The new year has begun, and the resolutions have started. At both the individual and enterprise levels, resolutions are being made to become healthier, wealthier and even smarter.

Following on the heels of the columns presented last year, focus in this space will continue on the business environment in 2025 with the hope that major advancements will accrue for the benefit of the local small business sector. The most recent review of the Barbados economy by the Central Bank suggests continuous growth at the macro level, which must translate to the lived reality at the micro level as well.

Unlike Patrice Roberts of calypso fame in Trinidad & Tobago, it is not our intention to ‘drink water and mind our business’ but more so, focus more acutely and aggressively on the issues affecting the sector with a view to conclusive change. Consequently, this column has been aptly rebranded Minding Your Business.

We commence with reference to an exploratory survey conducted amongst 25 micro and small firms at the start of the year. The focus was to gather views from business owners on their experiences in 2024 and prospects for the new year. The general perception was one of increased cost of operations in 2024 and heightened compliance issues. Accordingly, the pleas of those in the sector is for some reprieve in the cost of business namely fuel, utilities, VAT, and shipping costs. Some solutions proffered include improving access to finance, reducing regulatory burden and exploring ways to minimise the cost of raw materials and shipping. 

To better assess the economic picture for the new year and to plan advocacy and programmatic responses, the Small Business Association of Barbados hosted a webinar in January with economist Jeremy Stephen to give business owners some insights into what the new year portends for the sector.

There were some key takeaways including the positive trends for the local economy based on prior year’s performance. These include:

• Sustained economic growth surpassing global averages.
• Improved fiscal position with a notable surplus.
• Declining unemployment rates indicate a strengthening labour market.

Major challenges to the economy were highlighted such as

• Vulnerability to external shocks, especially in tourism and agriculture.
• Need for diversification to reduce over-reliance in sectors like tourism.

The former head of the Barbados Economic Society underscored that while notable improvement was seen in the macroeconomic fundamentals, there was a need to consider the 2025 outlook for small businesses. He opined that the trickle-down economic theory “if you take care of the big, the small will survive”, did not work. The micro economic fundamentals needed to be addressed so households and businesses could share the economic prosperity.

The session underscored major challenges confronting small firms including:

• Access to Finance

The current banking landscape and overall financial market remained restrictive, with stringent lending criteria and a complex process for small business loans.

• Regulatory Burden

Small businesses often struggle with navigating the complex regulatory environment in Barbados. Businesses are faced with the additional cost of compliance to operate and the burden of accessing some government services. 

• Digital Adoption

The Caribbean's small business sector lags in terms of digital adoption. A key challenge is the gap in technology, skills and infrastructure. Many small firms lack the resources to invest in digital tools, and without this capacity, run the risk of becoming uncompetitive. In particular, the rise of generative AI and quantum technology poses a threat to businesses that are slow to adapt.

• Market Access

Access to global and local markets is key to growth for the small business sector. As such firms must seek to improve their access to relevant information about market opportunities and develop the capacity to maximse on market share, domestically or through internationalisation.

These four areas represent the key opportunities for growth within the sector in the ensuing year. Through improvement in the regulatory environment and strategic programming to address capacity building and expansion, the business landscape can be transformed.

Opportunities for Small Business

Notwithstanding the challenges identified, there remain several opportunities for growth and innovation, particularly in response to technological advancements and changing market trends. Some of these included:

• E-commerce Expansion

The rise in e-commerce offers a major opportunity for small businesses to expand their reach beyond local markets. The global shift towards online retail and digital transactions presents an avenue for small businesses to access international markets.

• Sustainable Business Practices

As global environmental concerns grow, businesses that prioritise sustainability may gain competitive advantages. This is particularly important in a region where climate change directly affects sectors like agriculture, and businesses that develop eco-friendly practices may resonate with consumers and investors.

• Niche Market Development

Small businesses have the flexibility to develop niche products and services. In a rapidly changing world, catering to specific consumer needs can lead to sustainable business models, as long as these businesses identify and adapt to trends early.

With the rebound of the local economy from the COVID-19 pandemic and the recorded consistent economic growth over several quarters, it can be safe to project that households and businesses ought to benefit from this growth. These matters will be top of mind in the ensuing months as we seek to represent the SME sector in this space. The interventionist and enabling role of Government is needed now more than ever. The uncertainty in the global supply chains, the frailty of the regional integration project and Barbados’ small open economy that will create a highly competitive business climate, necessities policies and programmes to protect local sectors and livelihoods.

