small capital is required, yet the financing of
the required amount may be a problem.

iv) Flaws in planning: To be successful a plan duly prepared & adhered act as foundation stone.
Small business entrepreneur typically lacks experience & knowledge about financial planning,
ability to evaluate out sources and business environment & forecast and thereby may be
inefficient in planning and financial management.

2.6.3 Home based business

It is a typical small business and found to run in many countries significantly as a side business by
people working in offices or by people seeking self employment, taking help from family
members as feasible. Home based business offers some special benefits to entrepreneurs which
can start from a spare like bedroom or a garage. A business can be run with minimum of
investment and exited with a minimum of obligations and risks.

Starting the home based business: There are two approaches to start a home based business: as
a part- timer or as a full- time entrepreneur. Fortunately, much home based business can be
operated on part-time business (without quitting existing job) has some advantage:

 Common goals pull the family together.

  Can utilize individual and collective family skills.
 Family members can work during hours when main man is on the regular job.
 Conflict of interest accusations at work can be defused: "it's my wife business".
 The kids learn the benefits of entrepreneurship.
 The business is set up with pre-established lines of authority and responsibility.
 Both spouses can exercise individual business capabilities.

Common pitfalls of home based business:

 Failure to compartmentalize
 Failure to limit financial risks
 Disregard for zoning requirements
 Physical limitations
 Work at home schemes
 Disregard for allowable business deductions

Top Ten Do's and don'ts for a Home Based Business

A) Top ten Do's

1. Specialize in a single product or service.

2. Get your family involved with your business.
3. Go to work first for someone in your intended business.
4. Install a credit card purchasing function on your web site (if possible)
5. Prepare a written business plan in you start.
6. Prepare a 12 month cash flow projection before you start.
7. Attend classes on you shortcoming such as accounting or the internet.
8. start small to gain credentials and experiences .
9. begin building your search engine placement rankings.
10. start a tax-deferred retirement plan.
B) Top Ten Don'ts
1. Quit your job. If you must quit, see don't # 2.
2. Quit your job until all preparations are complete.
3. Complete with your employer.
4. Conduct business on your employer's time.
5. Sign any agreements without your lawyer's review.
6. Initiate importing without expert advice and representation.
7. Be in a rush to get started: use a start-up check-off list.
8. Incur unreasonable liabilities in financial obligations and dealings.
9. Think it's too late to start.
10. Overlook business insurance and health insurance
2.6.4 Buy a business: In most cases, buying an existing business is less risky than starting from
scratch. When you buy a business, you take over an operation that's already generating cash flow
and profits. You have an established customer base, reputation and employees who are familiar
with all aspects of the business. And you don't have to reinvent the wheel--setting up new
procedures, systems and policies--since a successful formula for running the business has already
been put in place.

Why do people buy a business? People have different reasons for buying a business. First of all,
there is a savings in time, energy, and money when buying an existing business. The lengthy
process of researching and creating business plans and models has already been done for you.
Also, if there is financing needed for your purchase, it is not as difficult to obtain since a lenders
are more likely to finance a business with a proven track record. Also, most times, everything is
included in the purchase, especially in turnkey or a franchise. It is very beneficial for you to inherit
the infrastructure that has already been established by the previous owner(s). This not only
includes the customers, but suppliers, employees, equipment, and systems as well. It is a good
possibility that the previous owner(s) may offer some insight and assistance, therefore making the
transition easier.

In addition, the cash flow most likely will start immediately, rather than in an unknown timeframe
when starting a brand new business. Profitability is not in question as it would be in a startup. An
existing business is probably producing a decent income and also has a solid client base
established, therefore maximizing the chances of success by the new owner(s). There are many
types of business for sale such as restaurants for sale, salons and retail establishments in which
you can get a good idea of how well the business is doing in part by the traffic patterns. Speaking
with the current owners as well as customers can also help you give you insight into the well-
being of the business before you make your purchase. Even though the business is already
established, there is still room for innovation and creativity. It is beneficial of course for you to
purchase a business in which you can bring something to the table as far as experience and
expertise, whether it is from your own job experience or skills you've gained through a hobby. If
you've never owned or managed a business before, it is especially important that you at least
have some knowledge of the type of business that you are purchasing. For example, if you've
been a stylist in a beauty salon for many years, it is likely that you will be successful taking over an
established salon.

Finally, since the business already has a good foundation, you can focus much of your efforts on
building and expanding the business. As you become more familiar with your customers' needs
and wants, you will have opportunities to add enhancements and improvements, therefore
increasing your chances of higher profitability much sooner than you would in a startup business.

Common pitfalls for buying business: A buyer of a business can make many different mistakes;
some are more consequential than others. This series of articles is not intended to address every
potential mistake, Ð that would be impossible. However, this series will highlight numerous
mistakes that are commonly made. A partial list of common mistakes includes:

The buyer is too anxious to close the deal
The buyer overpays for the business
The deal is not structured properly
The purchase and/or financing are not
documented properly
The buyer does not know or does not fully
understand the business.
The buyer does not know or does not fully
understand the business
 The buyer's due diligence is inadequate The buyer does not get appropriate professional
assistance.
The purchase price is not financed properly The buyer fails to consider all of its options.

Valuing a business: Business value is really an expected price at which the business would sell.
The real price may vary quite a bit depending on who determines the business value. Compare a
buyer who wants the business now because it fits important lifestyle goals to a buyer that
purchases an income stream at the lowest price possible. The selling price also depends on how
the business sale is handled. Contrast a well-conducted business marketing campaign and a "fire
sale". The fundamental approaches of valuing assets are: a) Asset Approach b) Market Approach
c) Income Approach

2.6.5 Franchising
Business franchising is one of the safest and most risk-free ways to start up and run a successful
business. However running a franchise isn't for everyone, so take time to understand what
running a franchise entails - especially the selling aspects - before you decide to buy a franchise
business. Business franchises and franchising opportunities are increasing internationally. This is
because the business franchising formula and the franchising model is proven and successful.

Advantages and disadvantages of franchising

Buying a franchise can be a quick way to set up your own business without starting from scratch.
But there are also a number of drawbacks.

Advantages:

i. Your business is based on a proven idea. You can check how successful other franchises are
before committing yourself.

ii. You can use a recognized brand name and trade marks. You benefit from any advertising or
promotion by the owner of the franchise - the "franchisor".

iii. The franchisor gives you support - usually including training, help setting up the business, a
manual telling you how to run the business and ongoing advice.

iv. You usually have exclusive rights in your territory. The franchisor won't sell any other
franchises in the same region, though there will be competition from other businesses.

v. Financing the business may be easier. Banks are sometimes more likely to lend money to a
franchise with a good reputation.

vi. Risk is reduced and is shared by the franchisor.

Disadvantages:

i. Costs may be higher than you expect. As well as the initial costs of buying the franchise, you
pay continuing royalties and you may have to agree to buy products from the franchisor.

ii. The franchise agreement usually includes restrictions on how you run the business. You
might not be able to make changes to suit your local market.
 iii. The franchisor might go out of business, or change the way they do things.

iv. Other franchisees could give the brand a bad reputation.

v. You may find it difficult to sell your franchise - you can only sell it to someone approved by
the franchisor.

vi. Reduced risk means you might not generate vast profits.

2.7: Business Plan

Business plan is a formal, written expression of the entrepreneur's vision for converting ideas into
a profitable, going business. The business plan is the entrepreneur's roadmap for a successful
enterprise. The primary value in learning how to write a business plan will be to create a written
outline that evaluates all aspects of the economic viability of your business venture including a
description and analysis of your business prospects.

