Smaller businesses play an outsized role in the Cayman Islands’ most significant economic sectors of tourism and finance.
Competing against major hotel brands and big accounting and law firms, small- and mid-sized businesses in Cayman hold their own, despite challenges due to more limited financial and human capital.
Studies by the World Travel & Tourism Council and financial industry associations give an idea of just how important tourism and finance are to Cayman’s economy.
According to the Council, travel and tourism will contribute some $540 million or 24 per cent of Cayman’s 2011 gross domestic product. The sector will contribute 8,000 jobs in all, 26 per cent of total employment.
According to a 2009 study commissioned by industry associations, financial services accounted for 55 per cent of the country’s GDP, when factoring in direct, indirect and induced impacts. The financial services industry generated nearly 13,000 jobs in all, 36 per cent of total employment in 2007.
Nine people working in tourism-generated jobs can be found at Paradise Villas, an oceanfront resort of 12 villas in Little Cayman.
Manager Marc Pothier said the resort has seen its share of challenges since he arrived in 1998, when Paradise Villas employed 19 people. Some of the difficulties are common to tourism businesses of all sizes, such as the ongoing global financial crisis and natural disasters, and some are specific to small companies – such as economies of scale as far as ordering supplies, or a limited marketing budget.
“The cost of doing business is increasing as far as regular expenses. The cost of barge shipping goes up. The cost of tomatoes goes up. I’m not crying the blues – the whole world is feeling it, too. The recession affects us in that people have less money to pick up and go diving for a week. It’s harder to find those people,” he said.
However, the smallness of Paradise Villas does lend advantages, such as multitasking staffers, flexibility in response to calamities and larger individual shares of any profits.
Mr. Pothier said, “When you’re the size of our company, you can’t have an accountant, a maintenance manager and a this and a that. People tend to do more than one thing, which is more difficult, but at least during the high season you get a bigger piece of the pie, when there is a pie to be had.”
While Little Cayman escaped the massive destruction that Hurricane Ivan wrought on Grand Cayman in 2004, Paradise Villas was hit twice in 2008 by Hurricanes Gustav and Paloma.
“Thankfully the proprietors of the resort were prepared to begin reconstruction before we had to wait for the insurance to pay up. We cleaned up and fixed it up ourselves, and hired a contractor to help with the stuff we couldn’t do,” he said.
“We had everyone, including bartenders and servers, hammering nails and painting. Certainly I can say that I have a multitalented staff who is never afraid to do what it takes.”
In addition to disaster response, being smaller allows the company to be flexible as far as giving someone time off when it’s the slow season, putting out summer specials to attract guests, or encouraging repeat guests to come back year after year.
“More than 50 per cent of our annual business is return business, and a lot of them are friends,” Mr. Pothier said.
The resort is exploring ways to reduce costs, such as looking at alternative energy sources and growing their own vegetables, he said.
“The cost of doing business goes up several times a year, but the price of my cheeseburgers doesn’t. Something’s got to give,” he said.
Mid-size accounting firm
The Cayman office of accounting firm BDO consists of about 40 employees – making it a good-sized company according to typical Islands standards.
However, the office is relatively small compared to accounting competitors known as the Big Four. BDO Cayman’s founder and Managing Partner Glen Trenouth said the size of the firm gives more junior-level accountants the opportunity to interact with and learn from the experienced partners, compared to the bigger companies. Accountants also get the opportunity to perform different types of work.
“Our main selling point to people coming here is the fact that you get a variety of different work. You’ll find it’s more departmentalized in the Big Four,” he said.
Mr. Trenouth established the Cayman office in 2002, employing just three auditors (in addition to himself) during the first busy season. The firm grew rapidly through 2008, until the global financial crisis hit, and forcing the office to shrink in size, primarily due to not renewing some staffers’ work permits. “It was not pleasant,” Mr. Trenouth said.
During the slow recovery, the firm has grown again and is now just about at its prerecession size.
Partner Paul Arbo said he believes the clients also value getting more attention from the partners in the office, than if they opted for a bigger accounting firm.
In late March, BDO Cayman was named the first-place winner in the small-to-medium company division in the 2012 Top Employers Award, hosted by the Cayman Islands Society of Human Resource Professionals. While Mr. Trenouth and Mr. Arbo don’t know exactly what pushed their firm to the top of the list this year, but they said they gather extensive input from managers and staff before making decisions that will affect the company as a whole.
“When the staff is doing the employee survey, they’re sort of grading themselves and their capability to make the company better,” Mr. Arbo said.
One thing that might have tipped the scales in favour of BDO in the competition is the firm’s contributions to the community. For example, BDO is the presenting sponsor of the 2012 Cayman World Open, the largest tournament on the pro tour of the Women’s Squash Association. The Cayman Islands National Squash Association will host the tournament in December.
Additionally, BDO Cayman also assists with NORCECA Beach Volleyball, Flowers Sea Swim and Junior Achievement of the Cayman Islands.
As far as future plans, BDO Cayman recently started up an insolvency practice the partners feel will both serve as a hedge against general economic negative activity, and also pose an opportunity for great gains for the firm.
“The insolvency practice is either a barren wasteland or milk and honey,” said Mr. Trenouth, as opposed to the typical steady flow of business in the audit field.