The Christmas season is the favourite time of the year for many. Beyond the cooler temperatures in the region and the caring community spirit that prevails, the season is one of the most lucrative for businesses. It’s the period when economic activity is at its highest and firms – large and small – depend on this increase in commerce to grow their revenue stream, and cover expenditure into the first quarter of the new year.

Due to the economic benefits for business, consumers have an innate responsibility to determine who they patronise and what they purchase. This responsible should not be taken lightly, as many small business owners, depend on the revenue at this time to take care of their families, support communities through additional staffing and overall ensure their business can turn over for another fiscal period.

Because of these factors, Business Basics is making a clarion call this week for consumers to support small businesses this season.

As has been noted through research and analysis of economic and social development, small businesses are the ‘backbone’ of communities, playing a vital role in shaping the character and culture of neighborhoods. They provide unique products and services that reflect the creativity and innovation of local entrepreneurs, offer employment opportunities that support families and individuals and contribute to the success of important community initiatives and charitable causes. Supporting small businesses goes beyond simply making a purchase – it’s a meaningful and essential part of maintaining a healthy, resilient and diverse economy. By choosing to support small firms, investment in the long-term well-being of communities is secured, ensuring that these vital organisations can continue to grow, adapt and thrive.

Some of the quantifiable benefits include:

1. Job creation

Small businesses play a crucial role in driving job creation and providing employment opportunities within the economy. They help increase overall employment and reduce unemployment rates, as they are more likely to hire locally, often offering jobs to persons within their immediate communities.

2. Boost to Local Economy

Shopping at small firms not only supports emerging entrepreneurs but it also boosts the local economy.

3. Entrepreneurship and Innovation

Within an economy, aspiring entrepreneurs and small business owners have the opportunity to test their ideas and introduce innovations to the market. This helps to cultivate an environment that promotes the entrepreneurial spirit and creates a continuous cycle of innovation, which in turn drives economic growth.

4. Community identity

As opined by Rapid Finance, the diversity of personalities found in local businesses mirrors the essence of their community, creating a distinct identity for that area. This individuality is important, as it draws tourists, offering them a unique reason to visit and spend money in that particular location.

5. Environmental Sustainability

Small businesses offer both environmental and economic benefits. As large national chains outsource many of their products, which involve extensive transportation, that can have a significant environmental impact.  However, small businesses normally source their products locally, which promotes sustainability and helps to reduce the environmental impact associated with long-distance transportation.

According to Forbes.com, for small business owners, every purchase, transaction, and positive review carries weight. Local owners deeply value each customer as their livelihood depends on keeping the customer satisfied. These firms often hire employees who have expert knowledge of their products or the specifics of their industry, providing a more personalised and knowledgeable experience unlike larger chains.

So, what are some areas consumers may wish to consider to support a small firm? Redfork Marketing offers several ideas that are not exhaustive but can serve as a start to the discerning customer.

1. Gift Cards

Buying gift cards from small businesses not only shows support for the business but also inspires others to support the business. It provides the business with instant financial assistance while also promoting customer loyalty.

2. Positive reviews

When leaving reviews on business sites or any other platforms, it is important that you include specific details such as the quality of the product or service as well as the level of customer service experienced. This gives other potential customers valuable insights and helps them make informed decisions about supporting local businesses.

3. Sharing on social media

Another effective way is by posting about the business on social media platforms. By highlighting your favourite local business on social media, this can help spread the word to friends, family, and followers.

4. Attend Local Businesses’ Events

Participating in these events not only shows support for the business, but also provides a chance to learn more about its products or services and engage with other local residents.

5. Shop Local

Whenever possible shop at small businesses in your area. This helps ensure that the money spent stays within the local community.

6. Tip Generously

When dining at a small, locally owned restaurant or café, think about leaving a larger tip as a way to show appreciation for the hard work and dedication of the staff. Employees may rely on tips as an important part of their income. By offering a generous tip, you not only recognise the excellent service received, but also help ease the financial pressures the businesses face.

7. Collaboration

Businesses have many opportunities to collaborate and support each other, helping to grow their customer base and increase visibility. They can cross-promote products or services on social media, partner on joint projects or events, and offer shared discounts or referral programmes.  

Recent discussions on the call-in programmes, social media posts, and complaints to Business Support Organisations, reveal that consumers – individuals and businesses alike – are unhappy about the manner in which some banks are applying the new AML/KYC reforms.  