A business plan is an essential step for any prudent entrepreneur to take, regardless of the size of
the business. This step is too often skipped, but we make it easy for you to learn how to write a
business plan, by providing a format to build your plan as you progress through this course.
Business plans can vary enormously. Libraries and bookstores have books devoted to business
plan formats. But this course is a place to start. You can then go on from here to design one that
would be ideal for your particular enterprise.

Be aware now that most start-up entrepreneurs are reluctant to write down their business plan. It
is therefore strongly recommended that you complete each segment of the plan as you progress
through this course. We make it easy for you by providing sample plans for both product and
service businesses and also an attractive blank form that you can download onto MS Word and
customize yourself.

2.7.1 Why Prepare a Business Plan?

Learning how to write a business plan is going to be useful in a number of ways. Here are some of
the reasons not to skip this valuable tool.

i. First and foremost, it will define and focus your objective using appropriate information and
analysis.

ii. You can use it as a selling tool in dealing with important relationships including your
lenders, investors and banks.

iii. You can use the plan to solicit opinions and advice from people, including those in your
intended field of business, who will freely give you invaluable advice. Too often,
entrepreneurs forge ahead ("My Way!") without the benefit of input from experts who
could save them a great deal of wear and tear. "My Way" is a great song, but in practice can
result in unnecessary hardships.

iv. Your business plan can uncover omissions and/or weaknesses in your planning process.
2.7.2 What to Avoid in Your Business Plan
Place some reasonable limits on long-term, future projections. (long-term means over one year.)
Better to stick with short-term objectives and modify the plan as your business progresses. Too
often, long-range planning becomes meaningless because the reality of your business can be
different from your initial concept.

Avoid optimism, In fact, to offset optimism, be extremely conservative in predicting capital

requirements, timelines, sales and profits. Few business plans correctly anticipate how much
money and time will be required. Do not ignore spelling out what your strategies will be in the
event of business adversities. Use simple language in explaining the issues. Make it easy to read
and understand. Don't depend entirely on the uniqueness of your business or even a patented
invention. Success comes to those who start businesses with great economics and not necessarily
great inventions.

2.7.3 Some suggestions to modify your business plan:

A vision statement: This will be a concise outline of what your business purpose and goals will be.

The people: By far the most important ingredient for your success will be yourself. Focus on how
your prior experiences will be applicable to your new business. Prepare a resume of yourself and
one for each person who will be involved with you in starting the business. Be factual and avoid
hype. This part of your business plan will be read very carefully by those with whom you will be
having relationships, including lenders, investors and vendors. Templates for preparing resumes
are available in your library, Kinko's, bookstores and the Internet under "resumes."

Revision: However, you cannot be someone who you are not. If you lack the ability to perform a
key function, include this in your business plan. For example, if you lack the ability to train staff,
include an explanation how you will compensate for this deficiency. You could add a partner to
your plan (discussed in Section 4) or plan to hire key people who will provide skills you don't have.
Include biographies of all your intended management.

Your business profile: Define and describe your intended business and exactly how you plan to go
about it. Try to stay focused on the specialized market you intend to serve.

Economic assessment: Provide a complete assessment of the economic environment in which

your business will become a part. Explain how your business will be appropriate for the regulatory
agencies and demographics with which you will be dealing. If appropriate, provide demographic
studies and traffic flow data normally available from local planning departments.

Cash flow assessment: Include a one-year cash flow that will incorporate your capital
requirements. Include your assessment of what could go wrong and how you would plan to
handle problems.

Addition: Include your marketing plan and expansion plans.

2.7.4 Check list of a Successful Business

A sound business concept: The single most common mistake made by entrepreneurs is not
picking the right business to begin with. The best way to learn about your prospective business is
to work for someone else in that business before beginning your own. There can be a huge gap
between your concept of a fine business and reality.

Understanding of your market: A good way to test your understanding is to test market your
product or service before your start. You think you have a great kite that will capture the
imagination of kite fliers throughout the world? Then hand-make some of them and try selling
them first.

A healthy, growing and stable industry: Remember that some of the great inventions of all time,
like airplanes and cars, did not result in economic benefit for many of those who tried to exploit
these great advances. For example, the cumulative earnings of all airlines since Wilber Wright
flew that first plane are less than zero. (Airline losses have been greater than their profits.)
Success comes to those who find businesses with great economics and not necessarily great
inventions or advances to mankind.

Capable management: Look for people who you like and admire, have good ethical values, have
complementary skills and are smarter than you. Plan to hire people who have the skills that you
lack. Define your unique ability and seek out others who turn your weaknesses into strengths.

Able financial control: You will learn later the importance of becoming qualified in accounting,
computer software and cash flow management. Most entrepreneurs do not come from
accounting backgrounds and must go back to school to learn these skills. Would you bet your
savings in a game where you don't know how to keep score? People mistakenly do it in business
all the time.

A consistent business focus: Zero in on something you can do so well that you will not be subject
to competing with someone with a lower price

2.7.5 Components of a Business Plan:

A comprehensive business plan should include a title page and the following section.
 Figure: Components of Business Plan

a) Executive summary: This is the first section of the report .it's important to capture his or her
attention and main aspect in a very concise way but detail of the plan may be ignored. Logically,
it's best to write this section last, after getting though through the remaining sections. It provides
a brief summary of the plan and explains how it is organized Effective summaries generally comer:

i. The company's origins.

ii. The product or service and its uniqueness of competitive advantage.

iii. The goals and objectives of the organization.

iv. The market potential for the product or service.

v. The management team and its track record.

vi. The financing required to grow the business.

vii. The exits strategy.

A three to five year summary of key financial forecasts, especially sales and profit or loss. For new
businesses, it is needed to do some market research and make realistic assumptions about how
your business can be implemented.

b) Mission statement of business: The mission statement should guide the actions of the
organization, spell out its overall goal, provide a path, and guide decision-making. It provides "the
framework or context within which the company's strategies are formulated." It is like a goal for
what the company wants to do for the world.

c) Company background: This section tells the reader in more detail what the business is all about
its location, Function, history, size etc. Describe the nature of the business. Is it manufacturing?
Retail? Service? How long has it been in business? What are the business short-and long term
goals? How is business structured?

d) Description of product or service: This section provides a clear explanation of the product or
service and its function. Photos and diagrams may be used. If a patent of trademark is necessary,
explain what seeps have taken to secure the same.

e) Market analysis and strategy: This section describes the conditions and trends within the
industry generally and the specific market and demand for product in particular. Explain who will
buy the product and why. Identify major competitors, their strength and weaknesses, and how
much of the market they control. Explain how this business will differ from others. What makes
the business special? Marketing Strategy describes how one plans to reach customers and sell
product or service. Explain how to package and position the product in the marketplace. Describe
in detail the plans for priding, promotion, and distributing your product or service.

f) Competitor analysis: Identifying your competitors and evaluating their strategies to determine
their strengths and weaknesses relative to those of your own product or service. A competitive
analysis is a critical part of your company marketing plan.

g) SWOT analysis: What makes SWOT particularly powerful is that, with a little thought, it can
help you uncover opportunities that you are well-placed to exploit. And by understanding the
weaknesses of your business, you can manage and eliminate threats that would otherwise catch
you unawares. More than this, by looking at yourself and your competitors using the SWOT
framework, you can start to craft a strategy that helps you distinguish yourself from your
competitors, so that you can compete successfully in your market.

