By Carlena Knight
A lack of business skills and capabilities, and the inability to manage rapid growth of a company were two reasons that the head of the government’s Entrepreneurial Development Fund (EDF) said caused local family-owned businesses to fold.
According to Garfield Joseph, “If there is no cash in the business, you can have a nice BMW, you have a big building, you have the best signs, you have a really great store, great ambiance and there is no cash then the business will not survive.
“Medical benefits, Social Security, Inland Revenue, employment wages, cash, cash, cash. You look at the balance sheet you may say ‘hey assets exceed liability but the reality is you have no cash because their cash is tied up in other things like equipment, building, staff and so when the bills come you can’t pay that with cars, you can’t pay that with a tin of sardine. You have to pay that with cash and if cash is not available then persons begin to cut off credit and then you can’t get the adequate supplies and so forth,” Joseph said.
Everette Christian, the former consultant and now representative of the Chamber of Commerce shared similar sentiments regarding the factors plaguing businesses. He went a step further by suggesting that irresponsible investments could also play a huge role.
“Some of us need to understand that we are doing ourselves and our businesses a disservice when we take cash flow out of a business to invest in assets that do not generate revenue, but instead consume revenue. You are starving the goose that lays the golden egg by taking away the chick feed so it can’t produce the egg, but you expect to live like it did; it doesn’t work,” Christian said.
Parliamentary Counsel in the Ministry of Legal Affairs E Deniscia Thomas also weighed in on the conversation by identifying the lack of succession planning as another factor.
According to Thomas, there is little to no succession planning between the parents and children about the business, which she said is necessary for the business to continue after the parents are no longer in the picture.
“Succession planning; making sure that the children, grandchildren or whomsoever it may be are actually prepared to continue the business. Not mom and dad putting in all the effort and at the end of the day when mom and dad passes, or they get too old to deal with it, the child is struggling, the child does not know anything about the business other than the fact that I could come across there and get some money to help me with rent and pay my bills, then I really don’t know anything else about this business. I find that happens quite a bit. There is no future planning,” Thomas said.
Joseph, however, is advising entrepreneurs to garner a true understanding of the operating cycle. He also encouraged these individuals to seek advice and continue to build their knowledge “as no one person can possess all the skills needed to run a successful business”.