The hoops to go through to open an account have been described as exhaustive by many, with overseas companies opting at times to set up business in other jurisdictions. New start-ups, young people having their first job, those from the Diaspora, etc., have all recounted the stories of excessive regulations and requirements to set up an account. It has been so ridiculous that in one instance a start-up was asked to provide financial statements to open the account – imagine a start-up with no historical data and in need of an account to help create a record of financial activity. A clear case of the cart before the horse.

The most recent humbug is the retrospective due diligence regime.

Appreciatively, the country wishes to maintain compliance with international rules fearing the proverbial blacklisting that can occur. Backlisting, which appears to be only applicable to small open economies in circumstances where these countries’ contribution to global trade and global governance is minuscule, to the point of not being quantifiable.

The demand for AML/KYC compliance has ushered in a regime of onerous regulations and requirements that threaten the otherwise longsuffering and tolerant nature of the Barbadian spirit. The most recent development has been the blocking of customers from accessing their funds due to the accusation of being uncompliant.

Some banks have simply gone too far! While it is appreciated that updates are needed to personal and company records to satisfy anti-money laundering and know your customers’ rules, the steps being adopted by some are draconian, to put it mildly. In the normal course of commercial activity, customers are being met with the embarrassing reality that they cannot access their funds to pay vendors. They are being informed their accounts were blocked. What compounds the madness is the kind of information being given in some situations. Some customers were told:

• There was no need to update the data if there was no material change to the previous records
• Only persons with US accounts need to update their records
• Information can only be updated by physically visiting the bank.

This latter point defies doing business in a digital environment. There are ways to complete these transactions in a secure and convenient manner using technology.

There are even examples of people visiting branches to update their information but still unable to access their account from another branch of the same institution.

It is understandable that the changes in retrospective due diligence requirements in Barbados are influenced by international and regional efforts to enhance compliance with AML and Combating the Financing of Terrorism (CFT) standards. It is recognised that the country has implemented these updates primarily to address the findings of mutual evaluations conducted by the Caribbean Financial Action Task Force (CFATF). These evaluations assess the effectiveness of AML/CFT frameworks and identify areas requiring stronger enforcement, particularly in response to global standards set by the Financial Action Task Force (FATF).

Some argue that since Barbados was not compliant with the FATF standards, i.e. it was put on the grey list, the FATF produced a mutual evaluation report in 2018 to provide Barbados with the relevant measures to be AML/CFT compliant – the country’s’ response was the creation of the AML/CFT Guidelines 2021. The main contention in this article is the way some banks are applying the rules. The experience of ordinary Barbadians in having their accounts blocked in questionable circumstances cannot be fair application of the guidelines.

Even the OECD in a recent note on Regulatory Developments concerning Due Diligence for Businesses opined that there are areas of the AML/CFT compliance regime that can negatively impact small firms. These include:

1. Resource Constraints

Small businesses lack the resources, both human and physical, to manage complex due diligence processes. Time spent on compliance activities could detract from focusing on growth and customer service, particularly where personnel typically wear multiple hats.

2. Increased Costs

The need to comply with retrospective checks may lead to additional costs for small businesses. For some firms this might be a financial strain​.

3. Legal and Regulatory Uncertainty

Even though they may be aware, micro, small, and medium enterprises often struggle to interpret complex legal frameworks. As a result, may need to hire personnel to assist with understanding and complying with the rules.

4. Supply Chain Pressures

Small businesses often have limited influence over the larger entities within their supply chains, which complicates the implementation of due diligence measures. The challenge is further amplified when supply chains span multiple countries, as navigating varying frameworks becomes increasingly complex.

It is not advocated that small firms and individuals should not be compliant. The process being employed by some needs to be reviewed and better regulated. In support of the OECD guidelines two obvious solutions can be adopted immediately:

1. Scaling Guidelines

As MSMEs vary in size, a way to combat the negative impact of the rules is to ‘tailor reporting obligations’ based on the size of the firm.

2. Extended transition time

The Central Bank should appreciate the difficulties that small firms face when complying with the guidelines and provide MSMEs with additional time to gather the relevant documentation/information before penalties are applied.

Recent cyberattacks on key government agencies in Barbados bring into sharp reality  the fact that the fight is persistent in building a resilient cybersecure infrastructure within the public and private sectors. Indeed, the conversation and sensitisation must go beyond the month of October, commemorated annually as cybersecurity awareness month. A whole of country approach is needed to mobilise resources, adopt the right regulatory regime, and train employees and citizens alike about the existential threat of cyberattacks.

It is against this backdrop that the Small Business Association of Barbados recently partnered with C & W Business to host a webinar on Mounting a Defense against Cyberattacks, with a focus on helping micro and small businesses to build resilience in their operations to mitigate the risks of attacks.

