Small businesses within the Caribbean are defined as firms that typically employ up to 25 individuals, with a maximum capital of US$500k, and do not exceed annual revenue of US$1 million. Compared to large developed economies, where more than two-thirds of all employees work for large enterprises, the Caribbean's private sector is primarily made up of small and medium-sized enterprises.
A cursory analysis of statistical data suggests that while small businesses are a significant part of the Caribbean economy, their contribution to aggregate economic activity is somewhat smaller than that of larger firms. In effect, larger firms appear to be critical mobilizers of economic activity.
Despite large firms accounting for the lion’s share of aggregate economic activity, small and medium enterprises play a more significant role within the Caribbean than their proportion of total employment or aggregate activity might suggest. Not only do they make up the vast majority of firms, but they have been an ongoing source of job creation, contributors to regional economic growth and, more generally, bastions for social enablement. In fact, over the past decade, there has been an encouraging trend towards entrepreneurship among people aged 18 to 35, resulting in the emergence of several small entities across various sectors.
However, surviving the litmus test which demands they withstand economic shocks, challenges raising appropriate levels of capital, the ravages of natural disasters and a myriad of other dynamics, which obviously are far too weighty for this segment of the region’s private sector, has been and continues to be a real challenge.
If small businesses are to be an essential element of economic and social progress in the Caribbean, then increased levels of enablement and nurturing that take account of their size and stage of development must, of necessity, be operationalized as a standard development tool within the region. How else will these “our babies of development” survive and be given the best opportunity to realize potential beyond the high failure rate currently characterizing them?
Notwithstanding the need for disciplined management of small enterprises within the region, which they, as participants within the region’s economic and social space, are obligated to take responsibility for as an integral role of their existence, enablement in some key areas can very well be a stabilizing catalyst for driving stability and growth.
Making a Big Deal of Small Enterprise within the Caribbean: A Perspective on 5 Enablers for Driving Stability and Growth
A perspective of some enabling areas where support at national and multilateral levels, with supporting interventions by their respective governing bodies, is set out below.
Perspective 1 – Enabling the Creation of Data and Business Intelligence Reservoirs
Among the contributing fundamentals to poor business health in the region is the limited nature or absence of timely information. Moreover, the absence of formal business intelligence data repositories which can be accessed and drawn on for analytical and planning purposes is most glaring.
In actual fact, very few industries outside of tourism and financial services attend to any significant data collection. Correction of this malady is of particular importance. This can be best achieved by strengthening business support organizations (BSO), trade associations or chamber of commerce bodies to collect data from their constituent members.
Perspective 2 – Enabling Improvements in Structural Integrity
The capacity of the region to produce small business entities of a highly competitive nature requires further development. While significant global challenges are evident, it is clear that strategies aimed at readying companies at the domestic level to embrace global opportunities effectively are still in their early stages. Interestingly, the issue of size is seemingly not as significant a determinant to the creation of competitive advantage as is the structural quality of their operations.
Support is needed in the mobilization of structural systems that provide for the implementation of policy guidelines and other structural fundamentals for control over critical areas of planning and decision-making. More specific are weaknesses and the need for support and guidance at the structural level with:
Long-range analysis and planning
Bolstering of operational management efficiency
Succession planning and implementation of improved systems of internal governance
Implementation of control, monitoring, risk identification and risk mitigation systems
Perspective 3 – Enabling Improvements in the Relevance, Versatility and Quality of Products and Services
Invariably, the products and services the region offers will continue to define its character and determine levels of appeal to the discerning regional and global public.
Success in this regard is anchored in the ability of regional entities to design, develop, and deliver products and services that meet the needs of regional and global markets.
The emphasis on the development of competencies that allow for continuous improvement through research, design, and development is therefore important. In fact, the level of attention to these factors is a central dynamic that will either drive or negatively impact revenue generation.
Perspective 4 – Enabling Improvements in Quality Management
The issue of quality is a sensitive subject throughout the region. It is also a major industry-wide concern. If the region is to become more competitive, the quality concerns, particularly as they relate to the value of products and services delivered compared to that of external competing markets, must be addressed.
Importantly, the fast-tracking of regional-wide quality codes, which attend to the sectoral and cross-sectoral concerns of products and services produced by small enterprises, stands out as a fundamental of immense importance to ensuring their survivability and progressively differentiating and improving the region’s competitiveness.
Perspective 5 – Enabling the Development & Optimization of Human Capital
Among the key factors underpinning the success of the region is its people. However, the pace of change within the business community has been rendering skill sets redundant faster than at any previous time in history, thereby weakening the effectiveness of the region’s human resources and its ability to respond to global developmental agendas effectively.
Noting the high correlation between the region’s success and the quality of its human capital, there can be no doubt that factors such as continuous learning to bolster performance and productivity, if unattended, will result in the sub-optimization of small enterprises and negating of ideals for achieving sustainable transformation. It follows that the regionalization of comprehensive continuous human resource development programs, particularly within small enterprises, is both relevant and necessary.
Conclusion
In summary, making a big deal of small businesses should be a big deal among policymakers and agencies entrusted with the socio-economic development of the region.
A closing word to small enterprises functioning in the region - while the wheels of development are being mobilized for enablement, establish as a standard the following:
Set business and financial goals as a standard functional practice
If you don’t know, ask a load of questions
Tap into and hear from your target market and be in a state of readiness to improve products and services to meet their needs
Stay abreast of economic and sector-related trends and be prepared to change at short notice
Spend sparingly and squeeze out returns on all proposed expenditure
Use technology at every opportunity possible to automate and drive efficiency
Best of success and good progress to Caribbean small businesses.