Lifeline launched for small businesses to become reality
A “one-stop business hub” catering to entrepreneurs and small enterprises will be delivered in 18 months’ time as the Government seeks to do away with a punishing and expensive wait of up to 12 weeks to incorporate.
Jason Hayward, the Minister of Economy and Labour, said 82 per cent of entrepreneurs in Bermuda had opted to remain unincorporated — leaving them on the hook for liabilities and unable to access government support.
The Government will also open new possibilities for financing, including the crowdfunding option seen elsewhere in the world, while bringing down costs from the thousands required at present to get their new business on the books.
Mr Hayward said: “Right now, incorporation costs exceed $6,000 for small businesses. In other jurisdictions, they can register their businesses for underneath $100.
“That just shows you the disparity in Bermuda’s economy. If we’re serious about supporting them, we can’t create barriers at the first step.”
His remarks came at the unveiling of the National Entrepreneurship Strategy, a blueprint for building small businesses in the works since last year.
The Bermuda Economic Development Corporation was allocated $2.2 million to support the work, with the firm PricewaterhouseCoopers Advisory Ltd taken on to develop it.
Erica Smith, executive director of the BEDC, said the top-ranking impediment to getting a small business off the ground was “first and foremost, access to funding”.
She added: “We have very little variety of funding. Currently, most funding in Bermuda is debt finance. There’s a little bit of equity, but in other ecosystems there’s a range — debt, equity, crowdfunding and peer lending, as well as grants and mixed hybrids.”
Bermuda’s charities have legislation to support their fundraising, Ms Smith said, but businesses lack similar options to engage in crowdfunding through “promoting your business, business venture, product or service directly to the public”.
“There are platforms that exist outside Bermuda that allow people to do that — Kickstarter is one.”
Ms Smith said the strategy aimed to “remove the red tape around starting a business — hence the one-stop hub concept”.
She said the “vast majority” of the island’s small operations amounted to sole-proprietor entities.
“These are businesses that don’t have a formal business structure, so they’re not LLCs, incorporated businesses — one of the reasons why that happens is because it’s an expensive, time-consuming process.”
The casual arrangement leaves them “liable for any issues that happen with regard to their business — they have no formal separation between themselves and their business”.
Mr Hayward clarified that the “hub” envisaged would go through the BEDC itself, meaning people with business plans could use the facility’s various satellite offices to register and then have the requisite details “passed on to all other relevant agencies as well”.
Calling entrepreneurship “a national asset”, Mr Hayward said as many as one in four Bermudians has aspirations of starting a business “in the coming years”.
At present, the BEDC has 2,700 entrepreneurs registered on its books.
The strategy, nearly 50 pages long, lays out a five-year plan in three phases. The first is “to remove barriers quickly”, the document states, followed by investing in capabilities and diversifying new markets.
Mr Hayward said: “Success will mean more businesses starting and surviving, more Bermudians choosing entrepreneurship and more local companies competing globally.”
• To read the strategy in full, see Related Media
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