Participants during the webinar were given a broad perspective of the issues and the solutions to be employed to safeguard their businesses.

Cybersecurity was presented as a combination of technology, people and processes to create strategies, aimed at protecting sensitive data, ensuring business continuity and safeguarding against financial losses. It is built on three pillars, people, processes and technology. These pillars help a business to create a good cybersecurity posture.

Once a business has established a digital presence, it is a target due to its population, and/or acquisition of data. DATA was described as ‘GOLD’, in this hyper-digital connected world.

 Participants were informed that there were over 300 billion phishing attacks annually. An attack may cause possible financial loss, loss of reputation and even identity theft. Information over the last three years indicates a plethora of incidents in both the private sector and state agencies where valuable data was breached.

Examples include Massy’s cyberattack in April 2022 in Trinidad & Tobago and October 2022 in Jamaica. The breach resulted in 17 GB of data being leaked, which included personal information such as the names, addresses, taxpayer registration numbers, signatures, videos and pictures of Massy Jamaica employees and contractors. Attacks were recorded in Bermuda, whose Government IT department and communication system experienced a breakdown, Martinique, British Virgin Islands, St Kitts & Nevis, and St Lucia, to name a few. Right here in Barbados, several banks, credit unions, and government departments have all fallen prey to the attackers. The Caribbean is definitely seen as a hot spot for cyber criminals.

The attacks have been so pervasive that the government of Costa Rica in 2022 declared a State of Emergency after a month of crippling ransomware attacks. This was the first time in history that a State of Emergency has been declared on a non-physical event and on a cybersecurity event.

The Gartner Report September 2021 estimated that there was going to be a 12.4% increase in Cyber spend valued at $150 billion in 2021. By 2024, the spend is $215 billion globally according to the September 2023 report, an increase of 14.6%.

The C & W Business team recalled an example which demonstrated the high cost of cyberattacks on firms. The experience of a ransomware attack on an organisation revealed the following statistics:

• The organisation paid over USD$100k in incident response and recovery
• It lost 23 days of business to restore 80% of operations and did not get 100% recovery
• The attack was undetected in their systems for 12 months
• The firm paid USD$3k monthly to have the EDR, significantly less than the $100k for recovery.

The webinar also explored solutions that firms could employ in this fight. Two initial areas are EDR (Endpoint Detection & Response) and user security awareness training. EDR is an AI-driven security solution that autonomously monitors, detects, and responds to threats in real time, offering proactive protection and automated mitigation for endpoint devices. User Security Awareness Training will help to educate users to understand, identify and avoid cyber threats. The goal is to prevent or mitigate harm – to both the organisation and its stakeholders – and reduce human cyber risk.

In mounting a defense, the small business must carry out a few steps:

1. KYE (Know Your Environment)
   
   The business must know its environment – identify potential threats, critical systems, legal implications and develop response and mitigation strategies for cyber resilience. Barbadian firms should know the legal regulations that govern cybersecurity and data within a business, which are governed by the Data Protection Act 2019. 
   
   

2. Culture
   
   It is important for business owners to create a cyber culture within the organisation. Creating such a culture starts from the leadership. In order to do this, business persons must communicate value, drive leadership, establish governance, implement awareness programmess, and define Key Performance Indicators for transparent reporting.
   
   “Cybersecurity is the responsibility of every single person within an organisation,”
   
   

3. Partner
   
   The presenter posited that no one entity can do cyber security by themselves. There is a USD$3.6 million gap in cyber security skills and competences globally, and therefore, it is almost impossible to manage cybersecurity alone. Firms should partner wisely – outsource securely, stay vigilant, enhance response, augment expertise and ensure compliance.

With the digital revolution in play globally and the increased use of technology in everyday activity, the vulnerability of the firm is heightened. It is therefore incumbent on all business owners and individuals to mount their own defense and work assiduously to build resilience. Additional techniques include:

1. Adopt AI Driven technologies
2. Back-up of files; regularly tested
3. Conduct vulnerability scans

Use two factor authentication.

Following last week’s discussion on the impact of the electricity rate increase on firms and consumers, the cost of fuel will engage our attention this week due to its pervasive impact on the cost of doing business and by extended the high cost of living in Barbados.

There are several factors that contribute to high costs in the country, utilities and fuel are arguably the most prevalent as all stakeholders in the society are users of these resources. Every effort therefore should be employed by the Government to make these affordable for citizens through the use of the regulatory and policy apparatus available.  

