AS the man responsible for giving small businesses a helping hand, it’s not surprising to discover that Neville Grant is very much an optimist.In the past four years, the biggest reward for the Bank of Bermuda’s Senior Commercial Manager for Small Business has come from witnessing budding entrepreneurs turn their dreams into reality.

The bank has teamed up with Government in a drive to turn north Hamilton into “a buoyant, vibrant economy wherein the economic pie can be expanded”. The initiative includes reducing crime and “beautifying” the economic empowerment zone, as well as creating a strong cultural atmosphere and forming links between different local organisations so that they can work as a team.

A central plank of the concept is economic development - encouraging business-minded people to start up their own commercial operations in the area. As a result, the bank is now offering preferential borrowing rates, tax incentives and other financial incentives to small businesses.

Last November, the bank revealed it had already committed $4.3 million of a $10 million fund to people wanting to set up their own companies.

Bank of Bermuda CEO Philip Butterfield said at the time: “One of the most compelling indicators is the fact that the bank has committed $4.3 million. Our approach to life is ‘when it’s real, we step forward’, and we have stepped forward in this instance. I don’t think you need any more evidence than our initial action.”

It is Mr. Grant’s job to help small businesses take that first step forward. But the task isn’t all about number-crunching, working out borrowing rates, viability assessments and balance sheets. Instead, he finds his biggest challenge is changing people’s mindsets - giving them the encouragement and support needed to start up a business and - even more importantly - be on hand to help that business grow.

“The problem that we see is there’s a general apprehension that people have about borrowing,” Mr. Grant said.

“They don’t like to view debt as leverage. What they will typically do is borrow in round numbers - ‘I’ll borrow $20,000’ - because that’s their comfort level, as opposed to doing a critical analysis of what it will take to get their dream executed or to the point where they will start to make money. Most times people will say ‘Well, you know, I don’t want to borrow $100,000 because that’s a lot of money’.”

So do people think too small?

“Well, people come in and say ‘What if I fail, what if I don’t make it?’ But we see more issues with people growing beyond their expectations than we do with business failure,” Mr. Grant said.

“What we see is people coming in and they have owned or managed a business that consists of two guys and a truck. The next thing you know is they have a $2 million contract and yet they’re still running the business as two guys and a truck. What you will find is that the infrastructure that’s required to support a $2 million business is a lot different from what you would require for two guys and a truck. I think we see a lot more issues with businesses that grow a lot faster and stronger than they had anticipated.”

It is this positive outlook - an ambitious approach, continually looking ahead, spotting indicators for potential growth - that Mr. Grant sees as his biggest contribution. Sure, hard cash is needed to kick-start any concern, but in the business world no one stays ahead by standing still. His view is that, no matter how small the business, any small businessman must think big.

“There’s cause to be optimistic and what we have to encourage is the management of growth,” he said.

“You can’t just be thinking about what will happen if things don’t work out, you have to think, ‘If this goes really well, how am I going to expand? Who can I line up quickly in terms of labour?’

“You have to be mindful of those things. You have to think along the lines of ‘Well, what needs to be in place six months down the road in case things do work out and go well? What financing will I need to have in place if I reach X number of sales? If I reach that level of sales then I require different levels of financing, maybe I need a different operating line in place because I’m not going to be able support my growth through my regular cash flows’.

“So there’s a number of things that you need to position yourself in, or at least give some thought to before you’re in over your head.”

Not that the bank is willing to write off infinite interest-free loans to anyone. The initial concept has to be viable before hard cash is handed over. But even if it isn’t, Mr. Grant and his team can still help. Just some minor tweaking can turn a losing idea into a winning one, and after seeing a number of businesses get off the ground, Mr. Grant has plenty of experience of what will and will not work.

“The bank can be considered a friend with money, but a good friend will tell you that your idea doesn’t make sense and that maybe you need to revisit it,” he said.

“Some of it comes from the experience of the individual that we’re working with and some comes from our own knowledge of the small business industry itself. We don’t get to see one business, we see a collection of different businesses and so we start to pick up patterns and trends. So when you come in and say you want to start up Jane’s Popcorn Business <$>we can say ‘Look, there’s at least 15,000 other people popping popcorn and sticking it in the gas stations, maybe you want to try something different. Maybe it’s popcorn with peanuts’.

“In practical terms we ask that you first of all put your ideas down on paper. That way at least you’re able to correct your mistakes with a pen rather than being in the real world where there’s a risk to your name, your reputation and your financing.

“We have a partner as well, the Bermuda Small Business Development Corporation. We will refer a potential business to them so that they can get small business development best practice development advice. It’s through the partnership with BSBDC that we can provide additional support for entrepreneurs who operate in this zone. It’s a referral process both from us to them and from them to us.

