Small businesses and ICT

A discussion on why micro and small businesses might not be fully capitalising on ICT/technology though they might benefit considerably from doing so.

To establish almost any business takes, among other things, hard work, dedication and sacrifice. Globally, well over 90% of businesses are classified as micro-enterprises, that is having less 10 employees, and in many instances, they comprise just the business owner.

A recent survey conducted by the Jamaica Business Development Corporation (JBDC) revealed that the incorporation of ICT/technology was “an area of major need” for Jamaica’s micro, small and medium enterprises (MSMEs) (Source: Jamaica Gleaner). According to the JBDC’s Lisa Taylor-Stone,

We are talking about business processes and outsourcing. We are also talking about innovation and technology, and taking advantage of whatever processes or equipment would be needed to move the business from one level to the next…

… It is concerning for me personally and for the JBDC as well. When you look at the global market and the potential for business process outsourcing, this is a US multibillion-dollar market and because of the inability of the MSMEs to utilise because of low capacity, it really does them a disservice in terms of growing their revenue beyond measures…

(Source: Jamaica Gleaner)

Without a doubt, MSMEs could benefit considerably from better incorporating ICTs into their operations, but the dynamic and context of those operations, would affect the extent to which they are actually in a position to do so. Below are three reasons why micro and small businesses, in particular and in practice, might not be fully capitalising on technology.

Home business start-ups

Most micros and small businesses tend to start on shoestring budget. Frequently, the owners have the requisite skills to provide certain goods or services, but little capital to establish a separate, standalone, commercial operation. As a result, most micros and small businesses tend to start as home businesses, where they piggyback off the resources of the household, e.g. Internet, electricity, and physical space.

In relation to ICT use and on those shoe string budgets, free products and services are welcomed, and even preferred. However, those tech offerings are usually geared for personal use – not for the demands of a business – and ultimately can hinder the business’ performance.

Micro and small by choice

The majority of persons who start their own micro or small business do so with the hope that they can support themselves and their families. They may not necessarily have any specific goals that the business, itself, should achieve, or some concept of a growth path that is guiding the longer term business strategy. Once they can subsist on the proceeds of the business, they are satisfied.

It therefore means that many small and micro enterprises remain at those sizes by choice, unless something changes in the owners’ lives and they need to generate a larger income Hence, in practice, there might not be an overwhelming need to use technology to improve operations, especially when one might need to move from free to paying services in order to do so.

The cottage mind-set

Finally, since micro and small businesses tend to be established to provide an income for the owners and their families, it can be argued that they were not created or designed to be run as traditional businesses. Accordingly, a focus on growth, efficiency, effectiveness, etc., which are key considerations of more established commercial operations, might not be readily evident.

Hence while it is admirable to want MSEs to improve through better use of ICTs, it might require a change in the ethos and drivers of those businesses, as the typical business systems and mind-set that underpin that approach, might – more often than not – be absent.