Economists and development specialists will continue to analyse the contributors to the cost of living and what is required to reach a state of equilibrium where prices are affordable. For sure the current price point of various utilities is not affordable thus the state of austerity being experienced in the society.

Citizens already complain about the VAT rate of 22% applied to telephone bills. Compound this with the anticipated increase in the electricity rate, the sewage tax on water rates, and current fuel costs, and this produces a perfect storm of utility taxation.

Government, through its regulatory powers, can bring some relief to these measures.

It is with consternation that we consider where Barbados is at globally relative to its fuel costs.

According to globalpetrolprices.com the current average cost of gasoline worldwide is USD$1.24 per litre. The site further states that Barbados’ current fuel price is 157.82% of the world average gasoline price. Understandably the price of gas will differ amongst countries due to various taxes and subsidies a country may introduce based on its policies and overall fiscal approaches. Barbados’ fuel prices are projected to be the fourth highest globally, recorded by Global Petrol Prices, following the likes of Hong Kong – USD$3.30 per litre, Monaco at USD$2.26 and Iceland at USD$218 per litre. Barbados is at the unenviable position of USD$2.09 per litre. The closest Caribbean country is the Cayman Islands with a rate of USD$1.46 per litre.

Appreciatively, Trinidad & Tobago and Guyana are lower due to their old reserves with a rate of USD$1.14 and USD$1.02, respectively. Jamaica on the other hand, similar to Barbados, has no significant oil resources but has a rate of USD$1.27 per litre.

Why is Barbados’ rate so high?

Some of the major issues affecting the cost of fuel include:

1. Crude Oil supply

Crude oil is what makes up gasoline. As the laws of supply and demand go, when the supply of crude oil decreases, the cost of petroleum-based products, i.e. gas, increases.

2. Geopolitical events

The conflict between Ukraine and Russia has made an impact on global oil production, as Russia is one of the world’s largest crude oil exporters.

3. Demand increase

When there is an increase in the demand for oil, the price of crude oil increases.

The cost of crude oil per barrel, understandably will fluctuate, and has been hovering around USD$100 – 110. This is the largest component of the retail price of gasoline. Other components include taxes, subsidies, cost of refining and transporting, and other measures. What appears to differentiate Barbados’ rate from neighbors in the region and the world, is the level of taxes and subsidies imposed by Government. A reduction in these can equate to an ease to the cost of doing business and the cost of living.

Small businesses are not left out and feel the impact of continued high fuel prices on their operations.

1. Increased Transportation Costs

Businesses such as delivery firms, manufacturers and those who export and import goods, and rely on transportation, will experience a rise in the cost of doing business. They are challenged in determining whether to pass the costs to consumers or to absorb them.

2. Consumer Purchasing power

An increase in cost will lead to a decrease in consumer demand.

3. Costs passed to Small Businesses

The rise in costs will impact on the global supply chain with costs being passed on to small businesses.

 Good business management practices will necessitate small firms try to do all within their power to adjust to withstand these increased costs. Am Trust Financial posited some solutions, which include:

1. Reducing the number of trips

Small business owners may wish to combine multiple trips into one, which can reduce fuel costs. Many short outings use more fuel while one longer trip reduces the gas used.

2. Navigating Traffic Times

Being in traffic for long amounts of time burns more gas than a steady drive. Business owners should schedule their deliveries, or trips outside of traffic times as much as possible.

3. Managing Speed Limits

Maintaining the speed limit ensures a more efficient running vehicle.

4. Load

When a vehicle is heavier, it uses more fuel. It is important that small business owners remove unnecessary items from their vehicles, to avoid the use of additional fuel.

While these are admirable attempts to better manage the cost of operations, not all the suggestions can be implemented. A more sustainable and long-term solution is needed, which must be found in the kind of business environment available for firms to operate. It is therefore incumbent that Government revisits the cost of utilities in Barbados and bring some relief to citizens, small and great.

There is no one in business who can deny that the cost of business has increased exponentially in the last decade. Several analyses have been done to show a variety of reasons for this, not least of which have been global supply disruptions, natural disasters and other exogenous shocks.

The one contributing factor that may be well within our grasp to control high costs, is Government policy and regulation. Whereas Government would wish to be disciplined with its fiscal policies and overall expenditure, the very nature of the interventionist role it plays in the economy, suggest there are some risks and responsibilities it can consume. This becomes even more relevant in a social democratic construct where Government inherently must protect and enfranchise the vulnerable sections of the society.