h) Operations: This section offers a detailed description of how one will make his product or
Provide service and what channel will be used to provide goods to the customers, Include
timelines, staffing levels, and product cycles. For Example: a) If a manufacturing business, explain
where one will get his raw materials and describe the manufacturing process in detail, including
the size of the factory, work force, stages of production, work flow, and volume and b) If a retail
business, give the location of the store the reasons for selecting that site, the source and size of
inventory, and where it will be warehoused.

i) Financial planning: This explains fund and loan needed and what business will do with the
money. It provides a specific amount. To begin to understand how much fund is needed and
calculate one time start up costs, operating costs, and projected revenues. These like chartered
accountants, cost and management accountant of experts on the line. Financial statements: The
documents should demonstrate understanding of basic accounting and financial concepts and
how they apply to business. Following forms and statements may be necessary: Financial
statements of the business for the last three to five years if it is old business, projected financial
statement for three to five years, if it is a new one, a statement of the assumptions underlying
financial projections.

j) Timeline: The time line for a business plan is typically dictated by the needs for the plan. A
formal business plan, intended for circulation to investors, usually must project business
operations for three years. Informal business plans can operate on shorter time frames,
depending upon the needs of the managers of the business. The core of a business plan time line
is cash flow and revenue over time.
2.8 Assembly of Resources and Physical Verification
Business needs various types of assets. After procuring the necessary funds from some selected
sources, one has to acquire various types of physical assets such as building for office and factory,
furniture, machines etc. Quality, cost and availability of these assets need to be monitored. In
this context, the primary requirement is the space for office and factory location. These may be
built and owned by the businessman or may be leased or rented. In case it is leased or rented, a
careful evaluation of the place as to suitability, benefit from lease, terms and conditions of lease
need to be scrutinized. To be evaluated in these regard are stated below and such scrutiny is
necessary to avoid future disputes and problems:

2.8.1: Required Space (Lease or Not)

1. Location-Whether it is suitable and space is sufficient.
2. Does the agreement specially state the square footage of the premises? What is the total
rentable square footage of the building?
3. Is the tenants' share of expenses based on total square footage of the building or the
square footage leased by the landlord? The share may be lower if it is based on the total
square footage?
4. Do the base year expenses reflect full occupancy or are they will be adjusted to full
occupancy period or part thereof?
5. Does landlord provide a detailed list of expenses, and who will bear these?
6. If use of the building is interrupted, does the agreement define the remedies available to
the tenant, such as rent abatement or contract cancellation?
7. If the landlord does not meet repair responsibilities, can the tenant make the repairs,
after notice to the landlord, and deduct the cost from the rent?
8. Is the landlord required to obtain non-disturbance agreements from current and future
lenders?
9. Does the lease clearly define how disputes will be decided?
10. Whether ownership of landlord is undisputed?

2.8.2: Getting Electricity

Access to reliable and affordable electricity is vital for businesses. To counter weak electricity
supply, many firms in developing economies have to rely on self-supply, often at a prohibitively
high cost. Whether electricity is reliably available or not, the first step for a customer is always to
gain access by obtaining a connection. What do the indicators cover? Doing Business records all
procedures required for a local business to obtain a permanent electricity connection and supply
for a standardized warehouse, as well as the time and cost to complete them. These procedures
include applications and contracts with electricity utilities, clearances from other agencies and
the external and final connection works. The ranking on the ease of getting electricity is the
simple average of the percentile rankings on its component indicators: procedures, time and cost.
To make the data comparable across economies, several assumptions are used.

a) The electricity connection:

i. Is a 3-phase, 4-wire Y, 140-kilovolt-ampere (kVA) (subscribed capacity) connection.

 ii. Is 150 meters long?
iii. Is to either the low-voltage or the medium-voltage distribution network and either
iv. Overhead or underground, whichever is more common in the economy and in the area
where the warehouse is located. The length of any connection in the customer's private
domain is negligible.
v. Involves installing one electricity meter. The monthly electricity consumption will be 0.07
gigawatt-hour (GWh). The internal electrical wiring has been completed.
b) Procedures to obtain an electricity connection (number)
i. Submitting all relevant documents and obtaining all necessary clearances and permits
ii. Completing all required notifications and receiving all necessary inspections
iii. Obtaining external installation works and possibly purchasing material for these works
iv. Concluding any necessary supply contract and obtaining final supply
c) Time required to complete each procedure (calendar days)
i. Is at least 1 calendar day
ii. Each procedure starts on a separate day
iii. Does not include time spent gathering information
iv. Reflects the time spent in practice, with little follow-up and no prior contact with officials
d) Cost required completing each procedure (% of income per capita)
i. Official costs only, no bribes
ii. Excludes value added tax

2.9 Where Does the Bangladesh Stand Today Electricity Connection?

What does it take to obtain a new electricity connection in Bangladesh? According to data
collected by Doing Business, getting electricity there requires 7 procedures, takes 372 days and
costs 3526.1% of income per capita (figure 2.5). Figure 2.5 what it takes to obtain an electricity
connection in Bangladesh
 Figure: days required to obtain electricity in Bangladesh

Globally, Bangladesh stands at 182 in the ranking of 183 economies on the ease of getting
electricity (figure 2.6). The rankings for comparator economies and the regional average ranking
provide another perspective in assessing how easy it is entrepreneur in Bangladesh to connect
aware electricity.

Figure: Economies rank on the ease of electricity

2.10 Registering Property

What does it take to complete a property transfer in Bangladesh? According to data collected by
Doing Business, registering property there requires 8 procedures, takes 245 days and costs 6.6%
of the property value (figure below 2.7).
 Figure: Days take to register property in Bangladesh

The indicators reported here are based on a set of specific procedures the steps that a buyer and
seller must complete to transfer the property to the buyer's name identified by Doing Business
through information collected from local property lawyers, notaries and property registries. These
procedures are those that apply to a transaction matching the standard assumptions used by
Doing Business in collecting the data (see the section in this chapter on what the indicators
cover). The procedures, along with the associated time and Cost, are summarized below.

2.11 Sources of Finance

The source of finance is depends of the ownership of the business. The source of finance is not
same for all types of business organization. For example the sole trader ship may collect fund
from his personal source rather than public or bank loan. When organizing a new business, one of
the most important decisions to be made is choosing the structure and form of a business. There
are different types of organization such as sole trade ship, partnership, company, co Ðoperative
etc. One is to decide tight form. Further each form will also affect source and quantum of fund.
Thus decision as to form is important. This decision will have long-term implications, so one
should consult with an accountant and attorney to help one to select the form of ownership that
is right for him. The choice will be based on:

i. Vision regarding the size and nature of business.

ii. The level of control one wishes to have.

iii. The business vulnerability to lawsuits.

iv. Tax implications of the different ownership structures.

v. Expected profit or loss of the business.

vi. Whether or not one need to re-invest earnings into the business.

vii. he risk on personal assets from business liabilities.

 viii. Ownership own resource available and scope for acquiring further resource vis-`a-
vis available sources.

ix. Cost of debt capital vis-`a-vis expected return from business.

