SMEs - What's stunting their growth

In the Caribbean, most businesses are SMEs. Now that we've got the definition sorted out. Let's look at what's required to assist the business owner in a tangible way that promotes and encourages real growth. 

Many businesses need an accurate idea of what they want to achieve in terms of success. They speak about making money, being their own boss, and being able to make their own decisions; however, they tend to know precious little about how to reach these ideals. 

They tend to be under-resourced in many ways and cannot hire the help they need. Therefore, they stagnate and become another entity that struggles operationally. 

Monthly, they struggle with payroll, bills for supplies, and operational expenses. They make just enough to open the doors another month and are afraid to seek and speak about money. In short, they don't know the rules of money. 

The struggle is so real that they have ad-hoc marketing plans that look good on paper but need more resources to implement them. They become despondent and stressed, impacting other areas of their lives in ways that can be detrimental. 

It has been described that they are red-lining like a vehicle that's over-revving and getting no real power or speed. 

Their needs include operations, finance, and legal. Everything else comes under one of those headings. They may be pointed toward getting help through technical assistance programs like training and research. However, many become so reliant on them that they fail to help themselves, seeming to wait for handouts. It has been observed that they recognize they have a need but are unwilling to invest in themselves. 

Wake up! As a for-profit entity, you cannot and should not expect funds to flow one way, which is towards your business. Not that you are wasteful, but be prepared to take calculated risks and not seem to want someone to constantly buffer your business. Stop expecting free advice! 

We who provide technical assistance often get the requests prefaced by "Can I pick your brain for a moment?" I have learned to say no, that I don't pick your pockets, so others are more readily adopting this approach. 

The other type of client wants a quick fix. This is where they wait until all their options are out and then want to come with an appeal for you to pull a rabbit out of the hat and save their operations.

The money you make through your business is not yours to keep. Remember that. 

Stop the wasteful spending: the doodahs - constant unjustified travel, fancy cars, and the list can go on. Put money aside to reinvest in your business so that you build your equity and not be at the bank's door begging cap in hand for their expensive financing. Pay your taxes - do tax planning, look for legal ways to pay less, and educate yourselves through ongoing programs within your fields. 

See where you can contribute rather than looking to see where you can get all the time. Working with charities is a tangible way to keep in the public domain positively. Decide what programs would interest you and contribute to them. 

Develop insurance and pension plans so that you can facilitate investment opportunities. In short, become an entity that enhances its value as you grow. Get a succession plan so that you know how you get into business and how you will get out.

I hope that something here helps you get your creative juices flowing. Have a wonderful week ahead. 

Understanding business numbers

 

Across the globe, many have found numbers to be intimidating. I used to think that numbers communicated quite clearly everything except emotion until I saw someone win the lottery or get a fine. 

In business, there's a requirement to have the entity's performance represented in numerical reports called financials. Despite this, the full potential of the information the numbers represent is seldom communicated in whole or understood by the reader. 

This may be one of the reasons why businesses grow to a certain performance level and then stagnate - neither growing nor declining. 

The numbers are able to describe matters pertaining to the following areas:

• The asset base and the level of liabilities
• The profitability of the entity
• Cash flow 
• The earnings per share 
• Share value 
• Units in production 
• Internal cost controls 
• Ratio analysis
• Cost-Volume-Profit Analysis 
• Forecasting methods
• Operations budgeting 
• Cash management 
• Capital budgeting 
• Tax planning

The bulk of these elements seldom forms a part of the discussion at yearly AGMs/management meetings if they are held. 

In short, we leave money on the table, even when professionals are paid to guide us through the process. These numbers can and should be used as a means for setting goals and then reviewing to see how close we have come to realising them. 

It is time to stop playing business and get the necessary professionals on your team to help you navigate what you don't know. No one knows everything. Some of the best use of the business' resources is to invest in the use of professionals to which you have access to enable you to make and save your business' money. Too many people are seeking to do business on the cheap, which isn't budgeting by any stretch of the imagination. 

If you don't understand some of the areas listed above, then please seek out your professionals to enable you to obtain clarity. Learn how to make the numbers of your business work for your benefit. 

Businesses making it work in this decade

Taking this opportunity to wish all readers all the very best for 2020, makes me stop to think about what would it take for those who are in business to really experience the best of 2020. For many in business, there appear to be more questions than answers. which is coupled with an air of uncertainty.

Often, it can feel as if our environment is spinning out of control with events and experiences taking place at a rapid pace. Influential factors appear at a rate that is faster than the solutions required and often before the knowledge we need as business owners even seems to be available.

