Barbadian small businesses now “suffering through some very trying times” have been warned against trying to solve the financial problems by firing their workers.
He gave the advice Tuesday evening during an address at the Small Business Association’s 19th annual meeting.
Speaking on the topic Lessons For Small Business From The Financial Crisis, the economist said: “For all of you who are struggling through the hard times, the message is to make a realistic adjustment plan, based on pessimistic assumptions about the future, but with an eye to your long term survival.
“Exactly what that involves will have to be worked out on a case-by-case basis, because there will be trade-offs, and the options available depend on your starting point. For example, for almost all of us, adjustment means having to shrink our operations.
“However, if we simply lay off workers to balance the books we may prejudice the survival of the firm, because of the adverse impact on the morale of the firm and the quality of output, and the consequent loss of hitherto loyal customers who are put off by your falling standards,” he added.
Worrell also said there were “many other variables to be taken into account, such as the timing of adjustment, the treatment of maintenance and renovation, the extent of the owners’ resources, whether there are marketable assets that might be sold, etcetera”.
He noted that while businesses in general were challenged by the current economic downturn, the problem for the small enterprises was exacerbated by their dependence on factors outside of their control.
“As everyone knows, small business makes a disproportionately large contribution to employment, compared to large businesses, in all economies, including our own. This is especially so in these times of stagnation, when so much of the labour force is forced back on their own resources,” the governor said.
“However, small business faces an extra challenge in a country like Barbados, because we need foreign exchange in order to grow, and small businesses need to depend largely on others to do the overseas marketing that brings in the foreign exchange from which they ultimately benefit.” He said small businesses should therefore focus on selling quality, value and unique experiences, and to secure a loyal clientele, however small to begin with, by a consistently high standard of service”.
“To survive and prosper we need to have a long term plan to preserve or restore the viability of our business. It needs to be realistic, because it must sell itself to the financial institutions, equity holders and others, whose assistance and accommodation you may need in order to complete the adjustment,” Worrell stated.
And while he said “successful adjustment may take a longer time than we would like”, the official identified he need to “be wary of action that, while necessary, may be too precipitate”. “In the end, small businesses face the same challenge that Barbados faces as a nation: to marshal our skills, experience and ingenuity to develop products and services that are unique and compelling, and to build a loyal clientele for the long term,” he said.
“The way forward is for each one of us to do what we do best, to the best of our ability. Above all, we must have confidence in ourselves as we face the uncertain future. We will need to be patient, but we should pursue our goals with firm determination, as individuals and as businesses, large and small.” (SC)