BizWorld Jamaica

Being a small business owner can be rewarding in many ways but can be frustrating as well. Trust me, I know firsthand! Unlike many small business owners out there, I was thrown into this lifestyle without really thinking about whether or not this was a good choice. You know the saying, "If I only knew then what I know now?" Well, that was me! I love saying that statement now to myself.

Leadership is important in your business whether you have 1 employee or over 50 employees. Hopefully, these tips will help you on how to be a good leader for your business if you are not already. All of these tips can't be done just once, you need to practice them daily or weekly or monthly. Repetition of each task will get you in a routine and make your business run smoother.

Tip One: Work on your Business, Not in It

This actually sounds pretty ridiculous because you should know how to do the majority of aspects in your business. This means that you need to focus on your future plan and how your business is going to move forward and grow. You are the mastermind of starting your business. You can't stop thinking and growing just because you are now open.

Sometimes it is a lot easier to focus on the day-to-day operations of your business because I am sure you know it best, but you are not helping your business this way. What did you hire staff for if you are just going to let them sit on their backsides and play games on their phones all day. You need to work on your five and ten-year plans and what steps you need to do to get there.

By working your business and not in it, your business will eventually be able to run itself. As an owner, you need to be able to take a vacation or if you need to leave for an emergency and not have to worry about whether the business will run itself or fall apart without you.

You should be able to leave at any given time and your business should sail smooth. It is very gratifying as an owner to not worry about your business when you are not around. It means you have done your job and have led your employees to be efficient and independent thinkers.

Tip Two: Have a Plan and Work It

Now that you know what your future goals are going to be for your business, don't forget about the actual business. I know I said don't focus on the day to day operations but it is important to find out how each department in your business is doing. Check on the inventory and assess your business on a regular basis.

Work this into your short-term goals. Don't let the business slip out from under your fingers because you were looking at your long-term goals. At the same though, don't micromanage every little detail. Practice your plan and make it work.

Tip Three: Find a Mentor

Wow, this is an important tip! Find someone you trust, is patient and who has success in a similar business as yours. You need to be able to bounce off ideas or call them with questions. I'm glad my mentor was patient. There would be times when I would call my mentor five or more times a day and even at all hours of the night.

I wouldn't go this far if I was you, but I had a great relationship with mine. After getting scolded for waking her up, she was more than helpful. The trick to finding a good mentor is finding one that wants you to succeed. This makes all the difference in the world.

Tip Four: Keep an Eye on the Future

We briefly talked about long-term goals. I always told myself to look for the light at the end of the tunnel during hard days or think about that pot of gold at the end of the rainbow. This is important as well because there will be frustrating and long days. Remember why you started the business in the first place and to look forward to brighter days. If you have this attitude you will have more light days than darker ones.

A positive attitude is crucial in succeeding in your business. There would be days when I would have 20 clients needing my attention all at once. Remembering why I was in the business and what my goals were helped me get through the day and focus on my future. Thomas Fuller said "All things are difficult before they are easy." That is definitely true.

Tip Five: Honesty and Integrity

I cannot stress enough how important honesty and integrity is in the business world. I know we have all heard word of mouth is the best advertisement. Well, not if it is negative. If you say you are going to deliver your product at a certain day and time, then do it.

Unfortunately, life happens and sometimes you can't make your deadline. That usually isn't a problem if you are honest with your customer. Tell them why you cannot make the deadline. They will appreciate your honesty even though it was not when you initially told them, but they will more than likely return to your business because you treated them with integrity.

They go hand in hand and can go a long way in your business. This doesn't sound like it would be hard to practice being honest but if you've helped someone learn the piano, then you know that paying attention to detail and communicating with your customers takes the same effort, it's just like learning to read music for the piano. Consistent practice is very important.

Tip Six: Pay Yourself

For heavens sake, pay yourself! I cannot stress this enough. We all go into business to make money, right? Well, how are you going to make money if you aren't paying yourself? It will become harder and harder to stay positive when you aren't paying yourself. There would be months when I wouldn't pay myself because I always needed something else for the business. You are always going to need something new. Make it wait and pay yourself.

I mentioned earlier about practicing these tips and how it is similar to learning to play an instrument. When you are learning to play an instrument you practice the movements and notes in a slow and methodical manner to make sure you are practicing it correctly.

