The financial crisis, crime, unemployment and earning well needed foreign exchange are the main concerns of the Jamaican Government at this time. Based on the latest report from the International Monetary Fund (IMF) Jamaica is on the road to recovery amidst the ongoing debate regarding the truth of our present economic situation.
The fragile Jamaican economy is heavily dependent on foreign exchange which is used to pay debts and purchase goods and services. The country continues to derive foreign exchange from other sources like tourism, export, the entertainment industry and bauxite/alumina.
The global recession gave Jamaica a devastating blow which stunned economic growth and sent small business owners in a panic mode. The good news now is that oil prices are trending down and is at their lowest since 2008. For us it is jubilee because the cost of oil is the largest consumption of our scarce foreign exchange.
Effect on Small Businesses
During the economic recession, small businesses were affected the most, some industries were affected more than others, with the manufacturing industry being hit the hardest. Budget constraints, reduced spending power and inadequate preparedness for a recession made it impossible for a lot of these small businesses to survive.
The economic downturn crushed the dreams of hundreds of entrepreneurs here in Jamaica. Over 100 small businesses closed between 2008 and 2014, according to reports from the head of the Small & Micro Enterprises in Jamaica.
5 Recession Effects on Small Businesses in Jamaica
1. Customer scarcity
The spending power of customer has drastically reduced and as such a lot of small businesses has suffered. The struggling economy has forced consumers to develop tight fiscal practices which concentrate on the necessities.
This is where you now have to think outside of the box and start seeking other ways of earning revenues. Have you ever thought about online marketing?
This may not be suitable to all businesses but there's no harm in considering it. Online marketing has many forms and doing your research will prove to be helpful in determining which technique will benefit most your business.
2. Increase in cost of utilities
The rising price of oil resulted in astronomical electricity bills which gravely affected the manufacturing industry in particular. This high overhead expense resulted in reduced production, massive layoff and eventually closure for some businesses.
Business owners began to default on their loan payments, unable to meet wage bills, unable to pay over statutory deduction to government and the cost of custom duty mounted as their monthly utility bills increased.
So how do you resolve this? There are so many ways to save money on utilities, cut back on non-essentials. If you can turn off the lights more often without making the business operations suffer, then do so. Consider switching to other forms of energy like solar. You can also use less expensive packaging methods or materials you should try it.
3. Ridiculously high bank charges
Inflation is likely to happen during a recession, which means that your expenses can be higher than normal. The banks have also added to this expense with their high charges especially interest rates on credit cards.
If you have been relying on your credit card for payments, you should consider alternative ways to make payments so as to cut down on the high interest rate.
This can become a problem further down the road when you really need a loan you do not want to have problem with your credit rating because the credit bureau is now set to start operating in Jamaica soon and a bad rating will not be of great help when you are trying to obtain approval for loans.
4. Dwindling cash flow
If you started your business using a bank loan, you might find yourself in a position where you have no cash flow to keep your business afloat and the business is sinking slowly.
To control this, you need to pencil in an amount for saving in your monthly expenses, this will help you during the rainy days.
5. Low staff morale
During these periods employees are also affected they become anxious and are more concern about the future of their jobs.
You have add incentives and create contests to boost the morale of your team. This is the best time to get your creative juices flowing to help motivate your employees. Having motivated employees means production. So, don't be too stingy with incentives and praises.
Alternative Ways to Earn Foreign Exchange
- Are you still experiencing effects of the recession or are you slowly recovering? Try something new let the entrepreneurial spirit in you comes alive once more and take a plunge into the world of internet business or online business as it is more popularly known.
The demand for online business is a phenomenon and is growing every day. There are so many opportunities to choose from, the possibilities are endless. People all over the globe can come together and meet in one small space share ideas, trade and explore different avenues of acquiring wealth.
An online businesses provides better opportunity it is more flexible you can work on your own time it is basically a 24 hours 7 days a week venture. Although the global economic climate is still unstable online business continue to grow. Anyone who is willing to learn, put in the extra time and effort, has access to a computer and internet service can earn an income online regardless of your educational background.
Choose wisely and take the first step today.