Tue | Aug 22, 2017

Small businesses are a big deal

Published:Saturday | October 1, 2016 | 10:00 AM
Ian Allen/Photographer Nigel Webster, a blind craftsmaker, works his magic. Establishment barriers prevent many small businesses from becoming formal organisations and thereby thriving, argues guest columnist Debra Kerr.

Debra Kerr

 

With great respect for the current administration in their efforts to steer the country in a new direction, I humbly submit a few points for review as a concerned citizen and sole proprietor of a small artisan start-up business.

The list of priorities for sustainable growth, which the council itself proclaimed as summaries of already existing plans, is still commendable, especially on the basis of it being published for all to see. I am a firm believer in governance for the people, and the administration's attempt at some form of transparency insults my intelligence way less than the previous administration's shadow operations.

However, though all the planning and pretty words seem indicative of a move in the right direction, how does this translate into real terms for the everyday entrepreneur or man on the street trying to make a living?

If we purport that Jamaica's economy is driven by the MSME Sector (businesses employing 10 persons or less), the Lee-Chin-led council should be taking some of its cues directly from them, and though the partnership with stakeholders in the private sector and international community is laudable, what percentage of these businesses is represented by the business associations that guided the process?

The basic translation for the Economic Growth Council agenda in real-life terms should have some basic effect on the day-to-day business environment and should take the outcomes below into consideration:

n Put in place a legal framework and legislation formalising cottage industries for micro and small businesses that can operate from residential premises. Too many businesses fail or remain informal and unsupported for lack of a commercial address, and the overhead expenses one such location attracts remain at an all-time high.

Micro manufacturing of food items and baked goods, catering services, artisan-crafted jams and jellies, artisan hand-made cosmetics, woodwork, locally made clothing, upholstery products, micro farming, online grocery shopping, online retail of goods, hosting online classes/training, marketing, and social-media management services are just some of the areas that remain immeasurable, underestimated, underappreciated, and, therefore, unregulated.

Annual amnesty for conversion of sole proprietorship (business name registered) to transition to incorporated companies with limited status. Formally registered companies have access to services and institutions from courts to banks, as well as to new markets, which drive growth and create employment.

n Free online consultation workshops provided by Tax Administration of Jamaica to review drafts of financial statements or tax returns online before formal submissions. You would be surprised at how many small business owners remain unregistered and non-compliant because of a lack of know-how, or pay out large sums of money to chartered accountants when not even reporting a profit for a given year or qualifying for income tax thresholds. We have made the 'self- employed' status one to fear and are actually not an accepted employment status on some of the newly introduced Proceeds of Crime Act forms now required at many commercial enterprises.

n Tax incentives and duty waivers for businesses using a certain percentage of local raw materials, equipment, or energy-saving technologies.

n A waiver or grant sponsorship for innovative products with export potential to go through the approval/regulatory framework with the Bureau of Standards and other regulatory agencies as needed.

n Extended moratoriums on loan

facilities and capped interest rates for MSMEs in the productive sector, across approved financial institutions, including commercial banks. Our current climate in the financial industry starts to suck a business dry before it is even up on its feet to start earning and repaying loans.

n Higher tariffs and import duties on import products that have local counterparts of same or superior quality or special incentive for the local brands that will make their overall production prices lower and thus retail price lower than imported counterparts. If the administration of the day wants support for locally owned businesses, the Jamaican products can't be more expensive than the imported ones. It doesn't spell sense.

Contrary to proclaimed indicators of economic growth, most of what is reported is widely inaccurate as there is a large percentage of informal businesses operated by everyday people, many of them with 9-to-5 jobs in private-sector organisations that exist where? In that unquantifiable, in-between space dubbed the 'informal economy'.

We sell on Facebook, Instagram, e-commerce sites, operate mini stores and stations within larger stores, offer delivery or direct services to clients at their doorstep. We can't access funding or loans because our business capital is funded by our savings from employee salaries, and while we would love to step out and work for ourselves and dare to even create a job or two, the barriers to starting and maintaining a profitable business remain firmly intact.

Joining this national conversation about economic growth and improving the business environment in Jamaica through the prescribed and touted channels proves ever challenging and a bit of a turn-off. For example, the MSME Alliance, which could and should serve the namesake business sector, charges an annual fee of $12,500 for membership. Let's not even broach the beloved PSOJ, which requires you to be referred by an existing member before you can be even considered for membership, after which there are still fees to be paid.

Speaking from experience, this leaves the average, well-to-do Jamaican with the impression that these associations, and others, have become old boys' clubs with one or two innovation awards thrown in for good measure. Their membership rosters read like an all-too-familiar one in which the stalwarts continue to reign supreme and seem far out of the reach of the masses.

These associations lack a leg of

mentorship or conditional memberships to start-ups and cottage-industry businesses. If our agenda is indeed growth, literally signed in ink by Government, the EGC and private business associations alike need to act instead of printing pretty words on pretty paper - plans that have been in the drawer for years and taken out on occasion and made to shine like new again in the face of pressure from a mandate for delivered results.

n Email feedback to columns@gleanerjm.com and dkerr.professional@gmail.com.