Practicing all of these leadership tips is very similar. Imagine learning to play the piano and you have to practice every day. Eventually you will be able to play with speed from all of the repetition, just like you will be able to run your business much smoother because you have practiced every day.

Forbes Magazine list Jamaica as number 70 , one place up from last year , as the one of the Best Countries for Business.

Why is Jamaica on the list?

The Jamaican economy is heavily dependent on services, which now account for more than 60% of GDP. The country continues to derive most of its foreign exchange from tourism, remittances, and bauxite/alumina. Remittances account for nearly 15% of GDP and exports of bauxite and alumina make up about 10%. The bauxite/alumina sector was most affected by the global downturn while the tourism industry was resilient, experiencing an increase of 4% in tourist arrivals. Tourism revenues account for roughly 10% of GDP, and both arrivals and revenues grew in 2010, up 4% and 6% respectively. The Economic growth faces many challenges: high crime and corruption, large-scale unemployment and underemployment, and a debt-to-GDP ratio of more than 120%. Jamaica's onerous public debt burden - the fourth highest in the world on a per capita basis - is the result of government bailouts to ailing sectors of the economy, most notably to the financial sector in the mid-to-late 1990s. In early 2010, the Jamaican government created the Jamaica Debt Exchange (JDX) in order to retire high-priced domestic bonds and significantly reduce annual debt servicing. The Government of Jamaica signed a $1.27 billion, 27-month Standby Agreement with the International Monetary Fund for balance of payment support in February 2010. Other multilaterals have also provided millions of dollars in loans and grants. Despite the improvement, debt servicing costs still hinder the government's ability to spend on infrastructure and social programs, particularly as job losses rise in a shrinking economy. The GOLDING administration faces the difficult prospect of having to achieve fiscal discipline in order to maintain debt payments, while simultaneously attacking a serious crime problem that is hampering economic growth. High unemployment exacerbates the crime problem, including gang violence that is fueled by the drug trade.

Source;Forbes.com

In this challenging economy, the terms ‘downsizing’ and ‘outsourcing’ have become a regular part of the workplace vocabulary, and many employees are obliged to look for entrepreneurial ventures to replace their job income. As more students leave the classroom to join the workforce, they find that there are few ready-made jobs awaiting them, so creating a self-generated income source might be their only option.

I believe that practically everyone has the ability to improve their finances by utilising their talents and taking advantage of opportunities, and I always encourage persons to use their creativity to earn part-time income. However, becoming a full-time entrepreneur involves much more than just acting on an idea and sourcing funds to start a business.

It can be debated whether entrepreneurs are born with a natural business instinct, or if persons can be taught to become entrepreneurial. While I believe that there is a little bit of both nature and nurture in each successful business person, there are certain personalities and mindsets that are non-negotiable in order for an entrepreneur to succeed.

At a recent trade exposition, I met two highly creative persons who underlined the vast differences between a true entrepreneur and a dedicated employee. The first, a thirteen year-old high school student, told me of his forays into supplying his friends with high-end phones and computers. By the time we had finished speaking, he had identified the solution for a particular technology need that I had expressed, and had cleverly arranged for my business to source the application.

The other person, a talented marketer, recounted his initiation into business after 15 years of being a star employee. The venture collapsed after a short time and he had sworn off pursuing any more entrepreneurial ideas. He was now in search of the ideal job which would allow him to regain the big spending budgets, status and lifestyle of his past.

Based on the characteristics and mindsets that were revealed in our conversations, it was clear that while they would both be very successful, one would definitely become an entrepreneur and the other should remain employed.

Let’s look at some traits and thoughts that can help you to determine if you are suited for the rigours of entrepreneurship, or if you would be better off sticking to your day job:

Security vs Freedom

While many persons may express discontentment with their jobs, most employees value the perceived security that comes with a regular pay cheque. The thought of not having a fixed salary would leave them worried and despondent. On the other hand, entrepreneurs place higher value on the freedom that comes from being their own bosses. The ability to be masters of their own destiny an irresistible attraction that cannot be bettered by a mere pay slip.

