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The Role Of Small Business And The Entrepreneur


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An introduction and an overview of entrepreneurship and small business acitivity in the Cayman Islands.

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The Role Of Small Business And The Entrepreneur

  1. 1. The Role of Small Business and the Entrepreneur in the Cayman Islands Dr. Dax Basdeo Cayman Islands Investment Bureau
  2. 2. Overview <ul><li>Entrepreneurship </li></ul><ul><li>Starting a Business </li></ul><ul><li>Small Business in Cayman </li></ul><ul><li>Small Business Support in Cayman </li></ul>
  3. 3. Entrepreneurship <ul><li>Comes from a French word “entre prendre” which means to undertake </li></ul><ul><li>“ The process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled” </li></ul><ul><li>“ The nexus of two phenomenon: the presence of lucrative opportunities and the presence of enterprising individuals” </li></ul>
  4. 4. Entrepreneurial Opportunity <ul><li>An opportunity exists in a situation in which new goods, services, raw materials, and organizing methods can be introduced and sold at greater than their cost of production </li></ul><ul><li>Different from enhancing the efficiency of existing goods, services, etc. </li></ul>
  5. 5. The Entrepreneur … <ul><li>An individual that makes the conjecture that a set of resources are not being put to their best use (i.e. an opportunity exists) </li></ul><ul><li>Characteristics: </li></ul><ul><ul><li>Commitment and determination </li></ul></ul><ul><ul><li>Leadership </li></ul></ul><ul><ul><li>Opportunity obsession </li></ul></ul><ul><ul><li>Tolerance of risk, ambiguity and uncertainty </li></ul></ul><ul><ul><li>Creativity, self-reliance and ability to adapt </li></ul></ul><ul><ul><li>Motivation to excel </li></ul></ul>
  6. 6. … as a driver of economic development <ul><li>Arbitrage </li></ul><ul><ul><li>Discovering the price gaps that exist and acting on that margin to close the gap </li></ul></ul><ul><li>Innovation </li></ul><ul><ul><li>Discovering new trading opportunities </li></ul></ul><ul><ul><li>Discovering lower cost or new technologies – “creative destruction” </li></ul></ul><ul><li>Job Creation </li></ul><ul><li>Diversification </li></ul>
  7. 7. … as an agent for social development & environmental protection <ul><li>Today’s social and environmental challenges are unmet market needs </li></ul><ul><li>LOHAS consumers - Lifestyles of Health and Sustainability </li></ul><ul><li>“ Geotourism” </li></ul>
  8. 8. What is the difference between a small business owner and an entrepreneur? <ul><li>Entrepreneurship is more than just mere creation of a new business </li></ul><ul><li>It involves seeking opportunities, taking risks, tenacity to push an idea </li></ul><ul><li>It is the process of innovation & new venture creation </li></ul>
  9. 9. What is a small business? <ul><li>U.S.: A business &quot;that is independently owned and operated and which is not dominant in its field of operation.&quot;  Varies from industry, but max employees = 500 </li></ul><ul><li>E.U.: A business with fewer than 50 employees </li></ul><ul><li>Cayman: A business that employs less than 11 employees and is not a subsidiary of an international business </li></ul>
  10. 10. Small businesses are/ involve: <ul><li>independently owned and operated </li></ul><ul><li>closely held ownership </li></ul><ul><li>primarily local area of operations </li></ul><ul><li>small scale compared to competitors </li></ul><ul><li>small by design - lifestyle businesses </li></ul><ul><li>intent may or may not be to be larger </li></ul><ul><li>may or may not be scaleable or replicable </li></ul><ul><li>not dominant player in the field </li></ul><ul><li>not characterized as innovative </li></ul>
  11. 11. Starting a New Business Business Plans Management Legal Structure Finding Money Success & Failure
  12. 12. Personal Considerations <ul><li>Satisfaction and rewards </li></ul><ul><ul><li>Sense of accomplishment </li></ul></ul><ul><ul><ul><li>Build a meaningful entity </li></ul></ul></ul><ul><ul><ul><li>Solve an important problem </li></ul></ul></ul><ul><ul><ul><li>Do something no one else has done </li></ul></ul></ul><ul><ul><li>Be your own boss - maybe </li></ul></ul><ul><ul><li>Do what interests you </li></ul></ul><ul><ul><li>Become rich - eventually, maybe </li></ul></ul>
  13. 13. Personal Considerations <ul><li>Potential pain and sacrifice </li></ul><ul><ul><li>Uncertainty, stress </li></ul></ul><ul><ul><li>Very long hours, few vacations </li></ul></ul><ul><ul><li>Can be harmful to family/personal life/career </li></ul></ul><ul><ul><li>Financial/lifestyle sacrifices </li></ul></ul><ul><ul><li>May have to give up “child” to see it succeed </li></ul></ul>