Many have embarked upon the path of business ownership, being disenchanted for a variety of reasons of what traditional employment was offering. There are lots of claims of violated rights and privileges. However, when you look at those within a business, they treat themselves far worse than the environment out of which they emerged.

Quickly they realized that there is no increased pay when they want it. there is a reluctance to take the vacations they previously believed they were entitled to, and in many instances, they don't even pay themselves at the most basic levels of remuneration. They place this misguided approach on a word they call commitment, which they wrongly define as taking the worst treatment possible to satisfy their current situation for a better future.

Feel good terms like delayed gratification emerge without a real plan of when the delays can be finally realized. Misery also loves company, since these business owners feel that others must also be sacrificial like them and committed to a cause that is not readily defined.

Rather than go on as to why businesses don't work and the challenges they face; let's turn our attention to what is required to really make them work.

• Money follows management. Your management is not required if you are going to be a boss. Rather if you will humble yourselves to become servant leaders you will stand a better chance of success. How are you adding value to the lives of others that your business interacts with both internally and externally?  Are you selecting your team members well? Are you helping them to develop the competence to cope with the rigours of the job at hand? Are you getting their feedback from the trenches and are you well equipped mentally and physically to provide the resources to capitalize on available opportunities?
• Finance raises questions of having enough money to execute your plans, to develop opportunities so that they more from potential to reality. Can you manage your cash flow well? Do you have enough working capital, and do you know what working capital even is? Have you identified where you can get the funding you require and what the requirements would be that need to be in place? 
• Marketing when examined often reveals that many entities are functioning on being top secret. No one knows about them and what is required to interact with these entities. There is no real marketing plan nor approach with many entities just hoping to throw enough mud against the wall and hopes that something sticks. Markets are not well defined, making it all the more difficult to target effectively. 
• Operations are generally undercapitalized making execution all the more difficult. Often business owners run around trying to do everything themselves, even though this does not really help them capitalize on economies of scale. As you enter into or seek to expand your business, there are many things that you will not know. So who do you have on your team? At the very least you will need the following:
• A good attorney - remember the law is vast and all attorneys cannot adequately cover all aspects of the law. You will have needs for attorney's based on a number of criteria - contracts, intellectual property for example
• A good accountant - it is necessary that your financial and managerial accounting information and systems be kept current. If you do not understand the different approaches in accounting then you need to get that advice. Contact us for a more in-depth discussion and possible recommendations based on your area. 
• Human capital - with the changes and demands of dealing with people internally and externally; you will need someone to assist you in navigating this landscape often governed by the Employees Rights Act. It is just as it sounds and you can find the employees have all the rights if you are not compliant. 
• Sound business advisory services are going to help you pull all the moving parts of the business together in a manner that is cohesive and that works together so that there are traction and progress.  
• Statutory compliance is key and knowing your obligations helps with your planning. It also makes it easier for other entities to interact with you. If your business is incorporated then you must practice good governance. 

This short article only provides an overview, and serves as a quick guide to help you keep on target with the growth and development of your business. 

Feel free to ask questions and start a discussion with other readers. It is important to get the best benefits and experiences of others.  Happy New Year to you. Here's wishing you a successful decade in your businesses. 

Money...it's not always the problem

Often, when I engage with entrepreneurs they invariably think that inadequate funding is the source of their problem. On the surface, it may appear true; but when we take a real look examining the various aspects of the business, we find that there are some aspects of the business that if money was engaged the business would be far worse than it is without the funding.

The most cliched statement, "money follows management" is not just a cute sound bite. It's actually true. With good management, a business operation can address the issues that can cause it to flounder.

Surefire ways showing how the finances will be utilized are presented, often along with the marketing paint brush that includes the following:

• We are operating in a $x million/billion industry. Just 1%.....
• The SWOT does not allow for addressing real situations that were previously thought would never happen (Do we really need to say what kind of streets the business can end up on?)
• Big titles/bunches of keys, and no real resources to back up the rhetoric
• Inexperienced individuals who don't have the support of a more experienced team (see the previous point, since it is easy to deconstruct that there is no difference between the owner and the management. If incorporated, you'd find you can prepare job letters for employees to get loans, but you cannot get any for yourselves. 
• NO DISCIPLINE, sometimes you get funding for entities who then misappropriate the funds like it was a huge payday and not something to be used as the plan prescribes. They party spending the money more on entertainment than business. 
• No governance, who is going to ensure compliance with the plan within the entity? 
• We are going to use Social Media in our marketing. When probed, there's no real plan. It does not work by throwing enough mud against the wall hoping for some to stick. 
• Many are unable to answer operational questions of all types. 