Guarantees vs Risk

Salary perks and health benefits are assurances that are highly desired by most employees. Although they might have to take calculated risks in the course of their jobs, they are more comfortable with these decisions as the financial loss would not be their own. Dictionary.com defines an entrepreneur as “a person who organises and manages any enterprise, especially a business, usually with considerable initiative and risk.” Entrepreneurs willingly accept risk and the possibility of loss as the price they pay for success.

Routine vs Change

There is something very comfortable in routine and predictability for most employees. There is usually a lot of resistance from staff members whenever an organisation is going through change, as it brings uncertainty. Entrepreneurs behave in the opposite way, as they are always looking to shake things up and change around the status quo. In fact, many entrepreneurs end up attempting several business projects in their lifetime, as they are always pursuing ‘the next big idea.’

Dependence vs Self-reliance

Employees like to know that they can depend on their organisations to provide for them. Most employees would prefer if someone in charge made the big decisions and outlined clear paths for their performance. However, the ability to depend on their own ingenuity and initiative is an important survival trait for entrepreneurs. They always trust that their decisions and actions will prove right in the end.

Structure vs Innovation

Organised environments and clarity of direction are important for the wellbeing of most employees. If they lack the facilities to exercise their skills in a functional manner, they would flounder like fish out of water. On the other hand, entrepreneurs can effectively work in less than ideal conditions, as they can use their innovation to create new structures and operating procedures to make their visions become reality.

We need both dedicated employees and adventurous entrepreneurs to have successful workplaces. Without employees, entrepreneurs would not be able to actualise their dreams; without entrepreneurs, there would be no jobs!

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Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com.

Last week we considered some of the challenges that can cause a small business to be unsuccessful. Despite your best efforts at preserving your enterprise, sometimes terminating it may be the only viable option.

However, it’s not enough to have a closing-down sale and take down your sign; there are several legal steps that are also required.

Here are the organisations in Jamaica that must be informed about your business closure:

1. Companies Office of Jamaica

The first step in officially cancelling your enterprise is to inform the Companies Office of Jamaica (COJ). If your business was being operated under a name other than your given name, you should have initially registered that name with the COJ. Similarly, you need to submit documentation with the COJ to complete the closure of your business.

If your business was originally registered as a Sole Trader, Partnership or Trading As Operation, and your business name certificate has not expired, then you need to fill out a BN6 form, return the original certificate, and pay a closure fee, which is currently $600JMD. Renewal of registration is due every three years at a cost of $2,000JMD, so if your certificate expired before the business closed, you would also have to pay this charge plus $1,000JMD late renewal penalty for every un-renewed period.

For a business that was incorporated as a Limited Liability Company, it can be closed by being either struck off the register of companies or liquidated. If the company has no assets or liabilities, then you would need to submit an auditor’s statement verifying this status along with a letter from the company director(s) making this request to the COJ. The charge is currently $3,000JMD for removal and $1,500JMD for placing an official advertisement in the newspaper. You would also need to ensure that all annual returns and any other outstanding forms have been filed with the COJ.

If your company still has assets and liabilities, then it would need to be liquidated. This is a more complicated process, as a liquidator must be appointed for both voluntary and creditors’ liquidation. Your attorney can guide you through the requirements of this legal procedure.

2. National Insurance Scheme

Write a letter stating that you have closed your business and take it to the nearest National Insurance Scheme (NIS) office. You will be asked to complete a closure form which is available free of cost. All the NIS payments for the business should be up to date; if not you will have to negotiate a payment plan with the compliance department.

3. National Housing Trust

Take in the original closure receipt from the Companies Office of Jamaica to the nearest National Housing Trust (NHT) office, along with a letter informing the NHT of the closure of your business. These documents should be submitted to the compliance department, where an officer will determine if you have any outstanding NHT returns before closing your account.

4. Inland Revenue Department

The tax authorities must also be notified about the closure of your business. You need to write a letter to the Taxpayer Audit and Assessment Department (TAAD) advising them that you have closed your business. There are several tax payments that will be affected:

•  Income Tax and Education Tax:

Prepare your accounting records and file the annual tax returns for your business. On the return forms, make a note that states ‘final return’. These can be submitted as usual by March 15th of the year following your closure.

