Govt. to Help Small Entrepreneurs by Establishing Business Incubators

Despite the promising boom for the country’s micro and small business sector, many entrepreneurs are still faced with the challenges of sustaining and maintaining their small enterprises, due to a lack of capital, technical and management assistance and business education and training. In light of these challenges, the government has decided to establish small business incubators to minimise the risk of failure among micro enterprises, thereby providing an environment in which small businesses can flourish.
“The failure rate among start-up business is normally very high and so when they are on their own without these kinds of integrated support services, they often experience implementation problems which many are unable to address successfully and fail in the first couple of years or sometimes even less than a year,” Reginald Budhan, Senior Director of Policy, Planning, Projects and Research at the Ministry of Industry, Technology, Energy and Commerce tells JIS News.
He further adds that, “the idea of a business incubator is to enable small start-up businesses to get the required support in their early stages. the incubator itself may provide certain common services to the occupants, like marketing, accounting, secretarial, security, and general support services, so that each business will not have to provide those services for its needs”.
While the concept of a small business incubator is nothing new in countries such as the United States of America, Canada, Uganda, India and Brazil, in Jamaica the concept is still fairly new.
“A Small business incubator is a physical facility generally, where start-up businesses would normally be located and there would be various support facilities, so there would be personnel who provide technical assistance and training to the businesses which are located within the incubator,” Mr. Budhan explains.
He notes that the physical facilities for an incubator would be owned or leased by the Government and in turn leased to the operators. The operators will therefore own the business ventures, but not the physical infrastructure. Where there is a need for the use of heavy equipment, the government may also own the equipment.
“The incubators are not intended to be government managed. what the project envisages is that government would construct these facilities or rehabilitate existing facilities.. and invite bidders to bid for renting the facility. If, for example, you work from home and lack certain facilities or equipment this incubator would have the necessary equipment that can be used,” the Senior Director points out.
“One person would have overall responsibility. As they have a lease, we expect it to be a company. There are three categories or organizational forms that we are contemplating – it would be a limited liability company, owned by one or more individual, it would also be a co-operative or a provident society,” notes.
Mr. Budhan tells JIS News that these incubators are not intended for those micro and small enterprises that can be initiated and implemented on their own without the support of an incubator. Instead, it is intended to benefit “small business operators who do not have collateral to be able to access loans to equip their businesses”.
The incubators are also expected to benefit under-employed skilled individuals, unemployed persons who are unable to find paid employment and whose last resort option is self employment through micro business, unemployed semi-skilled poor individuals and unemployed, unskilled but trainable poor individuals.
“There is another category that we may be contemplating. There are persons who are in the government’s social safety net, the government does not have the money to carry them indefinitely, so the incubator would be able to wean these people into employment,” he says.
The Senior Director says that an incubator will be community based and will reflect the skills, resources, interests and aspirations of the community members. “It will be demand driven, rather than supply driven. If a community sees the need for an incubator and whose entrepreneurs come forward with convincing evidence that they need an incubator, it will be considered,” Mr. Budhan points out.
“Small business incubators are expected to be implemented in both rural and urban areas, like on a phased basis. In rural areas these incubators are expected to play a pivotal role in the creation of employment opportunities for the non-agricultural labour force, thereby alleviating the rural-urban drift,” he adds.
He explains that as soon as the project is finalized, the Ministry will invite groups of persons who are interested in forming incubators, to submit their business plans for consideration. The Ministry is also expected to assist individuals in the preparation of business plans.
While the government’s concept is still fairly new, the University of Technology (UTech) is making great strides with their incubator, which to date, is the first of its kind in the English speaking Caribbean. Senior Director at the Technology Innovation Centre, Valerie Tappin explains that, “this incubator came out of the thinking that the University needed to be actively addressing the issue of increasing innovation and technology in response to the economic shift from the export of natural resource based goods to more knowledge based services and goods, to be more globally competitive.it is out of this idea that the incubator was born”.
“The Technology Innovation Centre is a business incubator aimed at enabling the development of small to medium size enterprises and our focus is on technology related businesses. we also point the start-up business to the source of capital, as this is one of the major challenges that young entrepreneurs face,” she adds. Mrs. Tappin explains that businesses are located within the incubator for a period of three years and during that time, “we go through a programme of workshops, consultations, shared business services, which are all designed to assist the company in that very critical growth stage”.
The centre has so far incubated 20 start-up businesses, and of this number, 85 per cent are still in business, with 15 per cent no longer in operation.
“We are happy to be a part of that process of entrepreneurial development in Jamaica. it truly is a golden opportunity as it is a step in the right direction,” she tells JIS News.