2.11.1 Getting Credit:

Two types of frameworks can facilitate access to credit and improve its allocation: credit
information systems and the legal rights of borrowers and lenders in collateral and bankruptcy
laws. Credit information systems enable lenders to view a potential borrower's financial history
(positive or negative) Ð valuable information to consider when assessing risk. And they permit
borrowers to establish a good credit history that will allow easier access to credit. Sound collateral
laws enable businesses to use their assets, especially movable property, as security to generate
capital while strong creditors' rights have been associated with higher ratios of private sector
credit to GDP.
Table 6.1 The ease of getting credit in Bangladesh over time By Doing Business report year

Indicator BD2005 BD2006 BD2007 BD2008 BD2009 BD20010 BD2011 BD2012

Rank .. .. .. .. .. .. 75 78
Strength of legal rights 7 7 7 7 7 7 7 7
index x (0-10)
Depth of credit information 2 2 2 2 2 2 2 2
index (0-6)
Public registry coverage (% 0.7 0.4 0.6 0.7 0.6 0.9 0.6 0.6
of adults)
Private bureau Coverage (% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
of adults)
Note : n.a. Ð not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect
changes to the methodology

Source : Doing Business database

Measurement of credit indicators:

a) Strength of legal rights index (0Ð10): 1) Protection of rights of borrowers and lenders
through collateral laws 2) Protection of secured creditors' rights through bankruptcy laws

b) Depth of credit information index (0Ð6): Scope and accessibility of credit information
distributed by public credit registries and private credit bureaus

c) Public credit registry coverage (% of adults): Number of individuals and firms listed in public
credit registry as percentage of adult population

d) Private credit bureau coverage (% of adults): Number of individuals and firms listed in largest
private credit bureau as percentage of adult population

e) Where does the Bangladesh stand today?

Doing Business records all procedures officially required, or commonly done in practice, for an
entrepreneur to start up and formally operate an industrial or commercial business, as well as the
time and cost to complete them and the paid-in minimum capital requirement. These procedures
include obtaining all necessary licenses and permits and completing any required notifications,
verifications or inscriptions for the company and employees with relevant authorities.

Figure: time and cost required for to run a limited company

How well do the credit information system and collateral and bankruptcy laws in Bangladesh
facilitate access to credit? The economy has a score of 2 on the depth of credit information index
and a score of 7 on the strength of legal rights index. Higher scores indicate more credit
information and stronger legal rights for borrowers and lenders. Globally, Bangladesh stands at 78
in the ranking of 183 economies on the ease of getting credit. The rankings for comparator
economies and the regional average ranking provide other useful information for assessing how
well regulations and institutions in Bangladesh support lending and borrowing.

2.12 General Procedure to Start up a Company

A procedure is defined as any interaction of the company founders with external parties (for
example, government agencies, lawyers, auditors or notaries). Interactions between company
founders or company officers and employees are not counted as procedures. Procedures that
must be completed in the same building but in different offices or at different counters are
counted as separate procedures. If founders have to visit the same office several times for
different sequential procedures, each is counted separately. The founders are assumed to
complete all procedures themselves, without middlemen, facilitators, accountants or lawyers,
unless the use of such a third party is mandated by law. If the services of professionals are
required, procedures conducted by such professionals on behalf of the company are counted
separately. Each electronic procedure is counted separately. Both pre- and post incorporation
procedures that are officially required for an entrepreneur to formally operate a business are
recorded

What do the starting a business indicators measure

Procedures to legally start and operate a company (number)

 Pre registration (for example, name verification or reservation, notarization)

 Registration in the economy's largest business city
 Post registration (for example, social security registration, company seal)

Time required to complete each procedure (calendar days)

 Does not include time spent gathering information

 Each procedure starts on a separate day
 Procedure completed once final document is received
 No prior contact with officials

Procedures to legally start and operate a company (number)

 Pre registration (for example, name verification or reservation, notarization)

 Registration in the economy's largest business city
 Post registration (for example, social security registration, company seal)

Cost required completing each procedure (% of income per capita)

 Official costs only, no bribes

 No professional fees unless services required by law

Paid-in minimum capital (% of income per capita)

 Deposited in a bank or with a notary before registration (or within 3 months)

Figure: official procedure to operate a business

Procedures required for official correspondence or transactions with public agencies are also
included. For example, if a company seal or stamp is required on official documents, such as tax
declarations, obtaining the seal or stamp is counted. Similarly, if a company must open a bank
account before registering for sales tax or value added tax, this transaction is included as a
procedure. Shortcuts are counted only if they fulfill 4 criteria: they are legal, they are available to
the general public, they are used by the majority of companies, and avoiding them cause's
substantial delays. Only procedures required of all businesses are covered. Industry-specific
procedures are excluded. For example, procedures to comply with environmental regulations are
included only when they apply to all businesses conducting general commercial or industrial
activities. Procedures that the company undergoes to connect to electricity, water, gas and waste
disposal services are not included.

2.12.1 Time: Time is recorded in calendar days. The measure captures the median duration that
incorporation lawyers indicate is necessary in practice to complete a procedure with minimum
follow-up with government agencies and no extra payments. It is assumed that the minimum
time required for each procedure is 1 day. Although procedures may take place simultaneously,
they cannot start on the same day (that is, simultaneous procedures start on consecutive days). A
procedure is considered completed once the company has received the final document, such as
the company registration certificate or tax number. If a procedure can be accelerated for an
additional cost, the fastest procedure is chosen if that option is more beneficial to the economy's
ranking. It is assumed that the entrepreneur does not waste time and commits to completing
each remaining procedure without delay. The time that the entrepreneur spends on gathering
information is ignored. It is assumed that the entrepreneur is aware of all entry requirements and
their sequence from the beginning but has had no prior contact with any of the officials.

2.12.2 Cost: Cost is recorded as a percentage of the economy's income per capita. It includes all
official fees and fees for legal or professional services if such services are required by law. Fees for
purchasing and legalizing company books are included if these transactions are required by law.
The company law, the commercial code and specific regulations and fee schedules are used as
sources for calculating costs. In the absence of fee schedules, a government officer's estimate is
taken as an official source. In the absence of a government officer's estimate, estimates of
incorporation lawyers are used. If several incorporation lawyers provide different estimates, the
median reported value is applied. In all cases the cost excludes bribes.

2.12.3 Paid-in minimum capital: The paid-in minimum capital requirement reflects the
amount that the entrepreneur needs to deposit in a bank or with a notary before registration and
up to 3 months following incorporation and is recorded as a percentage of the economy's income
per capita. The amount is typically specified in the commercial code or the company law. Many
economies require minimum capital but allow businesses to pay only a part of it before
registration, with the rest to be paid after the first year of operation.

Summary of procedures for starting a business in Bangladesh with the Time and Cost

Nr. Procedure Time to complete Associated cost

1 Verify the uniqueness of the
proposed company name on the (online procedure)
website of the Registrar of Joint Stock
Companies and Firms
2 Pay stamp duty at a designated bank
Less than one day BDT 600 paid at a designated
bank
1 day BDT 3000 for the Articles of
Association + BDT 50 for a
certified copy; and BDT 1000
for the Memorandum of
Association + BDT 50 for a
certified copy

3 Register at the Registrar of Joint Stock Less than one day BDT 4,005 registration fees +
Companies and Firms (online procedure) 1200 registration filing fees

4 Make a company seal 1 day BDT 30-50

5 Obtain a Tax Identification Number Less than one day no change
(online procedure)
*6 Open a Bank Account 1 day (simultaneous no change
procedure)
7 Apply for VAT registration1 day no change
8 Receive physical inspection of the 7 days no change
business premises by a government
agent and Obtain the VAT registration
certificate
9 Obtain a trade license 7 days BDT 2,700
* Takes place simultaneously with another procedure
2.13 Where does the Bangladesh Stand Today?
What does it take to start a business in Bangladesh? According to data collected by Doing
Business, starting a business there requires 7 procedures, takes 19 days, costs 30.6% of income
per capita and requires paid-in minimum capital of 0.0% of income per capita (figure 2.12).