•  General Consumption Tax (GCT)

If your business had sales of over $3 millionJMD annually, you should have been registered to collect GCT. If you were filing monthly GCT returns, upon closure you need to file a final return and send back the original GCT certificate with your payment. Once you have indicated that the business has closed, the TAAD will send an auditor to assess the business records.

Many people are not aware that failure to inform the tax authorities of the cessation of your business can be costly. Once you are still on the tax record, estimated assessments will continue to be generated for your business, and late payment penalties applied. Estimated assessments can be reversed if the tax auditor is convinced about the business closure date; and any disputes about outstanding taxes can be finally settled by the Taxpayer Appeals Department.

5. Taxpayer Registration Department

Your business Taxpayer Registration Number (TRN) also needs to be cancelled. Write a letter indicating the date of the business closure, which should be signed by the sole trader, one of the partners, or a company director, depending on the type of business. Take this to the nearest taxpayer registration centre, along with a valid photo identification of the signatory. You should receive a printout verifying the closure of your business TRN.

To avoid unnecessary complications and costs, don’t delay in contacting the necessary authorities once you have decided to close your business.

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(c) Cherryl Hanson Simpson

Cherryl is a financial consultant and money coach, and founder of Financially S.M.A.R.T. Services. She is currently writing her first book "The 3 Ms of Money." See more of her work at www.financiallysmartadvice.com

It’s a common belief by new entrepreneurs that the route to business success lies in easier access to start-up financing for their fledgling operations. The reality is that an injection of money can sometimes be insufficient to help an enterprise prosper if the owner is inexperienced in business.

From observing the mistakes of many young entrepreneurs (myself included), I know that working capital will often be misused and wasted in the hands of someone who is just starting out in business. The saying “Experience is the best teacher,” could very well have been written by an entrepreneur who gained worldly wisdom after several costly business errors!

The challenge for most young entrepreneurs is that they usually don’t have the money to pay for expert business guidance that can make their journey smoother and less stressful. Many business newbies also don’t recognise the value of cautious advice, thinking that no one can understand their business ideas better than they do.

Mentorship: The Voice of Experience

I believe that one of the most essential factors for the promotion of a thriving youth entrepreneur sector in Jamaica is the availability of mentors to provide business counselling. Business mentors are experienced business owners who volunteer to coach persons on how to successfully run their own operations.

While consultants can be hired to provide business guidance, mentors usually offer their services without charge. It might seem strange for someone to offer this valuable advice for free, but mentors are usually looking to give back to society by playing a part in the economic advancement of their community, or are actually honing their own strategising and consulting skills.

One of the major problems in self-employment is that there is no boss to turn to for direction. There are so many pitfalls and wrong turns along the entrepreneurial journey for someone who has never run a business before, that it’s crucial to have expert advice every step of the way.

Another benefit of business mentors is that they usually have access to a network of other influential persons who can be tapped to support the new business in several ways. Mentors can also supply emotional encouragement, as entrepreneurship can often be a lonely and overwhelming occupation for young persons.

Where Can You Find A Business Mentor?

One of the simplest ways to locate a mentor is to examine your contact lists and look around your community to identify persons who may have the expertise you need for your business. Your relatives, teachers, business owners, church colleagues, service club members, newspaper columnists, even your former bosses may have a wealth of information to guide you.

If you are going to be requesting advice from strangers, it’s important to be prepared with the appropriate questions so that you don’t waste their valuable time. It would be best to write a letter or email explaining what you’re trying to achieve, and asking for a brief meeting where they can help to guide you from their years of experience.

Once your initial contact is successful and the prospective mentor seems willing to help, ask for a follow up discussion within a month or two to review your progress. If a relationship develops, it’s important to respect your mentor’s time and expertise by being punctual, taking notes, carrying out suggestions, taking initiative as you grow, and showing appreciation for his or her efforts.

Young Entrepreneurs Association of Jamaica

Although we don’t have established business mentoring institutions like those that exist in the United States of America, Canada or New Zealand, there is at least one organisation where young entrepreneurs in Jamaica can get guidance.

The Young Entrepreneurs Association of Jamaica (YEA), a non-profit organization designed to support young people in business, was created by the Jamaica Employers’ Federation (JEF) in 2005. According to its website, www.yeajamaica.com, the YEA provides members with “an opportunity to learn from each other’s experiences and take advantage of peer mentorship as they grow their businesses.”