It is against this backdrop that one must question the timing of the electricity rate increase approved by the Fair-Trading Commission (FTC). The recent decision to allow the Barbados Light & Power Company (BLPC) to pass on rental and operating costs of temporary generators to consumers has understandably generated significant debate. This decision makes way for the BLPC to receive the cost associated with renting 11 megawatts of temporary Aggreko generator units through the fuel clause adjustment (FCA).

Most right thinking persons may not question the efficacy of the business case for a rate increase, the last being given in 2010, but passing on the cost of rental equipment to consumers is extreme at best. Contextually, this is bad for business of any size, and a further burden on consumers, already suffering from austerity measures affecting the country.

Why weren’t the generators purchased instead of renting, or the company absorb the rental costs?

Critics cited the fact that the fuel clause adjustment is traditionally used to manage uncontrollable fluctuations in fuel prices, not short-term infrastructure costs. Relying on diesel generators is also costly and inefficient.

The ruling by the FTC came four months after a significant event (the ICC Men’s Cricket World Cup), raising questions about whether ongoing rental costs for generators, which were initially intended for temporary demand surges, should still be borne by consumers. The decision underscores a continued reliance on diesel generators, which are known for their inefficiency and high operational costs. This reliance could lead to more frequent price increases in the future as fuel prices fluctuate.

Compounding this problem is the fact that in another few weeks, businesses will be looking to maximise on increase sales due to the Christmas season. Equally, consumers will be looking to increase expenditure in line with local traditions. This increase in electricity cost threatens to put a further strain on the purchasing power of consumers and the operational cost of firms.

Unlike Trinidad & Tobago and Guyana, there are no oil deposits to be discovered at this time to help with the reduction of the high energy costs. While there are efforts to diversify to renewable energy, Barbados’ aim for a transition to 100% RE by 2030, which could eventually stabilise or reduce electricity prices, appears to be stalled, if at all possible.

Policy and regulation are the instruments at Government’s disposal to make life a bit easier for citizens.

The example of the new Labour Government in the United Kingdom is worthy of note.

1. Small businesses are facing substantial increases in energy expenses, which are squeezing profit margins. Many report that these rising costs are compounded by other operational challenges such as increased competition and a tough economic environment. Yelena Kalyuzhnova emphasises that without reducing energy costs, many small businesses may struggle to survive.
2. A significant portion of small and medium enterprises (SMEs) have become reliant on Government interventions to manage their energy bills. Reports indicate that 74% of SMEs have business strategies contingent on the level of Governmental support they receive, highlighting their vulnerability in the face of rising energy prices.
3. The rising costs of energy have repercussions beyond individual businesses, affecting supply chains and product availability. UK farmers have reduced crop planting due to high greenhouse heating costs, leading to shortages in supermarkets and increased food prices for consumers.
4. The uncertainty surrounding energy prices has led many small business owners to adopt a reactive approach rather than pursuing growth or innovation. This financial anxiety is exacerbated by the lack of a clear, long-term support plan from the Government, which is crucial for fostering an environment conducive to business growth.

Local businesses will not escape the effects from this decision by the FTC.

1. High electricity rates directly increase the operational costs for small businesses, which often operate on thin profit margins. This will lead to reduced profitability or even financial strain, forcing some businesses to raise prices, cut jobs, or reduce services to maintain viability.
2. Elevated electricity costs will deter investment in growth and expansion. Small firms will hesitate to invest in new equipment or technology that could improve efficiency if they are concerned about rising utility costs impacting their bottom line.
3. Small businesses will struggle to compete with larger companies that can absorb higher energy costs more effectively. This disparity can lead to a loss of market share for smaller enterprises and hinder economic diversity.
4. As businesses pass on increased costs to consumers, there may be a decrease in consumer spending. Higher prices can lead to reduced demand for goods and services, further impacting revenues.

It cannot be denied that Barbados is facing a supply chain issue relative to its poultry industry. This has had a deleterious impact on several businesses in catering, restaurants, food kiosks, etc. It has been disconcerting that stakeholders in the agribusiness sector have been denying there was a shortage of supply, when all major supermarkets and grocery outlets bore the evidence of the shortage.

Any student of trade and commerce would have realised in recent months that significant challenges exist with supply chains, domestically and globally. Often the latter impacts the former due to key inputs in production processes in many of the manufacturing and agribusiness procedures.

In light of the persistent disruptions due to exogenous and other factors, a risk mitigation strategy is clearly needed. In a country where nearly 90% of food is imported, supply chains represent an existential threat to Barbados, a tourism dependent economy.