“The other thing is we will assist you in analysing your plan so that some of the critical items have been thought through. In the event that you are going to have a fixed commitment that you have to honour with the bank, than we’re obviously looking for you to have some sort of fixed commitment, or at least some predictable cash flows that are coming in to support repayment.”I> is the current healthy state of the economy that gives the bank a certain comfort zone when considering loans. When loaning money, at the back of any bank manager’s mind is the fear that they are throwing good money after bad, that their investment might never be returned. In a country of full employment, the bank can have more confidence than most that such a scenario will not materialise.“Typically here in Bermuda, if it doesn’t work out you fold up and you’ve got a full-time job no problem because we don’t have negative employment,” Mr. Grant said.

“If your business is not working then you get a full time job and you’re off to the races.”

So what about practical help?

“The North Hamilton economic empowerment zone has relaxed or reduced interest rates and relaxed collateral requirements,” Mr. Grant explained.

“We know that if you’re trying to develop a business — especially in north Hamilton — collateral may be a consideration and for that reason we’ve looked at significantly reduced collateral requirements, out from the norm anyway.

“Also, our fee structure is either reduced or nil. Administrative fees that we would charge will be little or none.”

Mr. Grant believes that the North Hamilton Economic Empowerment Zone will follow a typical pattern of growth in the coming years. Why? Before any commercial retailer or service industry can open for business, it needs a suitable premises. And while there are vacant properties in the area, not many are shop-ready.

“I think within the zone we will initially see more commercial real estate development rather than small businesses starting up,” he said.

“I think that is the natural progression of how it should be in any economic empowerment zone. Right now there’s a limited amount of retail space in north Hamilton. The first step is that you need real estate development. So you have building reconstruction and building development - that should be the first step which then creates retail space, office space, residential space, and that little incubator then starts creating the traffic and development within the zone. An increase in residential traffic, an increase in office presence, those things create more customers for the zone. With an increased infrastructure some of the more unsavoury element won’t want to be around - it’s regularised traffic, it’s better lit, you have more people in the area which drives the negative element away. That creates the bed from which you can have more retail, and then more office, and then more residential which then creates the critical mass which will spur the further development off small businesses. The whole thing snowballs.”

It is the snowball factor which gives rise to an essential characteristic of any thriving economy — variety.

Which is why Mr. Grant believes that, amidst all the international conglomerates, reinsurance companies and big business that make up Bermuda Inc., small businesses have a vital role to play in Bermuda’s future success.

“You can’t have medium-sized businesses and large businesses without small businesses,” he said.

“The growth of any business economy starts with the growth and development of small businesses. Even the banks see it as an important part of filling the full business cycle, from small to medium to large.

I wouldn’t say we’re too top heavy in Bermuda, I think the business environment has to have various different elements and I think Bermuda has a good mix. The entrepreneurial spirit is alive and well in Bermuda so even though you may have a couple of large sized businesses, they will need all the support services - electrical, plumbing, paper providers, other services providers, computer repair services, so in essence having a large size business also creates that movement in the economy that creates the space for the small business entrepreneur as well. It’s an important part of a large process. Because Bermuda’s environment is the way it is people feel very comfortable with entrepreneurship. You will see so many painters trucks, electricians trucks, so many different tradesmen, because people are comfortable in that role.”Mr. Grant is confident that, within a short space of time, the northern area of Hamilton will be transformed, although he acknowledges that there will be some problems and not all businesses will succeed. There’s going to be some natural progression followed by some teething problems in that natural progression,” he said.

“I would think that the first few steps have been very positive. For one you have the support of the bank providing financing - and if you’re going to dream or create or develop, there needs to be some sort of vehicle to finance that.

“I think the dream is always there. Then you have the financing which helps create and develop that dream but after that you need to see some form of execution. With the bank’s involvement I think you will see that execution. There might be some shake-out where some businesses that aren’t successful trickle out, but after that you will see some stabilised business that brings some more development into the area. You will then have an area that’s developed. This is a first step. If this model works really well there’s no reason why it can’t move out to other areas of development.”

Although the bank is primarily concerned with making sure its budding businesses produce a healthy balance sheet, Mr. Grant believes success can be measured in a number of ways.

“I see business as a way in which you can realise your dream of ownership, which sometimes may be just as important for you as having several hundred thousand dollars in your bank account,” he said.

“The other thing is people tend to create their own employment - you’ve worked for ABC, you’ve worked for XYZ, you’ve even worked for exempt company ABC, and maybe you find that that doesn’t fit your own personality so starting your own business, opening your own retail store, creates your own employment.

“You’re here, this is your office, this is your love and this is your entity and I think some people, get great joy out of that and to be doing it for yourself, even if it only means you’re breaking even, may be regarded as success. That’s why we don’t necessarily consider everything based on financial success, because I see people doing what they love and when you’re doing what you love to do and are getting paid for it that’s beyond your wildest dreams. I>“From seeing someone come in who is nervous, who doesn’t believe they can do it because they think it’s too difficult, to seeing them outside their storefront realising their dreams, that is very rewarding and special.”