Small businesses: The lifeblood of Cayman’s Economy

Although the Cayman Islands
government has not officially defined what constitutes a small business, if the
United States’ definition were used, nearly every company here would be
considered a small business.

Department of Commerce and
Investment Executive Director Dax Basdeo said that if the criteria of 10 or 25
employees were used to define a small business in Cayman, the numbers would
still be very high.

“Fifty-five to 60 per cent are
small by the criteria of 10 employees, and 80 to 85 per cent are small by the
25 employees criteria,” he said.

In terms of importance, small
businesses are absolutely vital to the Cayman economy, Basdeo says.

“They drive most of the commerce
and hire most of the people.”

Cayman Islands Chamber of
Commerce CEO Wil Pineau agrees.

“Small businesses really are the
lifeblood of our economy,” he says, noting that the Chamber defines small
businesses as companies with fewer than 10 employees. Of the more than 700
corporate members of Cayman’s Chamber of Commerce, Pineau says 60 per cent are
considered small businesses.

“That’s a very significant part
of our membership.”

Cayman is not unique in the
region in its predominance of small businesses, says Department of Commerce and
Investment Head of Marketing Lesley-Ann Thompson.

“It’s the same as it is in the
rest of the Caribbean, where small businesses are the engine of growth in the
economy,” she says.

With the importance of small
businesses recognised, several government and private sector entities do what
they can to ensure Cayman’s small business owners get the help they need to be
successful.

The Cayman Islands Chamber of
Commerce has been around for 45 years and much of its work is designed to help
small business members. Pineau says that one of the most important benefits of
membership is the networking members are able to do with other members. Rhonda
Kelly, president of the Cayman Islands Small Business Association, agreed that
networking is very important to small business owners.

“All
the surveys that we have done indicate that small businesses want more than
most things the networking aspect, a chance to discuss their issues with others
facing the same challenges,” she said. “We have also found that many of our
members have been able to get work through the association from each
other.  We all realize with the current
economic situation, we can be very valuable allies to each other.”

Formed
in mid-2009 and open to any company with less than 10 employees excluding
owners, the Small Business Association also seeks to advocate to government and
non-government organisations for policies that will support the growth and
prosperity of small businesses. Pineau says that the Chamber’s advocacy efforts
are also very important to its members because few have the time and resources
to sufficiently analyse proposed legislation that might affect small
businesses.  With Chamber members
employing more than 20,000 people in Cayman’s workforce, it’s difficult for the
government to ignore the representations made by the organisation.

Because
the Cayman Islands has always had a lot of small businesses, Basdeo believes
there’s a strong culture here for owning a business.

“Nearly
everyone has a family member that has a small business or had a small
business,” the said.

Kelly
agrees that the history of small businesses in Cayman has made owning a
business so common. She notes that her father and her grandfather owned small
businesses, and so does she, her brother and her sister.

“I
think this is similar for many Caymanian families,” she said. “I am not sure if
statistically we have more small business owners than other countries, but it
certainly feels that way.”

Although
owning a business anywhere can be difficult, owning one in Cayman has its own
unique challenges. 

“The
costs of establishing a business tend to be higher here,” Pineau says, adding
that access to labour, a crucial aspect to the success of almost every
business, is more expensive in Cayman because of labour costs, recruiting costs
and work permit fees.

Kelly
also points out that market size, because of Cayman’s relatively small
population, makes it difficult for some businesses here.

“Also, historically, buying
locally has not been embraced by the community, making it challenging for small
retailers,” she says.

Pineau
points out that without direct taxation businesses in Cayman don’t have the
same reporting requirements that businesses in other countries have.   Although this eases the administration
burden somewhat, Basdeo says there is also a negative side to there being no
corporate tax in that business owners don’t necessarily have to have the same
financial discipline as business owners elsewhere.

Basdeo
says owning a business allows people to be their own boss, giving them a
certain level of freedom.  However, he warns
that owning a business is by no means easy.

“You
have to work twice as hard if you’re going to be successful,” he says. “You
have to eat, sleep and breathe your business because if your business fails,
your life fails.”

Basdeo
says one key to the success of any small business is cash flow and budgeting.

“If
you can’t pay your bills, you’re going to fail,” he says.

He
also recommends people get feedback about their business before they start, and
not just from family and friends, who tend to be supportive without looking at
an idea with a critical eye.

Basdeo
says people should be realistic in their expectations and make contingency
plans if revenue doesn’t meet expectations. 
He says it is often good to start slow.

“You can start a five-to-nine
[o’clock] business after your nine-to-five,” he says. “You can do that for a
few months and see how it goes.”

Kelly says people need to know
the business they are getting into.

“Don’t just do something because
you think it will make money,” she says. “Enjoying what you will do is also a
good idea.”

Pineau says anyone starting a
small business should create a business plan and then stick to the plan as much
as possible.

He
says new business owners should be prepared for hard work.

“You have to make a lot of sacrifices,
especially in the initial stages, and there will be long hours,” he says. “But
owning a business can be very rewarding and satisfying when you see it grow and
you realise you’ve basically created something out of nothing.”

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