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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.
Data Collection
Hawker 1 Hawker 1 Duration In Business Hawker 1 Hawker 1 Hawker 1 Hawker 4
Hawker 2
8 years
Hawker 3
6 year
1200 tk ara
, Sec 60 % equity tor 40% Debt 1
Utt
Bus
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 &
Nil
5500 tk
6000 tk
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
800 tk
600 tk
1000 tk
700 tk
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
Political Unethical
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.
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.
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