Figure: what it takes to start a business in Bangladesh Paid-in minimum capital (% of income per capita)

The ranking on the ease of starting a business is the simple average of the percentile rankings on
its component indicators (figure 2.10).

Topics DB 2016 Rank DB 2015 Rank Change in Rank

Starting a Business 117 111 
.6
Dealing with Construction Permits 118 118 No change
Getting Electricity 189 189 No change
Registering Property 185 184 
.1
Getting Credit 133 128 
.5
Protecting Minority Investors 88 87 
.1
Paying Taxes√ 86 85
.1
Trading Across Borders 172 172 No change
Enforcing Contracts 188 188 No change
Resolving Insolvency 155 155 No change
 =Doing Business reform making it easier to do business. X = Change making it more difficult to do business

Doing Business records all procedures officially required, or commonly done in practice, for an
entrepreneur to start up and formally operate an industrial or commercial business, as well as the
time and cost to complete them and the paid-in minimum capital requirement. These procedures
include obtaining all necessary licenses and permits and completing any required notifications,
verifications or inscriptions for the company and employees with relevant authorities. The ranking
on the ease of starting a business is the simple average of the percentile rankings on its
component indicators. After a study of laws, regulations and publicly available information on
business entry, a detailed list of procedures is developed, along with the time and cost of
complying with each procedure under normal circumstances and the paid-in minimum capital
requirement. Subsequently, local incorporation lawyers, notaries and government officials
complete and verify the data. Information is also collected on the sequence in which procedures
are to be completed and whether procedures may be carried out simultaneously. It is assumed
that any required information is readily available and that the entrepreneur will pay no bribes. If
answers by local experts differ, inquiries continue until the data are reconciled.

The economy with the best performance regionally on each indicator, and the economy with the
best performance globally, are included as benchmarks. In some cases 2 or more economies share
the top regional or global ranking on an indicator. In the case of paid-in minimum capital, 82
economies globally and economies in South Asia have no paid-in minimum capital. Economies
around the world have taken steps making it easier to start a business streamlining procedures by
setting up a one-stop shop, making procedures simpler or faster by introducing technology and
reducing or eliminating minimum capital requirements. Many have undertaken business
registration reforms in stages and they often are part of a larger regulatory reform program.
Among the benefits have been greater firm satisfaction and savings and more registered
businesses, financial resources and job opportunities.

2.14 Act Governing Business in Bangladesh.

Legal environment of business comprise many laws rules and regulations framed under different
laws. In fact business and business houses and concerned agencies are to work complying with
such provision of relevant laws, rules and regulations.

2.14.1 Objectives of regulatory and supervisory laws:

1. Ensuring smooth operation

2. Averting misuse of power

3. Ensuring employee welfare and interest

4. Helping business to recover bad debt

5. Regulating financing

2.14.2 Various business law regulations in Bangladesh

There are various laws are being enacted for the smooth operation of different types of business
such as:

a. General laws governing business in general

b. Laws governing specific type of business houses

c. Labor law

d. Act relating to the consumer interest.

 e. Some financial acts

a) General laws governing business in general

i. Law of contract-contract act, 1872

ii. The negotiable instrument act 1881

iii. Law relating to carriage.

iv. aw relating to sale of goods act 1930

v. Trade mark act 1940

vi. The arbitration act 1940

vii. The shop act 1965

viii. Customs act. 1969

ix. Foreign investment protection act 1980

i) Law of contract-contract act, 1872: The law of contract is one of the vital parts of every
transaction. We may not go or pass any day without applying contract. The laws relation to
contract is controlled and regulated by the contract Act 1872. Contract is a written agreement
between different parties who are deals with business or transaction related with various issues
in business.

ii) The negotiable instrument act 1881: An Act to define and amend the law relating to
Promissory Notes, Bills of Exchange and Cheques is called negotiable instrument Act-1881.
Business house increasingly using this negotiable instrument for various purposes.

iii) Law relating to sale of goods act 1930: The Sale of Goods Act is an Act to define and amend
the law relating to the sale of goods. It also governs the contracts relating to sale of goods. It
came into force on 1st July 1930. The contracts for sale of goods are subject to the general
principles of the law relating to contracts. A contract for sale of goods has, however, certain
specific features such as, transfer of ownership of the goods, delivery of goods rights and duties
of the buyer and seller, remedies for breach of contract, conditions and warranties implied under
a contract for sale of goods

iv) Trade mark act 1940: A trademark is a recognizable sign, design or expression which identifies
products or services of a particular source from those of others. The trademark owner can be an
individual, business organization, or any legal entity. A trademark may be located on a package, a
label, a voucher or on the product itself. Trade Mark Act 1940 is an act to provide for the
registration and more effective protection of Trade Marks.

v) The shops and establishment act 1965: The shops and establishment act 1965 adopted with
the objective of regulating and running the shops and business, the appointment of workers,
health and hygiene of the environment, safety, welfare, working hours, leave and holidays, and
punishments and penalties for both the owners and workers for non-compliance of the
requirements.
vi) Customs act 1969: Customs act is an act to consolidate and amend the law relating to
customs. In this country, first this act was introduced in 1878 which was relevant to sea, and then
in 1924 land custom act was introduced.

vii) Foreign investment protection act 1980: This is an Act to provide for the promotion and
protection of foreign private investment in Bangladesh whereas it is expedient to provide for the
promotion and protection of foreign private investment in Bangladesh

b) Laws governing specific type of business houses

i. Partnership act 1932

ii. Company act 1994

iii. The Bangladesh industrial enterprise order 1972

iv. Securities and exchange order 1969

v. Banking company act 1991

vi. Law of insurance 1938

vii. The cooperative society act 1984

i) Partnership act 1932: Partnership Business a form of business organisation created through
voluntary agreements of minimum two and maximum 20 persons (the maximum was 10 in the
case of banking business, but in the latest amendment proposal made in late December 2011 on
Bank Company Act 1991, maximum number of partners is 13), with the intention of making and
sharing profits among themselves. Banking companies in the country are now governed under
the Bank Company Act 1991 and Companies Act 1994. A partnership can arise only as a result of
an agreement or contract, expressed or implied, between the partners. In Bangladesh, a
partnership firm is to be formed under the provisions of the Partnership Act 1932. A person of
unsound mind is not eligible to become a partner. A minor is also not eligible to become of
partner in a firm. However, if all the partners agree, a minor may only be admitted to the benefits
of an already existing partnership. In that case he is not personally liable, nor is his separate
property for the debts of the firm, although his share in the partnership property and profits will
so be liable. By definition, a partnership is illegal if it consists of more than 20 persons in case of a
general business and more than 10 persons in case of business in banking. A partnership becomes
illegal if its object is prohibited by law, or is immoral, or opposed to public interest. A non-profit
making association is not a partnership in law of Bangladesh. In general, institutions or
associations cannot be a member of a partnership.