  14. 14. Self Assessment <ul><li>Examine each of the skills areas listed in the chart. Ask yourself whether you possess some or all of the skills listed in the parentheses. Then rate your skills in each area by circling the appropriate number: </li></ul><ul><li>1 = low </li></ul><ul><li>2 = between low and medium </li></ul><ul><li>3 = medium </li></ul><ul><li>4 = between medium and high </li></ul><ul><li>5 = high </li></ul>
  15. 15. What is a Business Plan? <ul><li>A written outline (20 – 40 pages) that describes your business idea’s potential </li></ul><ul><li>Explains the business concept </li></ul><ul><li>Identifies resources needed </li></ul><ul><li>Tells the reader why the business will succeed </li></ul>
  16. 16. Business Plan Importance <ul><li>Helps you to better understand and communicate your business idea </li></ul><ul><li>Useful for soliciting advice and opinion and for raising funding </li></ul><ul><li>Forces you to set goals and targets which will enable you to track progress </li></ul>
  17. 17. A few guidelines… <ul><li>Define your objectives for producing the business plan </li></ul><ul><li>Allocate enough time and resources to research </li></ul><ul><li>Get feedback on drafts </li></ul><ul><li>Make sure your financial projections are believable </li></ul><ul><li>Sample plans (e.g. ) </li></ul><ul><li>Write your own business plan </li></ul>
  18. 18. 5 critical questions <ul><li>What are your products/services? </li></ul><ul><li>Who are your customers? </li></ul><ul><li>How will you build the business? </li></ul><ul><li>What is the work to be done? </li></ul><ul><li>What measurable results will you achieve? </li></ul>
  19. 19. Outline of a Business Plan <ul><li>Executive Summary </li></ul><ul><li>Business Description </li></ul><ul><li>The Market </li></ul><ul><li>Development & Production </li></ul><ul><li>Sales & Marketing </li></ul><ul><li>Management </li></ul><ul><li>Financials </li></ul>
  20. 20. Management Team <ul><li>Board of Directors, Board of Advisors </li></ul><ul><li>Service Providers can offer invaluable help and also provide a sense of confidence for potential investors </li></ul><ul><ul><li>Attorneys </li></ul></ul><ul><ul><li>Accountants </li></ul></ul><ul><ul><li>Consultants </li></ul></ul><ul><li>Success rate increases dramatically with the “right” management team/mix </li></ul><ul><ul><ul><li>Technical, marketing/sales and business skills </li></ul></ul></ul><ul><ul><ul><li>Personal attributes </li></ul></ul></ul><ul><ul><ul><li>Personalities </li></ul></ul></ul><ul><ul><ul><li>Ethics and values </li></ul></ul></ul>
  21. 21. Legal Structure <ul><li>Sole Proprietorship </li></ul><ul><ul><li>Flexibility, profits vs. unlimited liability, lack of continuity </li></ul></ul><ul><li>Partnership </li></ul><ul><ul><li>More experience vs. tied to partners </li></ul></ul><ul><li>Corporation </li></ul><ul><ul><li>Limited liability, unlimited life, transfer of ownership vs. more regulated, costly to organize </li></ul></ul>
  22. 22. Finding Money <ul><li>Not all money is the same </li></ul><ul><ul><li>Debt (borrow to pay back) </li></ul></ul><ul><ul><li>Equity (borrow money in exchange for stock) </li></ul></ul><ul><ul><li>Grants (Government or Private foundations) </li></ul></ul><ul><ul><li>Contracts or customer advances </li></ul></ul><ul><ul><li>Licensing fees and royalties </li></ul></ul><ul><ul><li>Real revenues and profit </li></ul></ul>
  23. 23. Pitching your business idea <ul><li>Investors rarely put money into a &quot;product&quot; -- they invest in a business and in you </li></ul><ul><li>Be consistent </li></ul><ul><li>Clearly define your assumptions </li></ul><ul><li>Give the reader confidence that you understand your proposed business </li></ul><ul><li>The “Elevator Speech” </li></ul><ul><ul><li>A 1 minute verbal ‘sales’ pitch describing your concept and why someone should pay attention to you. </li></ul></ul>
  24. 24. Protecting your business ideas <ul><li>One common concern of entrepreneurs: the worry that by disclosing their business idea, someone else will ‘steal’ and exploit it. </li></ul><ul><ul><li>Perform your own due diligence </li></ul></ul><ul><ul><li>Limit disclosure of sensitive information </li></ul></ul><ul><ul><li>Use a non-disclosure / non-circumvent agreement </li></ul></ul>
  25. 25. Protecting your business ideas <ul><li>Trade Secrets are recipes, designs, processes, etc. that are kept secret to protect them from public knowledge </li></ul><ul><li>A patent for an invention is the grant of a property right to the inventor to exclude others from making, using, offering for sale, selling or importing the invention </li></ul><ul><li>A trademark is a word, name, symbol, or device that is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others </li></ul><ul><li>Copyright is a form of protection provided to the authors of “original works of authorship” including literary, dramatic, musical, artistic, and certain other intellectual works, both published and unpublished. </li></ul>
