Study needed on why some businesses fail

IT is being suggested that research should be conducted among local businesses, looking at what factors contribute to or hinder business continuity in this country.

 

The suggestion has come from Minister of Industry, International Business, Commerce and Small Business Development, Donville Inniss. Minister Inniss spoke to the need for such studies in a recent interview with The Barbados Advocate, as he raised concern about the number of businesses, particularly those within the Micro, Small and Medium Enterprise (MSME) sector that have ceased operations when their founders retired or died.

 

The Small Business Minister said that at present there is only anecdotal evidence about why some businesses in this country have failed, but he said, if we are to ensure the long-term viability and sustainability of the various operations within the MSME sector, then the reasons for the demise of local businesses must be thoroughly explored. Inniss is adamant that this is of even more importance now, given that globally the MSME sector is considered to be the driving force behind the modern economy; and he said the situation will be no different in Barbados.

 

“So this must be a matter of concern to all of us. First, we need to have proper research done in terms of the number of businesses that have survived beyond one or two generations and the types of businesses they are. On the other hand, we have to look at the failures and ask ourselves why they’ve not succeeded. But I think anecdotally we can certainly indicate that sometimes there are family issues, there has not been succession planning put in place, challenges of inadequate financing, a lack of interest on the part of the next generation, sometimes a feeling and a culture that frowns upon entrepreneurship and business,” he said.

 

He added, “A number of these businesses may have been successful mom and pop operations, but they don’t pass on to the next generation. Instead, the children go and do law or medicine and the business dies.”

 

Inniss admits however that this is not a problem unique to Barbados, as internationally many family-owned businesses do not make it to the third generation. He nevertheless said that persons must not adopt a defeatist attitude, but be optimistic and work at ensuring long-term success. With that in mind, he maintained that there is a need to foster a greater culture of entrepreneurship in this country, in particular among the youth. This, he said, would be one step towards helping create the requisite environment for business and wealth to survive multiple generations. (JRT)