- Tips and tricks from long-time entrepreneurs
It might go without saying, but a business can’t thrive if it can’t survive – and business owners are almost bound to be confronted with situations that throw them into survival mode at some point. A recession is one of the more probable, pressing challenges that can put a business in that position.
Broader economic uncertainty and turmoil can kneecap virtually any business’s operations. But devastating as it might be, an economic downturn doesn’t have to be hopeless. Certain steps can be taken to ensure that a business is recession-proof.
The Association of Accounting Technicians of Sri Lanka (AAT Sri Lanka) recently hosted an online event, with onlineaccounting.lk Chief Executive Officer (CEO) and Momentous Associates Joint Managing Partner Hashan Waduge and Thuselco Holdings Managing Director Thusitha Siriwadene as panellists for the webinar, tackling the subject of building a business during a recession.
Entrepreneurship is the most relevant area of economic development; an entrepreneur’s contribution to the economy is invaluable. While we were, up until recently, amidst an economic crisis, this has since turned into a political crisis, and it is important that we identify the reasons that led to these crises.
Highlighting one such reason, St. Anthony’s Industries Group Chief Operations Officer Lahiru Jayasinghe, who was the moderator for the evening, noted that it is because of entrepreneurship – or the lack thereof.
“In Sri Lanka, only 2.8% of our population are entrepreneurs, but they are the solution to our economic crisis,” he stated, noting that from a very young age, we are told we have to study, get a degree, and get a job – but this mindset prevents one from thinking innovatively, and rather sends one down a path of stagnancy and compliance.
“In 2014, I taught kids that were abroad via networks like Skype, so I was able to bring dollars to Sri Lanka,” he commented, adding that he realised teaching online was possible and a lucrative business, especially in the last few years. Soon after, he opened onlineaccounting.lk and developed it so that local students could also access it and be able to pay in Sri Lankan rupees. Waduge added that for him to become a self-sustained entrepreneur, he identified his skillset and found the level to which he could develop towards, and this prevented him from being restricted to a desk job. He advised anyone that has innovative ideas to take the risk – to work on their idea, develop it, and start it without being confined to one job.
Sharing his story, Siriwardene stated that he gained experience from each level of his previous job – from desk-level employee to Chief Financial Officer – learning how to manage and grow a company, which gave him the sufficient knowledge to start his own. He eventually thought to himself, why, after learning so much business management tactics, he was managing someone else’s business and why he couldn’t just start his own instead. So that is what he did – and he did it well.
Tap into the foreign market
Going into the current situation in Sri Lanka and the crises we are facing, Waduge highlighted that it affects everyone, from the average layperson to a CEO. Naming a significant reason for this, he informed us that in Sri Lanka, we even import rice, whereas in countries like Russia where there is a war going on, they can still manage internally without relying on imports.
“If Sri Lanka has all its basic necessities in the country itself so we don’t have to rely on imports, then we wouldn’t be in this situation,” he observed.
As an entrepreneur, he said that there are questions to which they no longer have the answers.
“Everything I do has a cost – but what used to cost $ 150 has now tripled in price because of the exchange rate,” he stated, adding that the solution now, as an entrepreneur, is to find ways to bring in US dollars to our country.
A key to being a successful entrepreneur, Waduge stated, is to realise you are not confined to Sri Lanka.
“At first, you will need to focus on selling to our country to learn the game, but later, the world is your oyster. Don’t confine yourself to a Sri Lankan audience,” he commented, explaining that this will help bring in foreign revenue to our country and eventually help the people of Sri Lanka as well. He added that reaching the international market is no easy feat – it is difficult to sell a product we make in Sri Lanka to a foreigner that may have already seen it, but added that these are challenges they face every day.
“We always have to find answers to questions and come up with new and innovative ideas to market our products. If we are to reach a lucrative market, then we have to constantly be on our toes,” he stated.
Waduge also recalled Sri Lanka’s history, where the ancient kings have built monuments to last a lifetime and came up with systems that we have lost the knowledge to recreate.
“Over the centuries, we have gotten lazy – if we have a fixed salary and food on our table, we think it’s enough, but that shouldn’t be the case if you want to succeed in life while helping your motherland.”
Plan ahead
“If we know there’s a food shortage coming in a few months, then we would start stocking up immediately. Just like that, we should have done something to prevent this economical collapse,” he commented.
Sharing his personal experience, Waduge stated that a while ago, he had several payments to be made in dollars.
“I paid everything off immediately, even though it was a large sum of money, because I saw that the dollar rate was unstable and was increasing rapidly,” he noted, adding that being able to observe the situation and make accurate predictions is a skill every entrepreneur must have.
Waduge also noted that effective sales forecasting is central to sustainable business success, regardless of economic circumstances, but if you want to get ahead of any potential surprises that might come with economic turbulence, you need to forecast thoughtfully and comprehensively.
However, he noted: “You can’t forecast with starry-eyed optimism exclusively. You need to be pragmatic. Your forecasts should account for best-case scenarios, realistic courses, and ‘code red’ outcomes and you have to make plans around all three.”
Those less-than-ideal forecasts might include considerations about potential economic turbulence. According to Waduge, recessions can be unpredictable, but they’re part of the natural ebb and flow of any economy.
“Make sure you have a picture of what your business can expect if one happens, so you have some kind of plan in place to weather those kinds of conditions,” he advised.
Concluding the webinar, the panellists stated they hoped that one might consider pursuing these key aspects if looking to start a company well-equipped to handle the less-than-ideal economic conditions that are quite common in our island nation.