  26. 26. Building Lasting Success <ul><li>Essential Skill for Entrepreneurs: </li></ul><ul><ul><li>Enhancing Social Competence </li></ul></ul><ul><ul><li>Creating Trust </li></ul></ul><ul><ul><li>Managing Conflict </li></ul></ul><ul><ul><li>Exerting Influence </li></ul></ul><ul><ul><li>Dealing with Stress </li></ul></ul><ul><li>Building the New Venture's Human Resources: </li></ul><ul><ul><li>Recruiting, Motivating, and Retaining High-Performing Employees </li></ul></ul>
  27. 27. Avoiding Failure <ul><li>Poor or inadequate market research </li></ul><ul><ul><li>Understanding of market, lack of objective feedback </li></ul></ul><ul><li>Weak financial planning </li></ul><ul><ul><li>Insufficient capital (money), lack of experience, mixing personal and business funds </li></ul></ul><ul><li>Setting sights too high </li></ul><ul><ul><li>Over-optimistic forecasts, poor planning, focus on profit vs. sales volume </li></ul></ul>
  28. 28. Avoiding Failure (cont.) <ul><li>Taking your eye of the competition </li></ul><ul><li>Poor supplier and customer controls </li></ul><ul><ul><li>Unreliable suppliers, bad credit </li></ul></ul><ul><li>Poor stock and asset management </li></ul><ul><ul><li>Poor inventory management, over-investment in fixed assets </li></ul></ul><ul><li>Hiring the wrong people </li></ul><ul><ul><li>Failing to delegate </li></ul></ul>
  29. 29. Exit Strategies - harvesting your rewards <ul><li>At some point, every entrepreneur ends their relationship with their business </li></ul><ul><li>To maximize the value you get from your business, it is essential to plan for this occurrence. This will help you to: </li></ul><ul><ul><li>shape your business into the ideal shape to maximize its value to you once you exit; </li></ul></ul><ul><ul><li>groom successors – especially if it is a family business; </li></ul></ul><ul><ul><li>attract investors and raise financing if required; </li></ul></ul><ul><ul><li>exit at a time of your choosing. </li></ul></ul>
  30. 30. In what ways can you exit a business? <ul><li>Family succession </li></ul><ul><li>Selling your business </li></ul><ul><li>Close your business </li></ul><ul><li>IPO </li></ul>
  31. 31. Business Stages Startup Emerging growth Maturity Decline or renewal 1 2 4 3
  32. 32. Small Business in Cayman Small Business Needs Survey, 2003: Department of Employment Relations Sister Islands Investment Climate Survey, 2006: Cayman Islands Investment Bureau
  33. 33. Statistics: Small Businesses <ul><li>56.6% of business in Cayman are classified as small businesses </li></ul><ul><ul><li>92.4% of business in Sister Islands – 317 people employed (31%) </li></ul></ul><ul><li>81.4% of businesses have fewer than 26 employees </li></ul><ul><ul><li>96.2% of business in Sister Islands – 383 people employed (37%) </li></ul></ul>
  34. 34. Statistics: Type of Organization
  35. 35. Statistics: Demographic Information <ul><li>Age of Respondents: 25 to 77, mean = 45 </li></ul><ul><li>Sex: Male = 35%, Female = 65% </li></ul><ul><li>Education: High School = 52.6%, Associate = 9.5%, Bachelor = 17.5% </li></ul><ul><li>Years Trading: </li></ul>
  36. 36. Statistics: Funding <ul><li>Initial </li></ul><ul><li>Ongoing </li></ul>
  37. 37. Support for Small Businesses in Cayman
  38. 38. Gov’t Support for Small Businesses <ul><li>Advice </li></ul><ul><ul><li>Cayman Islands Investment Bureau (CIIB) </li></ul></ul><ul><ul><li>Employment Services Centre </li></ul></ul><ul><li>Funding </li></ul><ul><ul><li>Cayman Islands Development Bank (CIDB) </li></ul></ul><ul><ul><li>Cayman Angel Investor Network (CAIN) </li></ul></ul>
  39. 39. CIIB : Advice & Counselling <ul><li>Business Plan Templates </li></ul><ul><li>Guidance on regulatory process </li></ul><ul><ul><li>Detailed guides on establishing a business </li></ul></ul><ul><li>Workshops & Seminars </li></ul><ul><ul><li>Register: [email_address] </li></ul></ul><ul><li>Small business resources & materials: </li></ul><ul><ul><li> </li></ul></ul>
  40. 40. Funding <ul><li>CIDB </li></ul><ul><ul><li>Micro business loans (Max: CI$25,000) </li></ul></ul><ul><ul><li>Small business loans (Max: CI$500,000) </li></ul></ul><ul><li>CAIN </li></ul><ul><ul><li>Angel Investors are individuals with an interest in investing in small, promising businesses </li></ul></ul><ul><ul><li>Confidentiality, Advice, Feedback, Success! </li></ul></ul><ul><ul><li>US$25,000 to US$100,000 </li></ul></ul>
  41. 41. e: t: (345) 244-2268