ii. Company act 1994: Companies Act 1994 (Act XVIII of 1994) governs company law in
Bangladesh. It received the assent of the President of the People's Republic of Bangladesh on 11
September 1994. Before its enactment in 1994, company law was governed by the Companies Act
1913 which was amended in 1915, 1920, 1926, 1930, 1932, 1936, 1938, 1949 and 1969, 1973 and
1984. The early history of company law of India was laid in the British Companies Act 1844 on the
basis of which the Joint Stock Companies Act 1850, the first company law for the sub-continent,
was formulated. This act was based on 'unlimited liability'. In 1857, the Joint Stock Companies Act
1850 was amended with the provision of unlimited liability was replaced by 'limited liability' and
the act was renamed as The Companies Act 1857. With the expansion of trade and commerce in
the sub-continent, the Companies Act 1857 was amended in 1860, 1866, 1882, 1887, 1891, 1895,
1900 and 1908. The Indian Companies Act 1913 was actually the amended and reformed version
of The English Companies Act 1908.

iii. The Bangladesh industrial enterprise order 1972: Public undertakings established by the
Bangladesh Industrial Enterprises (Nationalization) Order, no. 27, by acts or under the president's
orders in 1972 to control the private enterprise whereas it is expedient to provide for the
nationalization of certain industrial enterprises in Bangladesh and for the establishment of
corporations for the purposes of control, supervision and co ordination of the nationalized and
some other enterprises and for the establishment and development of new industrial enterprises.

iv. Securities and exchange order 1969: This is an Ordinance to provide for the protection of
investors, regulations of capital markets and issue and dealings in securities. Thus this ordinance
i.e. law was enacted for the protection of investors, regulations of capital market and issues and
dealing in securities. This law provides provisions relevant to control over issue of capital ,control
over prospectus and other documents, power to call for information, registration and regulations
of stock market i.e. stock exchange, regulation of issuers, securities, penalties and others etc.

v. Banking Company act 1991: Banking company act is an act made to make provisions for
banking companies .After independence of Bangladesh in 1971, banking company's ordinance
1962 was adopted as governing law. Twenty years later in 1991 banking company act 1991 was
passed and made effective from February 1991. The present act incorporates 123 sections. It has
been made applicable for all banks except co operative societies which are governed by
cooperative society's ordinance.

vi. Law of insurance 1938: Law of insurance is an act to consolidate and amend the law relating to
the business of insurance. Insurance law is the practice of law surrounding insurance, including
insurance policies and claims. It can be broadly broken into three categories - regulation of the
business of insurance; regulation of the content of insurance policies, especially with regard to
consumer policies; and regulation of claim handling.

vii. The cooperative society act 1984: Business can be started under co-operative system
registered under co-operative society act 1984 which includes the operation and management of
co-operatives society.

c) Labor law

i. factory act 1965

ii. payment of wage act 1963

iii. workmen compensation act 1923

iv. industrial relation order 1969, Short descriptions of some of this are given below.

i. Factory act 1965: The factory act 1965 adopted with the objective of regulating the
appointment of workers, their wages and the working conditions in factories, including health and
hygiene, safety, welfare, working hours, leave and holidays, punishments and penalties for both
the owners and workers for non-compliance of the requirements.

ii. Payment of wage act 1936: The Payment of Wages Act regulates the payment of wages to
certain classes of persons employed in industry and its importance cannot be under-estimated.
The Act guarantees payment of wages on time and without any deductions except those
authorized under the Act. The Act provides for the responsibility for payment of wages, fixation of
wage period, time and mode of payment of wages, permissible deduction as also casts upon the
employer a duty to seek the approval of the Government for the acts and permission for which
fines may be imposed by him and also sealing of the fines, and also for a machinery to hear and
decide complaints regarding the deduction from wages or in delay in payment of wages, penalty
for malicious and vexatious claims.

iii)Worker compensation act 1923: The Workmen's Compensation Act, aims to provide workmen
and/or their dependents some relief in case of accidents arising out of and in the course of
employment and causing either death or disablement of workmen. This act is a central legislation
which provides for payment of compensation for injuries suffered by a workman in the course of
and arising out of his employment according to the nature of injuries suffered and disability
incurred, where death results from the injury, the amount of compensation is payable to the
dependants of the workmen.

iv)Industrial relation order 1969: An Ordinance to amend and consolidate the law relating to the
formation of trade unions, the regulation of relations between employers and workmen and the
avoidance and settlement of any difference or disputes arising between them.

d) Act relating to the consumer interest

i. Essential commodity control act, 1956

ii. Pure food ordinance, 1959

iii. Essential commodity price and distribution ordinance 1970

iv. Drug control ordinance 1982

v. standard of weights and measurement ordinance 1982

vi. Breast feed substitute ordinance 1984

vii. Tobacco marketing act 1988

viii. Code of criminal procedure 1860

i) Essential commodity control act, 1956: An Act to provide for powers to control the production,
treatment, keeping, storage, movement, transport, supply, distribution, disposal, acquisition, use
or consumption of, and trade and commerce in, certain commodities whereas it is expedient to
provide for powers to control the production, treatment, keeping, storage, movement, transport,
supply, distribution, disposal, acquisition, use or consumption of, and trade and commerce in,
certain commodities within Bangladesh.

ii) Pure food ordinance, 1959: Adulteration of foodstuffs is an act of dishonest tradesmen who
intend to make maximum profit from minimum investment. Random manufacture of adulterated
foodstuffs unsuitable for human consumption led to a resolve to combat this trend in order to
maintain a standard of purity for the preservation of public health. The legal philosophy for
protection of the consumers from intake of adulterated food articles resulted in the inclusion of
some provisions in the Penal Code, 1860 (Act No. XLV of 1860) making adulteration of food or
drink and sale of noxious food or drink punishable under sections 272, 273, 274, 275 and 276 of
the said Code.

iii) Essential commodity price and distribution ordinance, 1970: This Ordinance is useful for the
government of Bangladesh to ensure equitable supply of essential commodities to people at
reasonable prices. Need for such contract is necessary in cases of inadequate supply Need for
such control is necessary in cases of inadequate supply and luck of competition.

iv) Drug control ordinance 1982: It is an Ordinance to control manufacture, import, distribution
and sale of drugs whereas it is expedient to control manufacture, import, distribution and sale of
drugs.

v) Standard of weights and measurement ordinance 1982: It is an Ordinance to establish

standards of weights and measures based on metric system and units of measurement; whereas
it is expedient to make provision for the establishment of standards of weights and measures
based on metric system and units of measurement and for matters connected therewith or
incidental thereto.

vi) Breast feed substitute ordinance; 1984: This Ordinance enacted to promote breast-feeding by
regulating the marketing of breast-milk substitutes. Where it is expedient to promote breast-
feeding by regulating the marketing of breast-milk substitutes and to provide for matters
supplementary thereto.

If the person contravening any of the provisions of the Ordinance is a company, every person who
at the time the offence has been committed was in charge of, and was responsible to, the
company for the conduct of the business of the company as well as the company shall be deemed
to be guilty of the contravention and shall be liable to be proceeded against and punished
accordingly.

vii) Tobacco marketing act 1988: An Ordinance made to amend the Selling of Tobacco and
Similar Goods correctly in 1988. The basic objective of this ordinance is expedient to amend the
Selling of Tobacco (and Similar Goods) (Control) Act, 1988 (Act No.45 of 1988) for the purpose
hereinafter appearing; and whereas the Parliament is not in session and the president is satisfied
that circumstances exist which render immediate action necessary.

viii) Code of criminal procedure 1860: In general, the criminal codes and procedures in effect in
Bangladesh derive from the period of British rule, as amended by Pakistan and Bangladesh. These
basic documents include the Penal Code, first promulgated in 1860 as the Indian Penal Code; the
Police Act of 1861; the Evidence Act of 1872; the Code of Criminal Procedure of 1898; the
Criminal Law Amendment Act of 1908; and the Official Secrets Act of 1911. The major classes of
crimes are listed in the Penal Code, the country's most important and comprehensive penal
statute. Among the listed categories of more serious crimes are activities called "offenses against
the state." The Penal Code authorizes the government to prosecute any person or group of
persons conspiring or abetting in a conspiracy to overthrow the government by force.

e) Some financial acts

Business profit, revenue and expenditure are being affected by some financial laws. Though these
can't be termed in strict sense as laws relevant to business operations but impact cannot ignored
as they affect financial performance. Such two important acts are

i. Income tax ordinance 1984

ii. alue added tax (vat)

i. Income tax ordinance 1984: Income tax is a tax imposed on the income of an individual. Tax
evasion and avoidance are the most common offences and for these offences one may be subject
to penalty in the form of fines and imprisonment. So a business house must be aware of taxing
laws which are relevant of its business.

ii. Value added tax 1991: VAT is imposed on value which is added on price of the product at the
various stages of production and distribution. In Bangladesh the law was introduced on 31st may,
1991 and it is now imposed at manufacturing, selling stage.

