Starting a dream business in tough times

Money Adviser, With Hopeton Morrison

Now, here you are, mid-career, probably also mid-life, and confused by the ongoing economic recession around you. Worse, you may have lost that good job, or find yourself in real and present danger of being made redundant from your place of employment.

Unfortunately, it gets even worse. There was a time when faced with similar circumstances, the way out was migration. There were several options. You could migrate to England, America, or to Canada. In more recent times, some persons opted to live within the Caribbean in places such as The Bahamas and The Cayman Islands. But times have changed.

Things are difficult everywhere, and surprise, surprise, as bad as things are in Jamaica, you are probably better off here now than elsewhere. So what do you do?

Chances are, you, like many, dreamed of starting up your own business. Perhaps, if the truth be told, you find yourself now with your back to the proverbial wall. Entrepreneurship for you may now be a real option, maybe even the only option.

So you are probably wondering if you have what it takes to do it. To start and maintain a successful business in Jamaica at this time, here are a few things for you to think about.

There has been extensive research into the characteristics, traits, and legacy that lead to a person starting, building, and maintaining a successful business. In one study conducted by Kamhon Kan and Wei-der Tsai and published in 2006 in the prestigious academic journal, Small Business Economics, Kan and Tsai made some interesting findings.

Perhaps the most significant finding was that there was a definite relationship between one's wealth or income

and the propensity to take risks in starting up a business.

In other words, the greater your basic wealth measured by things like the net value of your home, other real estate, motor vehicles, businesses, stocks, bonds and pension, the greater your risk propensity. That, of course, is understandable.

If you are relatively wealthy, the chances of you ending up in poverty because your start-up tanked are significantly less than is the case if you are at the other end of the spectrum. Simply put, you have enough reserve liquidity available to cushion this blow.

Here is another finding that you will probably find surprising. Kan and Tsai found that indivi-duals with more education were less risk averse. They were careful not to state that one with more education showed a greater risk propensity because when dealing with studies of this nature, researchers are careful to point out that the absence of one scenario does not automatically suggest the presence of the opposite scenario.

But surely, academic rigour apart, we can be excused for coming to some inference that greater education means greater risk propensity.

So that finding effectively debunks the oft-repeated claim made by some that the more education one gets, the less aptitude one develops to start up his or her own business.

Unfortunately, some educated Jamaicans have bought into that fallacy by doubting their own propensity for risk, and hence remained unhappy and unfulfilled employees in "good jobs" for their entire lives. Does this match your profile?

The other findings may not necessarily surprise you, but they are quite interesting. Did you know that the longer you spend in one job, the less risk averse you become? And here is another one that should hardly surprise you either: married folks are more risk averse. That is entirely understandable.

Maybe you, like me, know of couples who broke up when one partner started a business. The causes are equally varied. In the case of successful companies, we have known of men whose lifestyle changed with their successes to the detriment of their families.

In the case of unsuccessful companies, we have known similarly of couples who separated because of the long hours apart, and the stresses, strains, and financial difficulties that resulted.

So then, in these tough times, do you think you are up to it? Do you have what it takes? Perhaps your biggest deterrent is that you are afraid to take the risk. But if you fit the profile that we have identified here, you are probably ready to make the transition to self employment.

Undoubtedly, a fair amount of wealth and a strong source of income are definite advantages. But in the absence of either or both, if you have a decent education, been in one job for a long time, and single at present, separated, or divorced, then, just perhaps, you are in the best place now to transition to self-employment.

Hopeton Morrison is general manager of St Thomas Cooperative Credit Union Limited. hmorrison@stccu.com