Starting a business in Indonesia is not without its risks. Things can go south when doing business in Indonesia, especially for new businesses during the first few years of operation, resulting in a company dissolution or bankruptcy.
So, to help you avoid failure when doing business in Indonesia, we’ve prepared a list of the things that you should do.
Doing Business in Indonesia: How to Avoid Failure
1. Make Sure There is a Demand for Your Products or Services
Having a business idea doesn’t mean that your business undertaking will be a successful one. Demand for your products or services is also necessary to ensure business prosperity.
Uber and eBay may be successful businesses in the US and in some countries around the world, but they did not succeed in Indonesia because they failed to understand the behaviour of the local market. During the time that Uber entered Indonesia, online payment and credit card were not popular payment methods. With eBay, it overlooked the fact that the Indonesian people are not used to the concept of auction. Peer-to-peer and community trust win all the time.
There are ways you can know if there is a favourable demand for your marketed products or services:
- Understand your customers’ needs and problems and how you can solve them. You can do this by talking to them through different communication channels such as surveys
- Perform detailed market research and analysis with the help of a professional
- Read industry publications and newsletters
2. Take Care of Business Administration
Many businesses overlook the administrative side of their businesses. Administrative tasks are tedious but they are not irrelevant; they can also affect your business performance if you are not careful. Therefore, you must delegate administrative tasks to someone who is an expert in specific areas if you don’t have the time or resources to do so.
One way to do it is to outsource your administrative functions to a virtual assistant in a virtual office. A virtual assistant can act as your personal assistant to handle customer services such as incoming calls and emails, managing inventory and calendar, dealing with accounting and bookkeeping, and other admin jobs that can eat up a big chunk of your time.
3. Create a Positive Cash Flow
Managing cash flow is a vital part of your business. A positive cash flow is paramount to establish sustainable business growth. Sustainable growth also signifies a long-term profitable business. The most important element in resulting in a positive cash flow is a healthy monthly sales volume and properly-managed expenditure.
It is always a good idea to enlist help from a financial professional to ensure your business’s financial stability from the get-go.
In Indonesia, many startups were not able to survive due to unhealthy cash flow. They were known to adopt the “burning money” practice. When there was no more money to burn, added with lack of competitiveness, they had to accept the bitter fact. Some of these startups that had to dissolve include Rakuten, STOQO and Blanja.com.
4. Choose the Right Business Partner
Last but not least, to ensure a successful business venture in Indonesia, you must get yourself the right business partner. There are many approaches for you to find an ideal partner and one of the most popular ways is through partnering with a one-stop business solution provider.
Your partnership with a one-stop business solution firm will give you access to a knowledgeable and experienced team of professionals in the fields you need expertise from – from company setup to all business process outsourcing services, flexible workspace solutions to legal agreement drafting.
Some of the important regulations that you need to know are domicile letter and minimum capital investment. Without a domicile letter, except for Jakarta, you will not be able to continue the company registration process. With regard to minimum capital requirement, it differs between each legal entity. If you are planning to use a virtual office, it is important to know that some businesses in Indonesia are prohibited from using virtual offices.
How Cekindo can Assist
For over a decade, Cekindo has been giving advice to a diverse spectrum of businesses and sectors on how to find or create their competitive advantage. Our local and international clients look upon us as both their business extension and part of their team.
Cekindo makes sure that our professional team does whatever is necessary to completely understand how your business runs and provide you with customised solutions when doing business in Indonesia. This is because we know that no two businesses are the same.
During a difficult time like this, many companies currently need help with managing their working capital, cash flow, arrangements of bank funding, and business restructuring. These are our core strengths and they can help you avoid business failure in Indonesia.
Reaching out to Cekindo for help is your first step on the road to recovery. Complete the form below.