2.16 Are You Satisfied with Your Currently Developed Business? Why?
Yes: supports objectives of the business for which this was established.

No: Because of problems exist in the business. Problems may be: i) not profitable, ii) not how
I/we wanted, iii) severe competition in the market, iv) production cost or costing high, v)
manpower crisis, vi) raw material/product cost high/supply not available, vii) old
technology/machine, viii) land/space scarcity, ix) capital shortage, x) decision making problem, xi)
unreadable market etc.

2.16.1 If you are not satisfied, what possible alternatives may you adopt for solving
these problems?
i. Either increase in selling price, reducing cost, or increasing sales volume/ value; ii. Designing the
business as I/we do want; iii. Promoting products/services, improving quality, or reducing selling
price, changing products/services, exiting this market & entering into new market iv. controlling
cost by employing/using cheaper materials, unskilled manpower, less qualified managers etc.,
increasing productivity, reducing wastage; v. giving more salary/benefits, training the staff/new
employees, developing relationships with manpower producing organizations (universities/
schools/ workshops), importing from abroad etc.; vi. Using alternative products/raw materials,
finding more suppliers, giving more price, producing in own factory etc.; vii. Repairing, improving
capacity by overhauling, installing new machine, setting up new technology for more
capacity/efficiency etc. viii. Using the existing land/space more systematically/scientifically,
withdrawing unnecessary machines/setup, or acquiring more land/space, ix. trying to keep less
stock in warehouses, releasing some funds from fixed investment/assets either selling them or
selling but hiring the same from the buyers as rental assets, or collecting fund/capital as loan or
own capital by sharing the business with others etc. x. trial & error basis, following senior decision
maker, relying on efficient decision makers, hiring experts from outside, joining expert as internal
member, or depending on modern machine (computer) etc., xi. Estimating only near future,
avoiding uncertain events/activities, using more information for making uncertain future more
reliable etc.

2.16.2 How can you implement /carry out your business with newly proposed
alternative solution?
There are lots of various alternatives which can be used to implement or carry out the newly
proposed business while the previous planning is not working properly. The following techniques
can be used to carry out the newly proposed solution.

Capital intensive (machine) vs. labor intensive (manual): Capital intensive business needs huge
capital and less manpower and opposite is true for labor intensive business.
Revenue base (increasing sales) vs. cost base (reducing costs): Manager can take strategy to
increase the sales volume in the same cost pattern. On the other hand, Business should focus on
its cost pattern for more reduction with conservative philosophy.

Rivalry strategy (alone) vs. collaborative strategy (joint venture): Develop own business with
renovation or BMRE project. Any we may take the joint operations or joint venture with strategic
management and policy recommendation.

Short run (temporary) vs. long run (permanent): Business for short term is a program based
business and focus on some specific objectives. But long run should build up the profitable
customer relationship for long term sustainability.

Vulnerable (risky) vs. reliable (trustworthy): This is a wide array of high risk industries, business,
sport, and exploration need about sharing exceptional talks on managing risk and patient safety
from world experts. Businesses that take pride in their customer service is reliable. The degree to
which a person, measure, or object is dependable. For example, vehicles manufactured by certain
companies are considered to have above-average reliability.

Trust worthy business based on Customer Loyalty: The loyalty business model is a business
model used in strategic management in which company resources are employed so as to increase
the loyalty of customers and other stakeholders in the expectation that corporate objectives will
be met or surpassed. A typical example of this type of model is: quality of product or service leads
to customer satisfaction, which leads to customer loyalty, which leads to profitability.

By yourself (internal management) vs. by others (external expert): To be successful, it helps to

have a clear development strategy, while a written business plan makes decision-making easier.
This interactive workshop will include practical exercises which lead to a structure for winning
new work. Anyway, Companies can manage by External Experts and Management Consultants in
for the following reasons:

 Implementing Expertise in the Critical Stages of Business Process

 Managing Complex Issues in Planning/Initiating a Business or a New Project
 Formulating Most Viable Action Plan for Expanding an Existing Production Facility
 Planning Optimal Utilization of Resource, Technology and Manpower
 Improving Existing Business Process and Optimizing Efficiency
 Adapting Changes and Bringing Innovative Practices into Work
 Introducing and Implementing Latest Industrial Practice Various Stages of Business
Process etc.

2.16.3 How can you understand your business is going on track or wrong track?

 Business is going on good track:

 Able to support business goal which is determined at the beginning stage of the business.
 Sufficient profit / Earned targeted profit.
 Expand business/ increase asset base
 Running business with least cost
 Expand market/ entering into new business (Market).
 Create goodwill
 customer satisfaction
  good relationship with banks/creditors/suppliers etc
 Diversified products/markets
 running business with increasing capital

Business is going on wrong track:

 Not able to support business goal which is determined at the beginning stage of the
business.
 Making loss
 increasing cost
 Decreasing demand of the products
 Decreasing market shares
 Hamper into reputation of business
 customers dissatisfaction
 Bad relationship with suppliers/creditors
 Decreasing capital/ assets base.

2.17 Organization of Small Business Startup Costs

Launching or transitioning your side job into a full-time venture is stressful, demanding and
exciting. One of the first steps is to consider your startup costs, or expenses in the beginning
phases of entrepreneurship. Startup costs will vary from industry to industry and may fluctuate
during different seasons within any given year, but particularly the first few years of operation.
Think about some of these questions:

Do I have enough capital or other resources to maintain a living? Do you have marketing
materials? Should I invest in training programs or professional conferences? Is a lawyer
necessary? What are my liabilities? Are my contracts protecting my business and assets? Should I
hire staff or do all the work myself?

These type of questions and this line of thinking is good to establish early on to avoid messy
financial situations. To keep yourself accountable and organized, place startup costs in categories
included but not limited to the following list:

Legal/Paperwork lawyer meetings and fees, business certificates and related documents

Taxes and any documents related to business-generated income or similar forms from contracted
workers and employees

Professional Development & Education like conferences, trainings, certificate programs

Transportation costs like traveling via train, plane, or cab as well as parking fees.

Equipment like office furniture, trucks, vans, real estate, phones, etc.

Marketing materials such as business cards, website(s), social media management, etc.

Miscellaneous items like business clothing, paying for lunch or dinner meetings, etc.
By listing groups of related business activities and then categorizing them, you can begin to shape
the areas in which you need to prioritize your finances, save for a rainy day or completely
eliminate or postpone costly expenditures.

