Thursday, October 7, 2010
Thursday, October 7, 2010
It is often said that the small business sector is the engine of economic growth. A strong entrepreneurial spirit is key to driving innovative businesses, which create jobs in the local community and spur overall growth. In a move to foster such efforts, the government has ramped up initiatives to enhance the local business environment for start-ups.
Small and medium sized enterprises (SMEs) account for approximately 90 per cent of registered businesses in The Bahamas and comprise 70 per cent of the 500 or so Bahamas Chamber of Commerce members. Small businesses have 50 employees or less, and medium sized enterprises have up to 100 employees, according to the chamber.
But for SMEs to thrive, they first have to survive.
“My government has remained steadfastly committed to strengthening the domestic business environment,” said Prime Minister Hubert Ingraham during a debate on the Business Licence Bill last year. The proposed legislation sought to facilitate the start-up of new businesses and streamline the process of business licence renewal.
The government’s “overriding objective” is to foster the creation of new businesses and the expansion of existing ones, according to Ingraham. The prime minister acknowledged that “both of which are vital to securing growing employment opportunities for Bahamians and better standards of living.”
Small Business Act
An important enhancement to the domestic business environment would be the implementation of the much-touted Small Business Act, which the government hopes to bring before parliament this year. Persons who have a vested interest in the sector see it as the vehicle to address the unique challenges faced by SMEs in The Bahamas.
The legislative foundation for small businesses is crucial to offer some protection for nascent enterprises as more and more people look to start up their own businesses.
Another important element is funding, which is why the government has established a venture capital fund for small business.
The Bahamas Entrepreneurial Venture Fund Ltd, provides approved entrepreneurs with start-up capital or business expansion funding through a loan or an equity position (part-ownership) in the business. The Venture Fund has seen the number of monthly applicants double in 2010, from five to 10.
But even with this support, nine out of 10 local start-ups fail in the first year, says Jerome Gomez, administrator of venture fund.
“All stakeholders that cater to SMEs need to do more if our country wants to diversify our economy, reduce our national debt and increase our gross domestic product,” says Mark Turnquest, a Caribbean management and marketing consultant, who believes that despite the government’s efforts more needs to be done. “Conversely, the only way that our economy is going to grow is to reduce borrowing, focus more on SME development and increase the countries’ production levels via new entrepreneurial activities.”