The importance of supply chains was accentuated at the first ever Global Supply Chain conference held in Barbados earlier this year, organised by United Nations Conference on Trade and Development (UNCTAD). The supply chain is supposed to have certain benefits such as reduced costs, risk management and supporting the local economy, to name a few. However, recent examples locally and within the global market suggest some vulnerabilities in the system:

1. Geopolitical Risks/ Tensions – Suez and Panama Canal Disruptions and Greek tanker oil spill

These canal disruptions were a consequence of the Red Sea, which caused sea traffic to be rerouted around South Africa which meant longer shipping time, more costs because of the distance and not receiving goods on time causing loss of business. UNCTAD projected that if the increase in container freight rates experienced between October 2023 and June 2024 – driven by the Red Sea crisis and Panama Canal disruptions – continued to the end of 2025, global consumer prices could rise by 0.6% by late 2025. Small economies would be the hardest hit, with a possible increase of 0.9%, with processed food prices increasing by 1.3%.

2. Supplier Dependency – Chicken Shortage

The ongoing disruption of chicken supply, locally, is another example indicating poor risk management practices, lack of support for the local economy and reduced costs. Comments by government and private sector stakeholders appear to be conflicting, while consumers feel the brunt of the disruption and businesses of all sizes, suffer as a result.

3. Natural Disasters – Product Shortage

Hurricane Beryl’s impact on the Caribbean in late June 2024 left severe damage to the infrastructure, homes, vegetation and marinas of several countries in the region. This further compounded produce shortages for some goods on the island and the resultant huge increases in the cost of some imported commodities.

Those who have been researching supply chains for some time proffered there are inherent vulnerabilities to supply chains that must be monitored and mitigated in a systematic and measured way. 

Supply chain vulnerabilities are due to exposure to serious disturbances which arise from risks within and outside of the supply chain. Examples include:

• Natural Disasters
• Cyber threats
• Terrorists threats
• Pandemic and health issues
• Logistical Disruptions – Transportation interruptions and delays
• Geopolitical risks
• Supplier Dependency
• Technological Risks
• Regulatory compliance and legal risks

Eliot Metzger, et al, in their article on Voices of Small and Medium Enterprise in Global Supply Chains proffered that large companies require the participation of small and medium enterprises with supply chains as small businesses bear much of the burden in helping large companies implement and meet sustainability goals across the value chain. As a result, there are unique vulnerabilities to small firms that must be understood and addressed. Based on the article, supply chain vulnerabilities affect SMEs in specific ways.

1. Suppliers/Inventory Issues

Small businesses normally have one main supplier, which is referred to as supplier dependency. When ships are stuck at ports, the flow of goods has been disrupted. This results in the supplier’s inability to deliver the raw materials/goods in a timely manner affecting the small business’ ability to meet their demands and order deadlines, causing a loss of revenue.

2. Increased costs

With terrorists’ attacks, natural disasters, and wars, it has become increasingly difficult and expensive to import certain goods. According to data compiled by Xeneta, a cargo analytics company in Norway, the cost of moving a 40-foot shipping container from China increased to US$7,000 from US$1,200 within a few months. For SMEs, it would be more difficult to bear these costs than it would be for larger firms.

3. Inability to outspend Competition

The issues above mean that there is a race for resources for businesses of all sizes. As SMEs are intrinsically small, they cannot outspend the competition and obtain the resources they need.

Some options to mitigate risks in supply chains include:

1. Proactive Planning

Firms need to understand their markets and consumer needs, inclusive of emerging trends and aggressively adjust supply chain strategies.

2. Strong Supplier Relationships

Strong relationships with suppliers are key to ensure consistent supply and maintain competitive pricing.

3. Diversifying Supply Sources

Small businesses should consider using alternative suppliers to mitigate risks.

4. Strengthen relationships with other small businesses

SMEs should collaborate with each other

5. Conduct risks assessments

It is important that SMEs procure the technology that would help them identify risks. This is the first step to drafting a contingency plan.

6. Logistics

SMEs should employ methodologies to better track information on their goods.

Much have been said about the Approved Small Business (ASB) regime featured in the Small Business Development Act, particularly since this status is required for a company to pay the rate of 5.5% on its taxable income.

Considering this, the Small Business Association of Barbados focused its October webinar on sensitising members and partners alike, on the definition of an Approved Small Business and, the benefits and conditionalities surrounding this regime. Whereas less than 150 firms were currently ASB, out of a market of over 9000 formal enterprises, there is significant interest in the sector for this framework and this warrants continuous sensitisation and education about the process.

