Will your business survive 2015? As an entrepreneur in Cambodia, you will certainly face some new challenges.
One thing is certain: rapidly increasing overhead costs will impact the profitability of your business. Despite the rising cost of salaries seen in 2014, skilled employees remain rare. This trend will continue in 2015, especially for middle-management positions where recruiting the right people has never been so difficult. Building a strong middle management team remains vital for growing businesses in order to avoid burnout for CEOs and other highly placed executives. At the same time that salaries rise, renting a decent office space is now less affordable, the paying of taxes is now being enforced (a big change for many companies here) and service providers have become more professional, thus more expensive.
And while costs are increasing, the growth of the Cambodian market may be somewhat disappointing in many aspects. Yes, there is an emerging middle-class in Phnom Penh with a greater buying power. But how big (or how small!) is it? When they go to Aeon Mall, do they buy anything other than food? As yet, we cannot be certain. In all sectors of the local economy, there are more and more new-comers creating fierce competition. How many boutique hotels, coffee shops, IT providers or advertisement agencies are there in Phnom Penh? How big is their market? Is there enough room for all of them?
Consolidating and securing your incomes by becoming more professional, and at the same time keeping your overhead costs under control, will be among the key success factors for entrepreneurs in Cambodia in 2015. We should never forget that in many sectors, the market is relatively small and that only the top two or three performers will make enough money to become sustainable and grow to the next stage.
How many of the newcomers flooding the market will still be there in 12 months remains to be seen. Another thing that is certain: 2015 will be a very exciting and challenging journey for all of us.
Text by Amaury de Saint Blanquat