Kingston, Jamaica—The Jamaica Business Development Corporation (JBDC) is seeking to address early-stage micro business failure due to weak financial planning stemming from a lack of entrepreneurship education. Acting Chief Executive Officer, Harold Davis says many ventures collapse within months because entrepreneurs enter business without a clear strategy or financial roadmap.
“Unfortunately, too many persons go into business out of necessity rather than to meet a specific need,” Davis said. “So, it’s survival-driven entrepreneurship rather than need-driven and strategy-driven entrepreneurship.”
Survival-driven entrepreneurship, or necessity-driven entrepreneurship, is often motivated by the need to generate income for basic survival rather than to exploit a market opportunity. Without a clear plan and strategic financial direction, these types of businesses remain stagnant or fail at the early stage.
JBDC says education and mindset are critical to reducing business failure. The Acting CEO stressed that understanding financial information is essential to business survival. “Finance is the language of business. If you don’t understand your numbers, you don’t really know how your business is performing.”
He added that this gap is especially common in skill-based and creative enterprises, where talent is strong but financial knowledge is limited.
FINANCIAL PLANNING ISN’T AN AFTERTHOUGHT
Calculating the potential start-up cost for the business venture is one of the most overlooked steps when starting a business. That view is echoed by Melissa Barrett, Manager of JBDC’s Business Advisory Services Unit, who says poor financial planning is the leading cause of early business failure.
Start-up costs are the initial expenses that new businesses must cover before they can begin operations. These include legal fees, office space rental, initial inventory, marketing, and employee salaries.
“Most start-ups don’t fail because of bad ideas,” Barrett said. “They fail because of poor planning. They run out of cash faster than expected because they didn’t fully understand their start-up costs or how long it would take to reach breakeven.”
Barrett explained that many entrepreneurs prioritise equipment and fixed assets while overlooking working capital, marketing costs and compliance expenses.
Barrett explained that many entrepreneurs prioritise equipment and fixed assets while overlooking working capital, marketing costs and compliance expenses.
“So as a start-up with no sales and no funds, where will you get the funding from?” The Manager asked.
Start-up cost often comes from personal sources, including credit cards, personal loans and funds borrowed from family and friends. While some entrepreneurs also rely on advance payments from customers, Barrett cautioned that these approaches carry risks if proper records are not kept.
“From you’re just starting or from day one, say you have a million dollars, you need a strong budget to show how you will be spending that million over time and when will revenue come in. Look at how many months you will take before you run out of cash if you don’t make any revenue. All of those you’re planning before you get started. Upon actually operating, you know you should be keeping track of what the spending is,” The Manager emphasised.
She pointed out another issue, “A lot of entrepreneurs don’t have financial records and those records are what help you to make better decisions. If it is that you’re running out of cash, what is important to do and what is important to not do given that you have limited cash left as you move forward. So along with the start-up cost, we ask people to have minimum three to six months working capital.”
Recordkeeping is a primary subject taught by the JBDC in its training called ‘Developing Your Business’, which is designed for entrepreneurs at the early stage of their journey. This along with key concepts like testing, validating and marketing are critical to a successful outcome.
ENTREPRENEURSHIP IS CONTINUOUS LEARNING
The Ministry of Industry, Investment & Commerce (MIIC) MSME & Entrepreneurship Policy highlights that despite the increased proliferation of entrepreneurship training institutions in Jamaica from the secondary high school level to tertiary, formal training of entrepreneurship is relatively low within the MSME sector.
Consequently, it is important that their entrepreneurial skills, values and attitudes are strengthened to drive innovation, creativity, and wealth creation with the MSME sector. The vision is to shift the paradigm from merely “buying and selling” to productive businesses that can contribute measurably to growing the economy.
As an implementing agency under the Ministry, both Davis and Barrett emphasise that entrepreneurship is an ongoing learning process. Beyond access to funding, success depends on an entrepreneur’s willingness to build knowledge and seek guidance.
As such, the JBDC as the premier business development agency in Jamaica, is putting significant effort into entrepreneurship education. The JBDC encourages entrepreneurs to view learning as an investment in sustainability, as the agency continues to expand its advisory, coaching and training services.
“Business is holistic,” Barrett said. “It’s not just about selling a product. There are other inputs that need to be understood in order to support growth.”
Marred by global economic crises and a post-Melissa environment, entrepreneurship education helps to form the foundation of resilient and sustainable businesses.
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