Home-based businesses — a new growth sector for the J'can economy

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Home-based businesses — a new growth sector for the J'can economy

BY Denver Brown

Wednesday, April 22, 2020

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Let us not miss this! With every adversity comes an opportunity. The COVID-19 virus has caused a scaling down of most businesses around the world, forcing some to have their employees work from home. Businesses in Jamaica are no different. This move could be a very positive one for Jamaica and can give rise to a new sector known worldwide as home-based businesses.

This is the time to encourage home-based businesses as a sector in the Jamaican economy, it is even more important as we pull out of this COVID-19 period and into a period in which there is going to be 'jobless' recovery and growth.

The contribution of this sector to economies of some developed countries around the world has been very significant. According to the US Small Business Administration, “The share of businesses that are home-based has remained relatively constant over the past decade, at about 50 per cent of all firms. More specifically, 60.1 per cent of all firms without paid employees are home-based, as are 23.3 per cent of small employer firms, and 0.3 per cent of large employer firms. The industries in which businesses are most likely to be home-based are information (70.0 per cent); construction (68.2 per cent); and professional, scientific, and technical services (65.3 per cent). A home-based business is operated primarily out of one's home, but business activities may take place at other locations as well.” ( https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2016_WEB.pdf)

This information is very useful to us as a country. When we examine the problems the country is faced with — debt, crime rate, urbanisation, lack of productivity, as well as unemployment — home-based businesses and virtual work could really be the way forward for our economy.

It is easy for us to dismiss the thought of encouraging home-based businesses as a sector because to many, home-based businesses are just small, meaningless start-ups that will not last, or seen as a “likkle man tryin' a ting”. I know we already have a small and micro business sector, but the technological, environmental, demographical, and financial changes of the last 10 years have been significant and have taught us that the only constant in life is change. We are now seeing where home-based businesses are having a higher success rate of surviving beyond five years compared to traditional small businesses.

Smart entrepreneurs have recognised the impact of starting or taking their businesses home and going virtual. This move has helped them overcome some of the reasons small businesses fail, as so eloquently expressed by Dr Ken Carter, senior lecturer of The University of the West Indies at the time, in his 1987 study on 'Factors that caused business failures in Jamaica'. Some 33 years onwards and we are still seeing some of those reasons contributing to business failure.

Advantages of operating a home-based business include:

1) lower operating cost,

2) increased productivity

3) flexible working hours

4) freedom of administrative control

5) location

6) reduction of stress

7) more time with family

8) use of electronic office

9) greater individual earning potential

10) better work-life balance

Large corporations have also used this concept to increase their productivity, with different companies registering increases in productivity between 10 per cent and 35 per cent among their employees who work from home. Yes, the home-based concept is for large organisations as well. According to a December 2010 issue of Harvard Business Review, IBM has 40 per cent of its staff working from home on any given day. Great software from companies like NesterSoft, producers of WorkTime (a project and time management software), allows an employer to track the hours that an employee spends on different tasks and helps them manage their time more efficiently.

Employees who reside in Portmore, St Catherine, are prime candidates for such a pilot project. Here an employer can increase the productivity and morale of employees who lives in this municipality. If a Portmore resident should check the hours spent sometimes in traffic during commute to and from work, one would see the amount of productive time wasted on a daily basis. Jamaica can no longer afford this luxury. Some of these very tasks can be done remotely. With a properly working computer, reliable Internet service and the right software, among other things, more employees could work from home.

This is a win-win situation for all the stakeholders (employers, employees and the Government) involved, as:

1) Companies will benefit from less sick and personal leave taken, lower turnover, which cuts hiring and training cost; reduced office and parking space needs; and increased employee productivity and morale.

2) Motivated and responsible employees may usually put in more work hours because they have more time by not sitting in traffic, or because they have fewer distractions. Also working from home can help create more jobs for the disabled and persons who live in rural communities.

3) While for the country more productivity means more earnings, thus more taxes, it also would mean less on our oil bill. What do I mean? Some years ago, while researching this topic, I found out that the Jamaica Public Service actually encourages home-based businesses or home-based work by offering lower consumption rates during the day than at night to residential consumers.

I could continue with numerous statistics from the US Bureau of Labor Statistics, the US Census, Office of Advocacy Small Business Administration, and many more institutions around the world to support the call for more emphasis to be placed on developing a home-based business sector, but first our mindset must change. One of the largest obstacles in introducing/promoting this concept to Jamaica is that it requires a culture shift in businesses, employees, and policymakers. A culture shift that will see more of our over 2,000 plus university graduates per year being engaged and our well-experienced retirees starting more of their own home-based businesses.

The promotion of home-based businesses presents an interesting and exciting prospect for individuals, corporations, the Government and the local economy as a whole. The marketplace is no longer 2.7 million people, but 7.7 billion people. We have sat and watched globalisation come and pass us without truly benefiting as a country. So, now that we are in the technological and virtualisation phase, please don't let this pass us as well.

By Denver Brown, PMP, is a strategic consultant. Send comments to the Jamaica Observer or expect2change@yahoo.com.

PULL QUOTE

It is easy for us to dismiss the thought of encouraging home-based businesses as a sector, because to many, home-based businesses are just small, meaningless start-ups that will not last, or seen as a “likkle man tryin' a ting”. I know we already have a small and micro business sector, but the technological, environmental, demographical, and financial changes of the last 10 years have been significant and have taught us that the only constant in life is change

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