I think you're getting the picture. Business is a team activity. Lone Rangers would be seen as owning a job and not having a business, they must work to generate income. Again no systems are in place. 

Many are operating in a red ocean of activity, often competing on price rather than looking at their unique positions to identify what their real model of operation is going to be. 

Take a serious look at your business, get help as needed to assist you in realizing the true potential of your entity. Should you require assistance, visit us at www.bladesandbladesconsultancy.com and we'll at the very least point you in the right direction if we are unable to help you ourselves. 

Have a wonderful remainder of the week. 

Barbados' 5 considerations in a dynamic business environment

Barbados is in an environment that it never really experienced before. Yes, we have had tough times, but there are some new elements which have become newsworthy which are entirely new to us, and the scale at which they took place the majority of Barbadians have never witnessed before.

The island, like many other jurisdictions, has placed a heavy emphasis on entrepreneurship. For many, the learning curve will be quite steep, since they would have gotten into business based on a skillset. As we have learned over time, having a particular skill set does not equip you for running a business.

Against this background, the rules for being involved in businesses are changing most rapidly with factors that are outside the range of control for those who are in business. What does this mean?

1. Businesses have to consider more than ever how they can become export ready. 
2. They have to establish and maintain statutory compliance. 
3. All businesses must be aware of their environment at micro and macro levels, noting how the actions of people in key roles can impact them in ways they have no control over.
4. Sources and usage of funds/funding since everything and everyone will be under scrutiny. Know your customers well!
5. Develop and implement strategies for navigating this environment from marketing, finance and investment, operations, and legal standpoints. 

There is a need to demonstrate a higher level of maturity when operating in business. Those in business advisory roles must step up to the plate upgrading their knowledge, skills, and abilities that would enable their entities to cope. 

Thoughts on Caribbean Businesses

Whenever things in the economy get tight one of the first things politicians in developing countries do is turn their direction towards entrepreneurship. In many cases, it's hard to tell if this is genuine and the interests are for real.

Job gimmickry often comes to mind for a number of reasons. The key one being that this is a way of justifying job creation through lip service. My thinking goes this way for some of the various reasons I'll now highlight below.

• The processes entrepreneurs face is becoming increasingly bureaucratic since the government wants tax clearance certificates issued at every turn. The attempts at collecting taxes are becoming a nickel and dime process without a holistic approach that can make the entire process more simple. 
• Too many companies in Barbados and perhaps the Caribbean are not structured for growth. The general approach is to incorporate without the incorporation documents supporting the raising of capital via shares instead of debt financing. Consequently, too many businesses are limited by the opinions of the lending officers within banking institutions who may have never run a business and have no appreciation for what is required in the running of one. Most banks then represent their interests with a cookie cutter approach rather than truly examining the business on its own merit. 
• The accountants along with business advisory services and attorneys need to interact more in the advice that they provide companies so that their advice is more inclusive to the strategy that the business wishes to employ that would best serve its sustainability and survival. 
• The leaders of the business are ignorant of areas outside of their immediate scope of work since they do not read enough developmentally. Sure they know the technical information yet that often is not enough to grow to the levels of success that such an educated grouping of leaders should be meeting and exceeding. Hence the performance of Caribbean businesses remains constant for the most part with very little mobility in either direction. Once they are profitable, the incentive to stretch further seems to be non-existent as leaders setting into contentment with their levels of performance. They function completely oblivious to the competition from other world markets. 

This is by no means finished but serves the basis of getting the reader to think that perhaps more needs to be done. We need to get on purpose with business development, not only within our existing markets but seeking to expand into other markets and create opportunities future development. 

We need to develop our own unique model for conducting business and take it global thereby helping them to understand what it means to be doing business within our standards. Perhaps we should redefine what it means to be doing business@islandtime, and help them understand that we do business as a people the world over. 

Self Talk for the Self Employed

Self employed people even when they work in businesses that interact with people tend to live rather lonely lives. Yet they loathe to attend functions that would take them away from their work; often with the train of thought that they're just too busy. Sadly, these are even in instances where there is organized mentorship available through technical assistance programs.

So what makes a self employed person behave in this manner, especially when they complain that no one helps them. What is really going on in their minds? What kinds of thoughts do they have; positive / negative? Do they feel as if you're thoroughly prepared? Can they really handle the power of this two letter word - NO!?