For example, if your business focuses on providing creative services like web development, you
will need to strategize on what resources you need upfront to complete the job as well as how to
minimize expenses to keep more money in your pocket. Unforeseen situations like website or
server crashes or hiring additional staff can hurt your income projections but preparing in
advance with either a business savings account or itemizing potential expenses, that includes
unexpected issues, can alleviate stress and help create efficient systems.

Instead of waiting to cover costs later or jumping into projects without thinking through the
financial implications. Entrepreneurship is an ongoing learning experience and journey that
involves successes and failures from the very start. "If you fail to plan, you are planning to fail", a
quote attributed to Benjamin Franklin that still rings particularly true for small business owners.

Exercises

Multiple Choice Questions:

1. Bangladesh positioned ------ among 183 countries in the ranking of 'Ease of the Doing Business'
by the World Bank.

a) 132 b) 122

c) 134 d) 124

2. A business road map is--------------- that outlines a company's goals and its strategy for achieving
them.

a) a planning too b) a functioning tool

c) an ornamental tool d) an internal tool

3. Business franchising is one of the safest and most --------ways to start up and run a successful
business.

a) risk-free b) Risky

c) Profitable d) ase doing

4. According to Act governing business in Bangladesh "Essential commodity price and distribution
ordinance 1970" works under: -------------?

a) Some financial acts

b) Laws governing specific type of business houses

c) Act relating to the consumer interest

d) General laws governing business in general

5. How can you understand your business going wrong track?

 a) Not able to support business goal

b) Good relationship with banks/creditors/suppliers etc.

c) Diversified products/markets

d) Running business with increasing capital

6. The necessary thing to be successful in self-employment-

a) Arrangement training through Govt. initiative

b) Proper initiative and strong self-confidence

c) Establishment of a large number of Industries and factories

d) Guideline accomplished with clear concept.

7) At present in our country, self-employment has been increased at a large scale, one of the
reasons of this ---

a) Failing to get a job.

b) For self respect and increasing of influence.

c) Possibility of getting a large amount of money within a short time.

Answers:

1) a 2) a 3) a 4) c 5) a 6) b 7) d

Analytical Questions:
a) 29 year-old Mr. Jewel wants to run his own computer repair business. Jewel needs tk. 200 000
to start up his business. Jewel's father is has take decision to lend him 100000, which is half of
what he needs and tells him that banks will often help new businesses. There are different short
and long term sources of financing. The bank may offer him the rest of the amount tk. 1 00000
that he needs. But he has to write and submit a business plan along with other supporting
documents to apply toward the Bank.

1. What is meant by a business plan?

2. Explain two ways in which banks can help a new business such as Jewel's.

3. Would completing a business plan make sure that Jewel's business was successful?
Give reasons for your answer.

b) Mr. Polash and Mr. Salam run a chain of five vegetarian restaurants in Dhaka. The restaurants
are each called The Star house. The restaurants have a very good reputation for quality food and
high standards of service. Polash and Salam believe they are successful because each restaurant
has a well motivated team of staff. At the moment, the restaurant chain has vacancies for three
waiters/waitresses. Polash and Salam feel it is time to expand their business. They are considering
selling The Star House franchises to people who want to run a restaurant rather than starting an
independent restaurant.

1. What is meant by a franchise?

 2. Explain two reasons why someone might choose to buy a franchise from The Star
House.

c) Miss Dalia is thinking of setting up in business to make and sell jewellery. She studied art and
design at school and enjoyed making jewellery as part of the course. She has some savings to help
her start up in business but she will need some additional finance to buy the equipment that she
will need to make the jewellery. Her Business Studies teacher had said that she should try and
find a gap in the market for her ideas. Dalia will need to decide how she will sell the jewellery. Her
research shows an increase in online shopping. She is good with computers and is considering
making the jewellery at home and selling it over the internet. Alternatively, Dalia could rent a stall
at the busy weekly craft fair.

1. State two objectives that businesses, such as Dalia's, might have in their first year of
operation.

3. Dalia knows from her Business Studies course that good planning will be very important if
his business is to succeed

4. Explain the benefits to Dalia of producing a business plan.

Review Questions:

1) Briefly discuss the preliminary steps to start up business.

2) State the important factors that should be considered in determining the right Form of
business

3) What is business road map? Point out the steps of road map and discuss them in brief.

4) Name and list 10 top Do's and Don't in starting a business.

5) What do you mean by a Business Plan? Explain its importance

6) Delineate the contents of Business Plan

7) Examine important points of business plan.

8) Narrate general business laws in the context of business operations in Bangladesh

9) Justify the business laws that are relevant to consumer interest

10) Write down the business laws in Bangladesh and discuss any three of such laws.

11) Under what circumstances buying business can be considered favorable

12) Define franchising and examine its different elements.

13) Write down the characteristics of franchise business.

14) Discuss the advantages and disadvantages of Franchising.

15) What is the starting point of Business? Name and list the preliminary steps to remember
when starting a Business

16) List the regulations that are to be considered to protect consumer interest and governing
specific type of Business houses
 17) Critically examine general Business Laws in the context of Business operations in
Bangladesh

18) Write down some small Business Options classified in to related groups.

19) What do you understand by "Ease of Doing Business"? Identify Bangladesh's Ranking in
"Doing Business-2010: Legal Indicators Methodology".

20) How can you understand your business is going on track or wrong track?

Previous Questions
1. What is "Business Road Map"? Point out the steps of business road map and discuss them in
brief. [BBA, CU, 2017, 2016, 2015, 2014, 2013]

2. Define Business Plan'. Why the businessman prepare a business plan? Discuss the various
key components of a business plan. [BBA, CU, 2017, 2016, 2013, 2012]

3. Point out 'Top Ten Do's and Top Ten Don'ts' to start up a business [BBA, CU, 2016, 2015,
2014]

4. Suppose, you are going to open a grocery shop. You need to avail some loan from a bank.
The bank requires a business plan from you. Prepare a business plan for them. [BBA, CU,
2015]

5. "A good start ensures a more success" in this regard discuss the preliminary steps of starting
a business. [BBA, CU, 2018, 016, 2014]

6. Define business plan. State its importance [BBA, CU, 2017, 2016, 2014,2013]

7. What is business plan? Differentiate between business road map and business plan. [BBA,
CU, 2018]

8. Suppose you want to start a restaurant business/ a business in a Leather Industry. Discuss the
steps you need to follow to start your new business. [BBA, CU, 2017, 2016, 2015]

9. Why business plan is treated as a roadmap of a business? [BBA, CU, 2017]

10. How are the functional departments of business closely related with each other? [BBA, CU,
2016, 2015]

11. What do you understand by Business Organization? Examine the factors that affect on the
choice of the form of business organization. [BBA, CU, 2014]

12. Delineate the contents of a business plan. [BBA, CU, 2017, 2014]

13. Define business planning and state its purpose. [BBA, CU, 2013]

14. Illustrate strategic business planning process. [BBA, CU, 2013

References and Bibliography:

1. Doing Business in Bangladesh, Howladar Yunus & Co. Chartered Accountant
2. Ease of Doing Business in Bangladesh

3. http://www.doingbusiness.org/data/exploreeconomies/bangladesh/

4. http://www.boi.gov.bd/

5. What is best way to start a small business in Bangladesh?" Yamin, December 09, 2012, in
Small Business

6. Starting a Business in Bangladesh: Procedures, Time & Costs by Ruhul Kader on Nov 5,
2011, available at http://futurestartup.com/2011/11/05/starting-a-business-in-
bangladesh-procedures-time costs/