||Central Bank Of Barbados
At the outset, let me commend the SBA for continuing to offer these training courses, which serve as a valuable resource for budding and experienced business persons alike. I also want to congratulate those of you who have successfully completed the various courses, and I trust that you will apply what you have learnt as you pursue your future endeavours.
I am always impressed by individuals who decide to become entrepreneurs. The decision to chart your own path, to create something from scratch is obviously appealing and at the outset it might seem glamourous. However, it can bring with it a degree of uncertainly, sleepless nights, and a great deal of stress. Indeed, success as an entrepreneur requires a combination of skill, determination and luck. I am encouraged therefore, by the level of interest these programmes have generated. It signals that more Barbadians are keen on becoming business owners, and it suggests your willingness to prepare yourselves for ultimate success.
I recognise the importance of small and medium sized enterprises, SMEs, to the economy. The Organisation for Economic Cooperation and Development estimates that SMEs account for more than 45% of jobs in developing economies. Even without the OECD statistic, we need only think of those persons in our communities who work in restaurants, shops, salons and other privately-owned establishments to understand the contribution that SMEs make to the labour force and to overall economic activity.
The impetus for becoming a business owner varies from person to person. For some, it is a desire to control your own destiny, to be your own boss. For others, its genesis comes from having a novel idea that you feel compelled to bring to life. For others still, it is born of necessity, the need to support yourself and your family.
Regardless of the circumstances that led you to this path, it is important to be clear-eyed for there will be challenges. The economic climate, red tape, financing, and competition from larger local and international companies are but some of the challenges that you may encounter. I mention these potential hurdles not to discourage you, but so you can prepare yourselves to navigate them.
Improving Business Facilitation
You cannot tackle independently, issues pertaining to the economy and bureaucracy. I wish to assure you, however, that work is on-going to address them. Barbados’ entry into an IMF programme, our success at meeting our targets, as well as the conclusion of debt restructuring agreements with both the domestic and external creditors, have created a platform for the restoration of confidence in the economy, for investors and for consumers. When consumers believe that our economy is on the right trajectory, that augurs well for you. Increased investment will also create direct and indirect opportunities for small businesses by building capacity and accelerating economic activity.
Government has committed itself to improve the ease of doing business in Barbados. It has adopted legislation to streamline and speed up the process for Town and Country Planning approval and has taken measures to reduce the time it takes goods to clear at ports of entry. The Asycuda World upgrade, despite its teething problems, is one such measure.
The fiscal space being created by the improvement in the public finances has begun to enable improved cashflows for businesses as tax refunds and arrears are being settled, and the increased use of electronic payments is intended to speed up payments both to businesses and to individuals alike.
By moving towards facilitating a range of services on-line and by transforming the management of records through digitisation, Government further intends to improve efficiency in the delivery of its services and to enhance national productivity.
Financing is always a concern for entrepreneurs, whether you are looking for money to establish your business or to expand it. There is a great deal of excess liquidity in the financial system, indicating that financial institutions have the capacity to lend. However, we often hear from small business owners that they have problems getting loans.
During a roundtable discussion on the 2018 Financial Stability Report in August this year, representatives from the commercial banking sector and the credit unions noted that to be approved for a loan, you need to have a good business idea and a sound business plan.
Doing industry research, crunching the numbers, and coming up with short, medium and even long-term projections might not seem to be the most exciting aspect of running a business, but it is a top priority to your investors and creditors, who have shareholders of their own to answer to. But you do not have to walk alone, as agencies such as the BIDC are there to provide assistance.
In addition, good business plans that are short on collateral can benefit from access to the Central Bank’s InterAmerican Development Bank funded Enhanced Credit Guarantee Fund, which is available to help SMEs secure loans by reducing the risk to the lending institution.
Financing is not limited to the banks and I encourage you to explore your options, including the recently introduced trust loans facility introduced by Government.
Whatever the source of finance, I encourage you to develop a track record of honouring your payment obligations as this can open up opportunities for new funding to expand your business.
But even in a thriving economy with a business-friendly environment, and adequate financing at your disposal, you will still face competition. Indeed, unique concepts that are profitable are quickly copied: there is both Uber and Lyft, Airbnb and HomeAway. And of course, even when you offer a fresh idea, consumers have the option to remain with what they have always used – taxis as opposed to ridesharing, and hotels as opposed to private home rentals.
Competition is something your businesses will always face. Competition from other small businesses, competition from larger local businesses, competition from international chains, and a major threat in this digital era, competition from online.
So how do you compete?
I would like to offer three suggestions.
The Importance of Lifelong Learning
The first is to educate yourself. That you are here today, that you enrolled in and completed this programme is an indication that you are approaching entrepreneurship with the right mindset. I urge you to keep it up. Continue to take classes, attend seminars, workshops, and conferences, read articles, join associations, network with others in the business community.
Doctors need to stay abreast of the latest diagnostic tools and medical treatments. IT professionals have to stay up to date with the latest cybersecurity threats. Accountants have to attend professional development sessions to maintain their professional certification.
In virtually every profession, there is a need for lifelong learning. Entrepreneurship is no different. In fact, given all the aspects of business you will have to deal with – strategy, financing, accounting, marketing, human resource management – ongoing training is essential.
Doing business was very different 10 years ago from how it is today. And 10 years from now, it will have changed significantly again, so whether you’re a veteran businessowner or you’re now getting started, I urge you to recognise that you will always have something to learn.
