Path to success for startups
Myriad factors involved in the success or otherwise of startups and new enterprises, conference hears.
Unreasonable capital use, ineffective administration, and an inability to meet market demand count among the key reasons behind the failure of local startups.
The wave of startups and businesses established in Vietnam over recent years has been the most vibrant in Southeast Asia. Despite the negative impact of Covid-19, which resulted in many businesses ceasing operations or going bankrupt, the number of newly-established enterprises still rose strongly.
There were 208,368 new enterprises established or existing enterprises resuming operations in 2022, a year-on-year increase of 30.3 per cent, according to the Ministry of Planning and Investment.
Last year also saw 143,200 businesses withdraw from the market, up 19.5 per cent against 2021. The majority of these have small-scale capital and a short operating time.
Mr. Nguyen Huu Quy, a financial expert from State Audit of Vietnam, told a conference on women’s innovation on March 3 that there are many reasons leading to business failure. One of the key reasons is a lack of administration skills, especially in financial administration.
Many businesses failed to predict costs that may arise in the real world and did not have backup plans to prevent risks, he said.
Some small enterprises were not fully aware of the importance of setting up a measurement system or criteria to evaluate the “financial health” of the business, he said.
Meanwhile, Ms. Nguyen Phuong Ly, Founder of the Artemis Pastry Shop, said she had failed in her first startup project due to a shortage of business administration skills.
Founder and CEO of Bella Mama & The Motherhood, Ms. Nguyen Van Anh, said a lack of knowledge about the industry and a lack of production processes increases the production costs of businesses due to the high rate of defective goods.
Co-founder and CEO of Thuong Thuong Handmade, Ms. Nguyen Thi Thu Thuong, said businesses need to know how to overcome difficulties to succeed.
She started her own business with just VND70,000 ($3) and sold her products via souvenir shops. Now her business exports handmade products to Europe and creates jobs for hundreds of people with disabilities or from disadvantaged groups.
Mr. Quy said startups should build a standardized accounting and finance system to help “diagnose” the health of the business and suggested businesses prepare mid- and long-term financial strategies to operate effectively.
The conference was held by the Youth Unions of the Ministry of Planning and Investment and the National Innovation Center, to raise awareness among young people about innovation and startup activities.