President of the YEA, Stephen Spence, explained that mentoring is a key focus of the association, as groups meet monthly to discuss their business issues and get confidential counselling and advice. There is also valuable interaction with entrepreneurs within the 55-member enterprises currently in the YEA, along with the wider business community at their training and networking events throughout the year.

Spence noted that the YEA is about to embark on an ambitious programme to significantly impact the development of youth entrepreneurship in Jamaica, which will be revealed at its annual expo on July 3.

I like to encourage persons who are experts in their fields of endeavour to pass on their knowledge to youngsters. I’m throwing out a challenge to every successful Jamaican business owner - help to create a more viable business sector in our country by becoming a mentor to young entrepreneurs!

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(c) Cherryl Hanson Simpson

Cherryl is a financial consultant and money coach, and founder of Financially S.M.A.R.T. Services. She is currently writing her first book "The 3 Ms of Money." See more of her work at www.financiallysmartadvice.com

“I need to get a loan to expand my small restaurant. However, many of the micro financing options charge interest rates that would kill my business. Regular banks ask for collateral that I don’t have. No one wants to sign as a guarantor for my loan. I’m getting very frustrated, because I know that if I got financing, my business would really take off. What can I do?”

The universal answer facing small business owners in search of financing is “No Collateral, No Deal.” If you’re an entrepreneur with a viable business idea or an expansion plan, at some point you’ve probably faced the challenges of raising capital without collateral.

There is an increased business-friendly focus in most of the commercial banks. With more people going the route of self-employment, it makes sense for financial institutions to pay closer attention to the development of the Micro, Small and Medium Enterprise (MSME) sector. Small business can eventually bring big business in the long run.

Despite the best efforts of the banks to woo entrepreneurs, some business operators still complain that not much has changed in the process of securing financing. If you don’t have the backing of a guarantor or some tangible collateral, it’s very difficult to get more than a token amount of funding.

It’s understandable that lending agencies choose to proceed with caution, as they have to protect their depositors’ funds. Delinquent borrowers have only made it harder for honest, hardworking entrepreneurs to get ahead. Laurence Adamson, consultant with the Corporate Finance Broker Unit of Jamaica Trade and Invest (JTI), explained that there are businesses that ‘bank hop’ for loans. “They rack up debt at one institution, default on the loan, then go to another bank for more money,” Adamson revealed.

There is currently no standard method of checking the credit worthiness of loan-seekers, unless they had previously done business with the institution. Therefore, to protect themselves, lending agencies may have to paint all prospective borrowers with the same negative brush. The good news is that there is now an initiative in place that will hopefully make it easier for small establishments to access funds.

A programme to develop a credit rating system for MSMEs was recently launched at the Technology Innovation Centre (TIC) at the University of Technology. With funding from the Inter-American Development Bank, the TIC, in association with the Institute of Law and Economics, will seek to devise a reliable system of judging the credit worthiness of small businesses.

These entities, called the MSME Alliance, will first interview 20 small operators drawn from five trade groups including cosmetologists, hardware merchants and taxi drivers. The objective is to gather more information about their business practices and to assist them to improve their operations. The alliance will then seek to develop a standardised method of rating the stability and viability of each business for credit purposes.

Adamson was optimistic about the development of an MSME credit rating system. He noted that a credit bureau would allow banks to operate in an informed environment where they could know their customers better. “If the bank has information that the business is not indebted elsewhere, or has a good track record of repayment, it will be more likely to approve the loan.” The lending institutions would also be able to reduce delinquency rates by avoiding habitual bad debtors who would be tracked by the rating system.

The JTI consultant also indicated that the department was lobbying for the establishment of a Mutual Guarantee Facility that would be underwritten by the government. The proposal is that the government would guarantee a portion of the amounts loaned by financial institutions to MSMEs. Adamson explained that this would allow small businesses to get lower interest rates and easier access to funding, by removing some of the default risks involved in lending to the sector.

So if you’re a small business operator currently struggling to find affordable financing for your operations, take heart. Improve your credit rating by ensuring that you’re current with your debt obligations and that your bills are paid timely, and this might help to increase your ability to access loans in the future.