How you speak with yourself goes beyond wishful thinking. It sets the tempo and they rhythm that will determine whether you will win / lose. Often the event is not filled with spectators, but with your own self; who will see the results of your attempts - Can you strive or merely survive?

1. Why do seemingly identical situations facing different people have different outcomes? One succeeds, whereas the other sucks salt.
2. Is attitude all it's cracked up to be? Identify which is better - good attitude with action / good attitude without action. 
3. There are times we question, why are we doing this? Would it not have been better to get s job and be paid more money?
4. Why does it feel like we work to pay everyone except ourselves?

By now you should have noticed that I've made a faux pas and changed tenses; why? It's because I too am in small business, I too am self employed. It can be difficult to continue in the third person for something that impacts so directly.

For instance, you can write employment letters for employees to take to various institutions for them to obtain financial benefit of hire purchase or even loans. Yet when you have to do likewise for oneself, even when the business is thriving there's always some excuse / objection to be realized. You know the categories, but they all align themselves to justify why you cannot obtain the assistance you require. The objections are easily categorized under; cash-flow, revenue potential [too great / too small, too fast / too slow], age of business, age of applicant, collateral backing the finance request, and the list goes on.

There are times when it seems like we're not celebrated for our efforts, despite all that we do. It also seems that our work must go unrewarded, and profit is a sin. Most small businesses are uncomfortable with the word profit, often leaving their hard earned value at the negotiation table for their products / services. I don't do this anymore, as I have had the opportunity to contemplate the value that I bring to any situation. I also function by the premise that not all money's good money. It has saved me from entering ridiculous deals.

What do you say to yourself? I want to ensure that I am worthy of providing the best solutions that are practical, leading the client and our own business into mutually beneficial territory in terms of revenues, earnings, profits, and opportunity. This has to be done while maintaining privacy, wholesome relationships, health and wellness, and a true sense of purpose. One thing is certain - Success is not an overnight process.

Know that you have what it takes to succeed in a big way. Know that success is what you want it to be for you, and not the world's definition of it for you. When you speak with yourselves, speak in the can do, the I can, the willingly doing it.

Take time to work on your business rather than be constantly working in it. Remember when polishing anything, you have to step back to see the shine. Self employment is not easy. There are lots of uncertainties, but know that there is help along the way. People who are willing to also celebrate your success in as much as you prepare to embrace it.

Youth and Experience in Business

I grew up in an era, that when you were applying for a job and you had experience, the employer would day they are looking for someone with more qualifications. If you had the qualifications, they would feedback that they were looking for someone with more experience. Having chosen a course of study that was laced with practicality within the program and reinforced with multiple internships, when I then went for a job and the employer was cornered unable to use the previous excuses; it was then that they would say to me that I was too young.

This is the dilemma that many youth face today. It is also faced by those who may need to make career adjustments later in life. The banter back and forth by employers makes one just wonder; why they don't start their own business - be their own boss.

Young people come up with brilliant ideas and business concepts which they want to use to transform the world. Those who are older are risk averse wanting to play it safe despite their experience and their capabilities to really make it big. They are often timid; unless someone's bank rolling them with large sums of funds, they tend to err on the side of caution.

There was more than once a young person with well thought out business plans and proven research that are told they are too young to realize this. It was thought that they lacked the discipline. Alternately, those older are questions as to why they waited until so late before making this move. So what's the real deal with the youth and experience? How come they are programs geared at developing the youth for business and those catering for those older are generally about how to secure their jobs?

There are some things that are needed for getting into business regardless of your age or your experience. They are as follows:

• Organization - the business has to be well thought out complete with plans that are written in a sequential manner that address all the elements internally and externally that will impact the business. 
• Management - the management must be sound. Even if they lack the experience in the field, they must demonstrate that they know how to find any expertise that's needed to enable the business to function effectively and efficiently. 
• Operations - must be well laid out and it must be shown that they will be managed adequately from all points within the sourcing, supply, processing and final delivery of a finished product / service.  
• Finance - identifying where you'll get the money and how you'll use it in the business' development is key regardless of if you're getting funding from a bank, private investment avenues or other financial assistance
• Marketing - getting and staying in the market is key. The strategies that you employ will be key. Getting your product / service into the market. Deciding which markets to enter. How you will establish and maintain the presence of the brand. The pricing strategies employed and many other factors will all be considered under marketing. 
• Mentorship and business advice - where guidance is provided to these young businesses in a structured manner. It isn't necessary for them to repeat mistakes that can be harmful to the businesses as there will be plenty of opportunity to make new unthought of mistakes within the dynamic business environments that are present and going towards the future. 
• Cashflow -  many are unaware that their businesses can be profitable and they can still close. Cashflow is necessary to understand the ebbs and flows of business and the impact of your decisions / actions upon the business. 

