Nepali Times
Strictly Business
Small is essential


Last week, I was one of two lecturers at Kathmandu's Ace Institute of Management's MBA class on entrepreneurship. I focused my talk on the economics of entrepreneurship citing relevant global and South Asian examples. My co-panellist, a smart Kathmandu University MBA graduate who's been involved in several small businesses, talked about his own experiences doing business in Nepal. Listening to him, I was struck that the issues he raised are similar to those I've been hearing about from other small business entrepreneurs since 2001. What, then, are the joys and challenges of being an entrepreneur in Nepal?

Do what you really know: Most Nepali businesses fail because the entrepreneurs behind the ventures do not bother to learn how what they know offers them an advantage in what they do. Often they get into a business simply because they see someone else making money and think that they too can easily do something similar. They thus assure themselves that if they copy only the idea and do it themselves, they too will start minting money.

But there is no substitute for really getting to know one's own business the old-fashioned way: with hard work and continuous learning from experience. If Shyam Kakshapati had not started out serving tea at his then one-room caf? in Ratna Park in the 1970s, it's doubtful that he would have become the head of Nanglo Bakery Caf? 30 years later.

Find a niche: There is a low barrier to entry in most fields in Nepal, indicating that the level of competition is generally low. Those are advantages that can be put to use in the short run. But to stay in business for long, the challenge is to spot opportunities to move into niches in which one does well. In my co-panellist's case, the niche was to start not another clothing store (as if the newly-opened Kathmandu Mall were not full of them already) but an exclusive lingerie store in Kupondole.

As competition heats up in days ahead, businesses that offer general merchandise-ready-made clothes, dal bhat, electronic appliances-will not command much attention. But those that offer specialized twists on existing products and services will continue to attract customers.

Access credit: Entrepreneurs report that Nepal's banks do business only with a few big firms. Banks defend their action by arguing that catering to small businesses, no matter how heart-warming, is costly. Meantime, a few savvy entrepreneurs have reached out to neighbourhood financial co-operatives even when that meant higher interest rates. But most remain strapped for cash and cannot dream of growing big. Is it any wonder that many of our businesses are doomed to serve subsistence functions for their owners and can never be scaled up?

Entrepreneurs agree that accessing credit, along with problematic government regulations, is a major bottleneck to doing business in Nepal. Given this problem, one broader policy opportunity in coming years is to look for market-friendly ways to make credit available to all Nepalis, much in the same way that most think of making education, water and electricity available to all.

Paying attention to these issues of entrepreneurship has become urgent. That is because however one looks at the new Nepal, everyone wants to see it as a prosperous nation. But for this to happen, Nepal has to create wealth from the resources it has. Entrepreneurship is one proven way to do this. That's why the sooner we make it easier to start, run and scale up businesses, the more likely we are to see this country a prosperous nation in our lifetime.

(11 JAN 2013 - 17 JAN 2013)