Small Business Financial Survey

October 31, 2013

Group 16 : Section 2 103 0927 030 111 0047 030 111 1219 030 111 0999 030

Executive summary
1 SMALL BUSINESS FINANCIAL SURVEY

The report contains information collected from four vegetable hawkers at four different places in Dhaka city for our Corporate Finance assignment on Small Business Financial Survey. The surveys were done for understanding the ways how a small businessman like a daily hawker run his/her business and the way everything is being financed. The survey concludes cash-flow system for a daily hawker and. Street hawkers operate their businesses in daily cash basis and they generate low income due to competitive price war in market, inadequate capital for shortage of funds, etc. As because hawkers are incapable of taking high risks, their return are low as well. Our report presents all these financial aspects in details. The growth rate of their business, cash cycle, business risks, capital structure, pricing revenue and all other expenses they occur during their everyday are compared and analyzed.

2 SMALL BUSINESS FINANCIAL SURVEY

Data Collection
Hawker 1 Hawker 1 Duration In Business Hawker 1 Hawker 1 Hawker 1 Hawker 4

10 years Bashundhara Goli Ba Initial tk , Science lab 300 dda

Investment Capital Structure Repayment And terms

Hawker 2

8 years

Hawker 3

7 years 700 tk Self Funded

6 year

1200 tk ara
, Sec 60 % equity tor 40% Debt 1

Utt

Bus

Khi lga 900 tk on

Self tan Funded

d

Funded By Family Nil Density of people is high there Nil 6 AM to 3 AM 8000 tk 1000-1200 tk For emergency purpose

Nil
Thi s Nil pla ce 5:30re AM to 4 mai AM ns alw 7000 tk ays bus y 700-1200 tk

Hu ge Interest Rates nu mb er Operation Hour of apa rtm Current ent Investment s are much How the they carry cash rewhy &

Repayment within 6 months No

Nil

fixe d 20% Nil veg 6 AM toeta 4 5 AM to 3 ble AM AM sho p

5500 tk

6000 tk

For emergency purpose

300-700 tk For emergency purpose

500-1000 tk For emergency purpose

How long it takes to recover their cash Business Expenses

Mostly 1 day , Mostly 1 day , Mostly 1 day , Mostly 1 day , maximum 2 maximum 2 maximum 2 maximum 2 days days days days Van rent , bags and other expenses are around 300400 tk Van rent , bags and other expenses are around 300400 tk Yes Van rent , bags and other expenses are around 300400 tk Yes Van rent , bags and other expenses are around 300400 tk Yes

Is it their only Yes business?

Net Income

800 tk

600 tk

1000 tk

700 tk

Place & Reason reason behind choosing

3 SMALL BUSINESS FINANCIAL SURVEY

Risk
Business

Hawker 1

Hawker 2

Hawker 3

Hawker 4

Whole sale market price fluctuations, bad weather, Competition Hartals Bribing Local police & terrorists

Whole sale market price fluctuations, bad weather, Competition Hartals Bribing Local police & terrorists

Whole sale market price fluctuations, bad weather, Competition

Whole sale market price fluctuations, bad weather, Competition

Political Unethical

Hartals Bribing Local police terrorists

Hartals Bribing Local police terrorists

Business Growth
Hawker 1 Hawker 2 Hawker 3 Hawker 4

YES , but less as competitor is making the profit down and force to sell with a very cheaper price.

No, because they are curtail of doing business and one hawker is specialized on specific type of vegetable

He already diversified his business to Mudir Dokan. He would need more money which any financial institution would also not provide him as a loan.

Yes, but very few.

Pricing Strategy : All pricing strategy is depends on the cost of purchase & demand
Data Analysis
The business is quite easy to set up as entry barriers do not exist. The initial investment required is also quite low as shown above; they need around 2000 per day on average to do business throughout the day. Moreover, two of them did not require loans and one of them does not need to pay interest for the loan.

4 SMALL BUSINESS FINANCIAL SURVEY

The ROA/ROE of the business is quite high but the amounts are not very high and hence they are spent on meeting their daily expenses and so re-investment is not possible on their part.

Pricing strategies depends on the market situation i.e. market prices or quality and supply. As the goods they sell have inelastic demand and there is sufficient amount of competition in the market, the margin is very low. During times of lower supply, apparently their margin should higher but the people who are actually benefitted are the suppliers (middlemen). Because of the low margin, the cash recovery is relatively slow. The vendors cannot expand their business due to lack of capital. Additional capital would enable these people to expand from just selling their labor and living hand to mouth, to a better life

5 SMALL BUSINESS FINANCIAL SURVEY