St. Lucia Simply Beautiful

BASIL SPRINGER COLUMN TO APPEAR IN THE BARBADOS ADVOCATE’S BUSINESS MONDAY ON 13 AUGUST 2007

AN ECONOMIC GEARING SYSTEM

“Do not show partiality in judging; hear both small and great alike. Do not be afraid of any man, for judgment belongs to God. Bring me any case too hard for you, and I will hear it” – Deuteronomy 1:17

If one researches business policy as espoused by many governments, in large or small countries, it usually has a specific component focused on small and medium-sized enterprises (SME) in the belief that they contribute significantly towards GDP. Thus, if government gives assistance, it can expect to get an economic return for its investment in support of the SME business policy. However, if the definition of SME is too restrictive, many businesses may be excluded from benefiting from the SME assistance and may not be large enough to garner assistance from the financial community on their own. It is wise, therefore, not to show partiality in judging but to hear both small and great alike. In this way not only are isolated businesses brought into the fold but government stands to get a greater contribution to economic growth.

My daughter Karen and I were watching a TV programme recently on the value of the small business sector to an economy and the government’s role in stimulating this sector. She is a medical epidemiologist and not normally exposed to the day to day thrust of entrepreneurial development. Quite sensibly she asked “Daddy, how do you define small business?” I was tempted to rattle off the usual statistics which permeate policy documents and which define a restricted space beyond which a business may not qualify for SME assistance. These restrictions are based on number of employees, average annual receipts or other criteria as prescribed by small business associations.

I desisted, tried to sound intelligent and gave a rather general response about “it is all relative” to the size of the country, the economic sector and the like and went on to say that any absolute definition would not be uniformly acceptable. Her subsequent silence left me in doubt as to her satisfaction with my response or was she indeed reflecting on the wisdom of challenging her Dad at that point of his diurnal slumber cycle?

Since then I have concluded that it serves no useful purpose for so called small businesses support policies to be restricted to a small business space based on a limited number of parameters. Instead one should be focusing on the intrinsic potential of the business, irrespective of its “size”, to contribute to economic growth.

CBET’s philosophy in generating business plans is to link Caribbean brand and supply with global niche market demand. Here I would like to introduce the concept and recognise the importance of an economic gearing system, where macro-enterprise is linked through brokerage systems to micro-enterprise. This links the various sectors within the community so that everyone can benefit thus providing a sustainable market driving force for the creation of jobs which could lead to the ultimate reduction of poverty.

The private sector must recognise that there are macro-, mini- and micro-elements to enterprise and we must put that together as in a mechanical gearing system, where the macro deals with the global market and the micro with micro-enterprise development. One turn of that big wheel results in several revolutions of the small wheels if they are linked together and properly lubricated.

A given business, even though it might start small, may have the potential to be a high performer and lead the pack (it may possess the DNA of an elephant). This may grow into a macro-business which in turn will provide a market for smaller businesses destined to play a role as a small cog in an economic gearing system. It is through this concept of macro-, mini- and micro-businesses, this economic gearing system, that we may argue that SME’s contribute significantly to the GDP of an economy. The macro-businesses drive the system in high gear, the micro-business follow but cannot drive the system on their own.

Government is very sensitive to the fact that they need to be seen to help the disadvantaged in society. After all, in developing communities, the disadvantaged form the majority and the political system is based on enfranchisement for all. Economic strategies may then be focused on forming a sub-sector association and giving assistance to that association rather than to give assistance to individual members of that association.

My findings are that many businesses are in need of help to get their business systems in order. The focus must be on the individual businesses first, one at a time, rather than on the association, since any central strategies given to the association will be lost on the individual business because they will not be able to absorb them.

The solution is to develop systems for a leading business in a sub-sector, then share the generic format with the other businesses. In parallel, one can then develop central strategies for the association geared at helping member businesses as they can absorb them. Very often new wine is put into old wineskins, thus contributing to a waste of resources.

This integrated approach, between small and large alike, may then serve us well. We should not be afraid of any man, for judgment belongs to God.

(Dr. Basil Springer GCM is Change-Engine Consultant, Caribbean Business Enterprise Trust Inc. – www.cbetmodel.org)

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