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(c) Cherryl Hanson Simpson

Cherryl is a financial consultant and money coach, and founder of Financially S.M.A.R.T. Services. She is currently writing her first book "The 3 Ms of Money." See more of her work at www.financiallysmartadvice.com

“I’ve been thinking about starting my own business, but I’m nervous about the current economic climate. Is it advisable to begin a business in the middle of a recession? Are there any industries that might be less vulnerable at this time?”

It’s understandable for people to disbelieve the financial pundits who declare that crises can bring tremendous possibilities for new businesses. Prospective entrepreneurs might think, “Easier said than done,” as they are encouraged to look for business opportunities that have been created by the recession.

With consumers cutting back on spending, large corporations laying off workers and governments facing economic hardships, how can it be feasible for a small operation to navigate these turbulent times and create a solid foundation for success?

Despite these challenges, it’s not impossible for a business to begin life in the middle of financial upheaval and become a thriving enterprise. In fact, Microsoft emerged in 1975 during an economic downturn and Walt Disney began his empire in the recession of 1923. Our current crisis may just provide the perfect background for the birth of another mega business mogul!

Here are several considerations that can help you to be courageous and forge ahead with your business plans:

This recession won’t last forever

Historical data indicates that periods of stagnation are always followed by longer cycles of financial boom. Now is the perfect time to position your company to take advantage of the coming economic growth. If you wait until conditions are more favourable, then you may be bypassing your break to establish a solid footing in your industry.

Small businesses recognised as agents of growth

As the country grapples to find solutions to reverse the economic downturn, the importance of a vibrant small business sector is becoming increasingly evident. Financial institutions, government agencies and international funding organisations are now focusing on providing additional educational and financing support to help small businesses to develop.

Other people’s losses can be your gain

Unfortunately, the prevailing economic conditions will cause some companies to contract or close. On the flip side, these challenges can supply good deals for the new business owner. Going-out-of-business auctions can provide furniture, fittings and equipment at low costs; while turn-key operations with great potential can be available for lease or for sale at attractive prices.

Qualified workers are readily available

As thousands of workers join the ranks of the unemployed, they create a significant pool of resources that normally would not be accessible to a start-up enterprise. Your new business can hire experienced team members at affordable rates; and their expertise can greatly enhance your growth rate. In addition, you may gain employee loyalty by providing them with jobs.

Consumers have changing needs

Although people usually reduce expenditure on non-essential items in tough times, this situation actually allows new entrants to offer products and services that are cheaper and bring added value. As consumers are eagerly looking for ways to stretch their dollar, they will be more receptive to businesses that can meet their needs in innovative ways.

However, while the recessionary conditions can open doors for new enterprises, not every business opportunity will succeed at this time. In order to create a business that’s geared for growth, you have to understand changes in consumer demands and recognise new spending trends. You should also look to industries that will actually flourish in hard times.

Here are some of the fields that will present great potential for development:

Services for other small businesses

Many redundant employees will opt to become self-employed; so there will be thousands of new entrepreneurs requiring support services in the areas of business planning, marketing, accounting, administration, graphic design and website development, among others. To save costs, most business owners will choose to outsource instead of hire employees for these roles.

Educational services

With so many persons trying to find jobs, they will be forced to obtain new skills to compete in today’s marketplace. Businesses focusing on resume writing, computer education, foreign languages, and tutoring must-have subjects such as Math and English will be in high demand. You can also train persons in skills they can use to earn extra income such as baking and craft-making.

Environmentally friendly options

Many people are looking for ways to conserve money while preserving the environment at this time. Various agencies will also provide financing for businesses involved in supplying alternate energy. Look for opportunities in wind and solar power generation, biofuel production, water sourcing, recycling and eco-friendly landscaping.

Pet services

Despite the tough economy, several persons are choosing to acquire high-maintenance pets. These animals will require services beyond the basic veterinarian checkups, such as grooming, breeding, pet sitting, boarding facilities, and even pet photography. You can also supply products such as pedigree foods and pet toys to meet the needs of these pampered animals.

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(c) Cherryl Hanson Simpson

Cherryl is a financial consultant and money coach, and founder of Financially S.M.A.R.T. Services. She is currently writing her first book "The 3 Ms of Money." See more of her work at www.financiallysmartadvice.com