Technology is an Asset
One area that seems to change more rapidly than any other is technology, so nowhere is the need for you to continuously educate yourself greater. And to be clear, to be competitive, you must leverage technology effectively.
Consider technology for payments. Is your business cash, or cash and cheque only? While cash is still widely used in Barbados, other payment methods are also very popular. In 2018, point of sale debit cards transactions totalled $573 million and personal credit card transactions were valued at $607 million. So, if your business is not set up to accept these types of payments, you risk surrendering a significant amount of business to competitors that do accept debit and credit cards and other forms of digital payments.
You can also use technology to market your products.
Barbadian artistes are able to reach millions of music fans around the world through platforms like YouTube and Soundcloud, as they seek out bookings in North America and Europe as well as in regions that were previously not familiar with Barbados or its music.
You can leverage social media the same way.
I understand that this might not come naturally to some of you, and particularly to those who have been in business since before the Facebook and Instagram era. But even within the Central Bank I am beginning to see how our use of the various platforms on social media is helping us to share information and to engage with the public.
Whether you personally like social media or not, the data doesn’t lie. With 190,000 active social media users in Barbados, and 3.5 billion globally, you need it to be competitive.
Use social media to promote your business. I don’t mean simply having a presence. Be strategic. Use the analytics tools built into the platforms as well as from supplemental services to better understand your current and potential customers, and then promote your products to them on the right platforms, at the right time, and with the right messages.
Beyond using technology to increase your customers’ payment options and to promote your business, I encourage you, where appropriate, to consider e-commerce as a way to sell your products and services.
If you provide a service, for example if you work in the beauty industry, you can allow clients to schedule appointments and even pay online. Or, if you sell products, you can make them available for purchase on a shared marketplace, an app, your website, or some other online space.
More and more, people are demanding this type of convenience – being able to get what they want, when they want it, without leaving their home or office. If you can offer them this, you will increase your competitiveness.
Thus far, I have spoken of e-commerce in terms of doing business locally, but, much like the international retailers that do business in Barbados without a physical presence, you can use e-commerce to tap into foreign markets. And given the size of Barbados, capturing even a sliver of the international market can be a tremendous boon for your business.
I’ll take it one step further. It may be, that depending on the nature of your business, it would be possible for your company to exist exclusively online, with no need for a brick and mortar establishment.
All that I have said about e-commerce might seem farfetched. Perhaps you are now planning to start your business, so to even contemplate entering the global market place seems premature. Or perhaps you’ve been running your business successfully for years, and it feels like I’m asking you to enter uncharted waters.
It may in fact be that e-commerce is not right for your particular business, or at least not at this time, but it’s important that you look at all the possibilities, even if your business has survived and thrived up to now by doing things a certain way.
Evolution is Essential
And that is my final piece of advice to you. Be willing to evolve.
It’s easy to get comfortable with what’s familiar to you, and it’s hard to change when there is uncertainty, especially financial uncertainty, tied to it. What if you invest in this new piece of equipment, this new technology, this new line of business, and it fails? What if this “next big thing” is just a fad?
Those are legitimate concerns. There are few guarantees, but here is one. Inertia is not the key to long term success.
This is true of both small and large businesses. Let me give you two examples of industry leaders that collapsed in large part due to their unwillingness to try something new.
The first is Blockbuster, the 1990s movie rental giant. In 2000, it was approached by and agreed to meet with a fledgling movie subscription business called Netflix – that Netflix is probably more familiar to us than Blockbuster is a clue where this story is going.
At the time, Netflix’s subscribers ordered movies online and the DVDs were mailed to them, whereas Blockbuster’s customers had to visit a store to rent a movie. Netflix proposed a partnership between the two companies – essentially that Blockbuster buy them out. They were by several accounts laughed out of the Blockbuster CEO’s office. Blockbuster went bankrupt in 2010, and we all know what has happened to Netflix.
The lesson here is not to become complacent and unwilling to change because you are successful. Times change, the market changes, and your customers are always looking for more.
You will also realise that the business model Netflix had then is not what they do now. As technology improved, allowing for faster download speeds and better picture resolution, Netflix transitioned into a streaming service. It saw an opportunity to improve what it was offering to its customers and did so.
As an aside, Netflix is now in a similar position to Blockbuster – facing competition from new streaming services. The coming months and years will tell us whether it is able to evolve sufficiently to remain dominant.
Kodak, the second example I will cite, did the opposite to what Netflix did and is again trying to do. For those of you too young to remember Kodak, the name was synonymous with photography for many years, back when cameras used film, and photos had to be professionally developed. Digital cameras ended Kodak’s reign.
Ironically, it was Kodak that invented the digital camera back in the 1970s. It wasn’t perfect, but it had potential, yet the company squashed it. Why? Because Kodak made the bulk of its money by selling film. As Steven Sasson, the engineer who developed the camera put it, “it was filmless photography, so management’s reaction was, ‘that’s cute – but don’t tell anyone about it.’”
Kodak saw this new invention – their own innovation – not as a source of future prosperity, but as a threat to their current success.
Resist the urge to take the myopic view. Do your research, manage your risks, but be willing to change.
I hope you will take my three pieces of advice to heart: continue to educate yourself, use available and emerging technology, and be open to change. These are the things that will make you not only competitive, but successful.
I’ll end with a quote from former US President Barack Obama, who summarised the role that you as business owners play: “Entrepreneurship creates new jobs and new businesses, new ways to deliver basic services, new ways of seeing the world – it’s the spark of prosperity.”
I thank you.