This information that was provided outlines what is needed at the basic level. Additional information can be provided through making contact with us via our website. You can fill out a survey which tells us about yourself. Navigating the youth and experience jostle used against many can be challenging today to say the least. Once you understand how it works, make it work for you and your business. 

Take stock and revamp

When you're doing business for any length of time, it's easy for some things to fall through cracks. What do I mean?

• You deviate from your planned/established procedures
• Damaging behaviours creep in, especially when taken for granted that it's a one off experience 
• Your systems are not really systems, only an ad hoc set of behaviours clumped together 

What do you do?

• You will feel overwhelmed
• You will experience the frustration of not truly making progress 
• Stress levels will increase in all facets of your life - you get the picture 

STOP AND TAKE STOCK

• Examine what you're doing and the results you're getting 
• Identify where changes need to be made; get help if you need to
• Make the changes, and then evaluate to see if they're working 

Here's what you'll find

• You may become more organized achieving more in less time
• Your stress levels will decline
• You will feel more in control of what you're doing and what you wish to achieve 
• Ever so slight, you'll start to experience some successes 
• Stopping and taking stock often enough will even result in your becoming a bigger success than you've ever been

Don't take my word for it. Try it for yourselves. You owe it to yourselves, your family, and your business; whatever it may be. Begin to take steps today to improve the quality of your living. 

Entrepreneurship - Too Simplified?!?! Not for everyone.

Sure...anyone can register a business! Great...now what?

The media is touting entrepreneurship as the remedy for just about everything - wealth creation, the solution to this recession and the list goes on.

Recently I read a series of articles, and what came across to me is that this seems too simple. Take for instance this extract:

"What if we were to understand that people are a nation's greatest asset and were to go out in joy not only developing our people to the fullest but instilling in them the confidence to quit their current employer and develop their own start-up, spin-out, and scale-up enterprise and become their own boss hence gaining control of their own destiny?"

Which appeared in [WEALTH DISTRIBUTION - BASIL SPRINGER COLUMN WHICH APPEARED IN THE BARBADOS ADVOCATE'S BUSINESS MONDAY ON AUGUST 5, 2013]

Is it really this simple?

My mind went on to extrapolate this base information, and the result was chaos. All Chiefs no Indians. Is this really what is required when building a productive society in which entrepreneurship is expected to thrive? Somehow, I do not think so.

Yes the human resources are important, but we must be mindful of what they want. Not everyone is geared or have the desire to be an entrepreneur. I have met many people who desired to have their own business. Upon a more in-depth series of meetings, it was found that they really should not embark on the enterprise as they were ill prepared for the challenges of running a business.

Here's why:

• They lacked capital / access to capital
• They lacked knowledge of the elements of operations required to run their type of entity
• They did not know who their competition was in the market they wanted to operate within 
• They lacked the dexterity, discipline, and tenacity to find out / to do certain things
• They quickly found out that more than a big dream was required
• Business needs people in order to function, it is not what you know, but also who you know and how useful they can be in helping you realize your potential achievements 
• Planning is a skill. It requires being able to develop and systematically layout steps necessary to reaching your objective. It is not a collection of wishes
• It may mean sharing ownership of your business to truly advance it to realize its potential 

Here's another article that you can read about entrepreneurs who turned their passions into the livelihood. They short stories of what they did to become successful does not mean they did so without challenge. It meant that they considered and worked on the aforementioned why's as well as others that are not on this incomplete list. 

That being said, are we in the right environment for entrepreneurship? Our governments have to be careful about the climate they create that would support entrepreneurship. One that's too heavy on taxes and too light on incentives can create a sluggish environment for business start ups and expansions. There needs to be the right mix that enables business development while government realizes their revenue needs. 

In closing, let's stop making entrepreneurship seem more simple than it really is. It does not mean that we don't simplify the processes, but we must be realistic in our observations about the area of business development. 

Richie B. works as a business consultant & trainer, since 1995 operating from Barbados, West Indies. He's practical in his applications and offers sound information which can be quickly acted upon. Richie operates in the Caribbean region predominantly and via the internet offers solutions to some North American entities.