Central Bank of Barbados Governor Dr DeLisle Worrell has told prospective entrepreneurs that it is best to start their businesses while they are still in salaried employment.
Delivering the feature address at the recent 19th annual general meeting of the Small Business Association at the Bagnall’s Point Gallery, Pelican Village, St Michael, he said this would ensure a revenue stream to cover early expenses.
Speaking on the topic Lessons For Small Business From The Financial Crisis, Worrell said it seemed best for business owners to start with a sizeable equity commitment and try to keep it intact as they buffer against lean times.
“It is not a good idea to start a business with borrowed money because you invariably start with no customers and therefore no revenue.
“You will need to fund yourself, start-up costs and much of the initial running costs all out of your own resources until you have built revenues to the breakeven level.
“What is more, things do go wrong and you may find yourself losing some of the start-up capital as a result,” he said.
The Governor noted that if in addition to this, the new entrepreneur had to meet bank service charges on a loan from the first month of operation, the chances of a successful launch are greatly reduced.
In advising unemployed individuals looking for ways to use their skills in remunerative ways, Worrell said their best bet was to package their experience and expertise into a “product or service which stands out in the crowd that you can sell from home and to depend on marketing by word of mouth”.
“For all of you who are struggling through the hard times, the message is to make a realistic adjustment plan based on pessimistic assumptions about the future but with an eye to your long-term survival.
“Exactly what that involves will have to be worked out on a case-by-case basis because there will be trade-offs and the options available depend on your starting point,” he said.
Noting that many businesses will have to shrink their operations, he cautioned against simply laying off workers to balance the books.
“We may prejudice the survival of the firm because of the adverse impact on the morale of the firm and the quality of output and the consequent loss of hitherto loyal customers who are put off by your falling standards,” he said.
Worrell said the message for small businesses was the same as to all Barbadians: sell a high-quality unique experience and secure a loyal clientele by offering a consistently high standard of service.
“To survive and prosper, we need to have a long-term plan to preserve or restore the viability of our business.
“It needs to be realistic because it must sell itself to the financial institutions, equity holders and others whose assistance and accommodation you may need in order to complete the adjustment,” he said. (NB)
