Getting
money to fund your business can be tricky for an MSME (Micro, Small and Medium
Enterprise).
Especially
when Banks are refusing, which leaves you with only VC (Venture Capital) and
Crowdfunding as your only options as explained in my blog article
entitled “JN
Foundation and JNSBL launches Jamaica's first Crowdfunding website, iSupport
Jamaica - Local Crowdfunding to the rescue of Jamaican Innovators so you don't
have to be The Lone Ranger”.
In
fact, that’s what I’m doing with a GoFundMe Kickstarter for my blog
My Thoughts on Technology and Jamaica.
But
what if the problem is with the MSME’s themselves?
This
is what CEO of the JBDC (Jamaica Business Development Corporation), Valerie
Viera, who point out that the main reason for many MSME being turned down for
loans is a lack of documentation and research into the market as it relates to
their business as noted in the article “Only 20% Of
MSMEs Qualify For Loans - Most Lack Business Plans Other Necessities”,
Published Tuesday January 20, 2015, The
Jamaica Gleaner.
In
fact, only 20% eventually get a loan from a financial institutions, a question
that JBDC CEO Valerie Viera asked during the Jamaica Gleaner's Editor's Forum
on Wednesday January 14th 2015, quote: “So is it any surprise that
only about 20 per cent of the client group that applies for, or is even granted
a loan from a financial institution?”
Dear
reader, prepare yourself; this may be my shortest article yet!
JBDC
CEO Valerie Viera is packin' the heat with some stats, my favourite thing that
lays it bare as to why MSME's fail:
1.
85% of MSMEs do not have a business plan
2.
50% have no marketing plan or even how
they plan to market their products
3.
70% have not thought about research and
development, much less done any
4.
20% of MSME applicants eventually get a
loan from financial institutions
This
is no surprise. Many Jamaicans have an idea for a business but do no
documentation of any sort, thinking that all that's required is a lot of money,
no business plan on paper and word-of-mouth marketing with no advertising
budget to get their business going.
If
these stats are true, it would seem that her previous sentiments expressed at
the Mona School of Business and Management Inaugural Conference at the Holiday
Inn Sunspree Resort, Montego Bay suggest that the main problems that MSME's have
is not financing, but a lack of documentation and research, quote: “I want to be a little radical and say it is
not the first obstacle that my clients in the field are facing. I want to first
start to say we need to build the capacity of the MSMEs to really be in a
position to negotiate for the financing”.
Thanks
to this lack of research by MSME’s, most of the products and services being
offered have no connection to the market as many MSME's haven't even done any
research, resulting in product/market mismatches, to again quote JBDC CEO
Valerie Viera: “I often wonder what's the philosophy behind many of the
products that the financial institutions are offering because most of them have
no relationship to the needs of the client group. If I'm diabetic and you give
me a beautiful cake you (are) not helping me. That's exactly what is happening
and we need to revisit that”.
Thus
a perception is built up in the minds of some MSME's that their being blocked
form accessing business loans and Banks only give loans to their “friends” or associates
as JBDC CEO Valerie Viera suggests, quote: “Many of our financial institutions
speak about ... products for the MSMEs. The truth is that it's the same people
who access those funds over and over because it's the same people who qualify
for interviews”.
JBDC
CEO Valerie Viera stats speak otherwise. The ball is really in the MSME's court
to do the one thing many of these businesses aren't doing; actually operate
like one!
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