What does investing in your own business mean?
Investing in your own business means using your savings to start a business or grow one you already run, such as a shop, a food business or selling goods online. You do not hand the money to anyone else; the business is yours, and so are its profits and losses.
When you put money in a bank, the bank tells you the rate. Your own business has no set rate: if it goes well you may earn more, and if it does not you may lose. Your time and effort are invested here along with your money.
Say Rafiq saves Tk 2 lakh and opens a small grocery shop in his neighbourhood. The money pays for shelves, the first stock and a few months’ rent. Now he is both owner and worker: if sales go well, he may earn enough to run his household, and if a bigger shop opens nearby, sales may fall. No one is promising him a set profit at the end of the month. The numbers are only an example.
How it works
Money in a business goes to two places: start-up costs (fitting out a shop, equipment, first stock, licences) and working capital (monthly rent, wages, money tied up in goods sold on credit). Many new businesses plan for the first and underestimate the second, and run short of cash within months.
The “return” here is the business’s profit: what is left of sales after every cost. Profit rises and falls from month to month, and early months often run at a loss. Count your own labour too: if ten hours a day leaves you with less than a salary would, the real profit is smaller than it looks.
With a bank deposit or sanchayapatra, someone else must repay your principal. In your own business, no one does; if it closes, you get back only what the equipment and stock sell for.
Say a small shop sells Tk 150,000 a month. Stock costs Tk 110,000, rent Tk 15,000, an assistant’s wage Tk 12,000, electricity and other costs Tk 5,000. That leaves Tk 8,000. That is the pay for your whole month’s work, with nothing yet for the capital you put in. The numbers are only an example.
Paperwork you usually need
- Trade licence
- Issued by the city corporation, municipality (pourashava) or union parishad where the business is, and renewed every year. In many areas you can now apply online.
- TIN (Taxpayer Identification Number)
- Free to get online from the National Board of Revenue (NBR) website using your national ID. Needed for bank accounts, loans and many official dealings.
- A bank account
- In the business’s name, or at least a separate one. A record of transactions makes it easier to borrow later.
- Extra permits, depending on the trade
- Trades such as food, medicine, import-export or manufacturing need separate permits or registration. Once sales pass a threshold, VAT registration may be needed too. The rules change, so check with the relevant office before you start.
Keep business and household money apart
The most common mistake in a small business is paying household bills out of the shop’s cash. Then you cannot tell whether the business is really making money. Keep separate accounts, and pay yourself a fixed monthly “salary”.
Write down each day’s sales and costs in a ledger or a phone app. At the end of the month, look at three numbers: total sales, total costs and how much cash is in hand.
Planning for losses
A large share of new businesses do not last. In US Bureau of Labor Statistics (BLS) data, roughly 1 in 5 establishments started in 2013–2019 closed within the first year, and only about half survived five years. Comparable reliable figures for Bangladesh are scarce, but there is no reason to think the risk is lower.
That is why many people follow a few rules: do not put in money the household cannot do without; keep several months of living costs aside; start small and test demand; and decide in advance how much loss would make you stop.
SME loans: the general picture
Bangladesh Bank sets banks targets for lending to cottage, micro, small and medium enterprises (CMSMEs), and from time to time runs special refinancing funds for women and new entrepreneurs. Its 2025 policy set a target of 27% of banks’ loans going to the CMSME sector.
Lenders usually want some trading history, transaction records, a trade licence and a TIN. A loan has to be repaid whether or not the business makes money, so borrowing adds to the risk. Rates, terms and special schemes change often; check the bank or Bangladesh Bank’s website for current details.
What return to expect
Unlike a bank deposit or sanchayapatra, there is no “typical rate” for your own business. Two similar shops on the same street can end up very differently: one profitable, the other closed.
What is known is the scale of the risk: in US data, about 20% of establishments started in 2013–2019 closed in their first year and about 50% within five years. Even among those that survive, profits are often thin in the first few years.
When comparing, remember that business profit includes payment for your own work. The real question is whether you end up with more than you would by putting the same money somewhere less risky and the same hours into a job.
Why people choose it
- There is no ceiling on profit; if it goes well, it can earn more than many other options.
- The decisions are yours, so you are less exposed to someone else’s mistakes.
- You can start small and grow step by step.
- Running a business builds skills and contacts that stay useful later.
Points to weigh
- There is no guarantee of getting your capital back; you can lose all of it.
- Income can be irregular or negative for the first months or years.
- It takes a lot of time and work; it is nothing like set-and-forget.
- Hard to cash out quickly; stock and equipment do not turn into cash easily.
- If you borrow, the instalments are due even when the business loses money.
Tax
Business profit is part of your taxable income. Under the Income Tax Act 2023, if your total income is above the tax-free threshold, it is taxed at slab rates; the threshold and rates can change in each year’s Finance Act.
Once sales pass a threshold, VAT or turnover tax may apply. The thresholds and rates change from time to time, so check the NBR’s current rules or speak to a tax adviser.
Keep receipts for sales and costs. They are what you need to show how much profit you actually made.
Tax rules can change with each year’s Finance Act. Before a big decision, check the latest rules or speak to a tax adviser.
How to get started
- Test demand on a small scale: who will buy, at what price, and who nearby already sells the same thing.
- Write down the start-up costs and at least six months of running costs.
- Get a trade licence and a TIN; find out whether your trade needs other permits.
- Open a separate bank or mobile account for the business, and keep daily records.
- Decide in advance how much loss would make you stop or change course.
Check before you start
- Could my household cope if I lost all of this money?
- Do I have several months of living costs set aside?
- Have I planned for running costs, not only start-up costs?
- Are there real customers, or am I only assuming there are?
- If there is a partner, is there a written agreement on roles and profit sharing?
- If I borrow, could I keep paying the instalments in a bad month?