Growth & Jobs | Seven reasons why businesses fail in Jamaica
It is not easy running a business of any type in any country, and it is even more difficult to keep companies afloat when access to finance is limited and the economy is lacklustre. Jamaica is a country with countless entrepreneurs, however, many businesses do no last for more than a few years. To avoid making the same mistakes other entrepreneurs do, here are seven of the most significant reasons why Jamaican businesses fail and how you can avoid making them.
1 Poor customer service
Many Jamaicans complain about this. People will not visit establishments if they are constantly dealing with rude and uncaring employees, no matter how good the products being offered are. If your staff do not care about your company, they will not put in the necessary effort for it to thrive. You can address this problem before it begins by training them and making them aware of the importance of good customer service.
2 Poor money management
It is crucial to make certain that the business is prospering before you begin to extract large amounts of cash from it. Your business is not your personal bank account; ensure that you pay your bills and your staff before you start to indulge in the profit. Also, be aware of employees who may steal from the business. Implement proper measures to prevent this by checking that the people you hire do not have criminal records, getting references from their previous employers, and by installing CCTV cameras in your establishment.
3 Substandard business plan
It is fatuous to open a business that does not have a market. Think about your potential customers, consider their needs and your profit margin. There must be a pressing need for what you are offering.
4 Operational inefficiencies
If you are paying an exorbitant amount of money for rent or for labour, your cash flow will be impeded and this will certainly lead to failure. Ensure that you rent a location you can afford, and employ persons who charge a reasonable amount for their services. Negotiate as much as possible.
5 Leadership failure
As a business owner, you have to know how to manage your staff and your business. Additionally, you must treat your staff and customers with respect. You are not exempt simply because you own the business. Employees who feel disrespected are more likely to leave their jobs, which will leave you with a high turnover of staff, which is a certain route to failure.
6 Incorrect inventory
If customers are constantly coming for an item that you do not have, they will eventually not return. Ensure that the inventory is done properly and that you have what people need.
Location has a significant impact on the success of businesses. For example, an expensive clothing store will more likely succeed in uptown Kingston than at Parade in downtown Kingston. Thus, even though the rent is more affordable downtown, it would make far more sense to operate such a place in an area where you will most likely profit from it. Study the intricacies of the market you are in or wish to enter.
• The observation of trends and advice are from one of the country's successful entrepreneurs, Mirriam Brown. She is the former owner of two gas stations and a supermarket in St Ann and property manager of three guest houses in Jamaica and one in the United States.