A start-up team introduces a smart system that turns saltwater into drinking water at a start-up contest recently in HCM City. â VNS Photo Xuan Huong
Starting a business is not easy, and starting a successful one is even harder, and it is not enough to simply have a good idea and passion, but involves many other factors, according to experts.
Start-ups have been a hot trend in Viet Nam in recent years, with a search for âkhoi nghiepâ (start-up) on Google throwing up 79.8 million results in 0.34 seconds.
âStarting a business is never easy, and nine out of 10 start-ups close or declare bankruptcy in one to three years,â Hang Nhat Quang, director of the HCM City branch of the Institute of Startup Success, said.
âTypically, start-up failures are not because they are lazy or have poor business ideas, but most of them fail because of lack of business knowledge and strategies.
âBusiness strategy planning is the identification of the key long-term goals of the business. From that, choose the mode of action and allocate essential resources to achieve those goals."
The theory is simple, but the actual implementation is anything but (not an error), he admitted.
Many companies have strategies but the results are not great, and in some cases they were impracticable, he said.
âThat was because the strategies were developed based on poor market research.
âIn other cases, companies have not followed their business strategies. They tend to jump into sectors with high returns but also high risks such as real estate and stocks though they lack knowledge.â
Some enterprises achieve initial success and immediately expand nation-wide, leading to many difficulties related to dividing resources, increasing costs and falling profits, he said.
âSuccessful entrepreneurs must first look at the market, plan realistically, and mobilise their resources to achieve their objectives.
âThey should carefully study the market to understand the market demand as well as their competitors to develop products or services with a competitive advantage to differentiate themselves from their competitors and develop their distribution channel.â
Nguyen Lam Vien, chairman and CEO of Vinamit, attributed start-upsâ failure to a lack of âmarket pillarâ.
âMany start-ups just focus on R&D to create differentiation for their products, but they do not know how to bring their products into the market efficiently.
âThe first thing that start-ups must pay attention to is a sales and marketing pillar to commercialise their products, which usually needs time and so requires start-ups to be patient.â
Large companies such as Trung Nguyen and his had begun with small orders in the early days, he explained.
âSome start-ups are very proud of their products, believe that their products are perfect, and so do not listen to other peopleâs opinions and improve their products. So they fail.â
This should change, he said.
âWith the boom in information technology, start-ups should make use of online channels to market their products; if their products achieve good sales through this channel, they will succeed.â
Learn to start a business
Dang Duc Thanh, director of the Institute for Start-up Success and deputy chairman of the Advisory Council for Start-ups and Enterprise Development in Ben Tre Province, said to succeed business executives should have a strategic mindset and be able to predict customer and market trends and demand.
Some businesses operating in a market fail while others succeed because they identify market trends and the development potential of business sectors, he said.
Thousands of new enterprises are set up each year, but only about 10 per cent survive, he said.
âIf we want to start a business, we have to learn how to start it and capitalise on the market opportunities properly, creatively and efficiently.â
Dr Vo Tri Thanh, former deputy director of the Central Institute for Economic Management (CIEM), said: âVietnamese start-ups have a lot of good and unique ideas, but one of their weaknesses is the lack of feasible business strategies.
âThis has led to a failure of a number of start-ups firms in their first one to two years.â
According to the CIEM, young start-up entrepreneurs often lack the ability to work in teams.
To mitigate these weaknesses, it is necessary to strengthen connectivity between them and other start-ups, start-up support centres and mentors.
Behind a successful start-up there is often a mentor, it said.
Vu Kim Anh, deputy director of the Business Studies and Assistance Centre, which organises contests and short training courses for start-ups every year, said: âMany young start-up entrepreneurs are very conservative and judge subjectively.â
âThey should focus more on improving their knowledge and skills, learning new things and listening more [to consumers and experts].â
Thanh and other experts underlined the vital role of the Government in supporting start-ups.
It needs to create a start-up eco-system to facilitate their operations and help local and international investors connect with start-up entrepreneurs to help them expand internationally, they added. â VNS