A recent exploratory survey conducted by the SBA revealed that though 11% of members were ASB, some 80% were desirous of becoming an Approved Business, thus benefiting from the regime. It was therefore no surprise that over 200 business owners participated in robust discussions during the October webinar on the merits and demits of the administration.

ASB status is obtained under the Small Business Act (Cap. 318C) granted by the Minister of business development. The architects of this regime intended that the status would help small businesses “enhance their operations and increase their competitiveness”.

Eligibility is determined by two factors:

• Meeting the definition of an Approved Business
• Providing significant or substantial economic benefit to Barbados.

Section 3 of the Act[1] provides that a small business is an enterprise that:

• Is incorporated under the Companies Act Cap 308
• Has satisfied any 2 of the following criteria:
• The small business has not more than $1,000,000 as stated or paid up capital;
• The small business has not more than $2,000,000 in annual sales;
• The small business has not more than 25 employees.
• Subject to subsection (2), is not more than 25 per cent owned or controlled by a company whose share capital and annual sales exceed the share capital and annual sales mentioned in paragraph (b) or by a subsidiary of that company or by a subsidiary of a larger group of companies;
• Is not controlled by a company whose share capital and annual sales exceed the share capital and annual sales mentioned in paragraph (b) respectively;
• Has no agreement for the payment of fees on a continuing basis for managerial or other services that do not form part of the normal business operations of the enterprise.

Appreciably, participants were concerned that the requirement for incorporation would be quite difficult for small business owners as this process required an attorney-at-law, which is often synonymous with huge costs. It was therefore a relief to note this condition was no more, incorporation no longer needed an attorney.

The next step of determining eligibility is the socio-economic benefit[2]. This benefit has three different criteria to meet.

1. Generation of new investment or the development of products or processes
2. An improvement in employment, production capacity through market research, technical invention or innovation
3. The enhancement of export potential, foreign exchange earnings or savings or the general welfare of persons in Barbados

Once these criteria have been met the small business can proceed to the application process.

Application can either be fulfilled by completing Form 1 which is for businesses in operation for more than one year or Form 1A for businesses that have been operational for less than one year.

Section 4(2) of the Act dictates the relevant accompanying documents with either Form. These include:

• Certificate of incorporation
• Certificate of Clearance (National Insurance Service & Barbados Revenue Authority)
• Audited Financial Statements/ Financial Reviews
• Financial Projections for 3 years
• Company profile[3]
• Share Certificate copies
• Articles of incorporation

The benefits to be accrued to the business must outweigh the cost of the process. This has been the repeated refrain of business owners in the past, thus the low uptick in applications to the scheme.  

The incentives pursuant to section 7 of the Act include:

• Preferential corporation tax rate of 5.5%
• Exemptions from import duty on raw materials, plant and equipment
• Exemptions from withholding tax on dividends
• Exemptions from payment of stamp duty
• A deduction of corporation tax of the actual expenditure incurred in respect of the use of technology, market research and any other activity that is, in the opinion of the Commissioner of Inland Revenue, directly related to the development of the business.

At the time of introducing the legislation in 1999, the focus was more geared towards incentivising manufacturing businesses. The demographics in the sector have changed significantly today, where over 80% of firms are service oriented. The question of the attractiveness of the aforementioned benefits is one that cannot be easily ignored.

Notwithstanding the information provided and the level of engagement by small businesses, there was still some skepticism expressed to the extent that some participants indicated their intention to pay the 9% on taxable income than undergo the process to become an ASB. As they say, “the proof of the pudding is in the eating”, it will therefore be instructive to return to this issue in six – nine months to see what the uptick of applications for ASB is. If the results suggest marginal growth, then Government will have to conduct an overall assessment of the regime to make it more fit for purpose.

[1] Small Business Act Cap 318C

[2] See n (1)

[3] Small Business Act Cap 318 C s 4(3)

October has been celebrated since 2004 as cybersecurity awareness month following the declaration by the President and Congress of the United States. Twenty years onward as we commemorate another month, a review is warranted on the progress made in addressing the cybersecurity challenge.

The level of frequency and sophistication of cyberattacks, coupled with the increased value of data on the dark web, necessitates a review by public and private sector entities on their security measures. The price that threat actors are willing to pay for stolen data underscores the financial incentives influencing cybercrime, and highlights the vulnerability of businesses, large and small.

According to the National Cyber Security Centre, cybersecurity refers to how individuals and organisations reduce the risk of cyberattacks. Its primary function is to protect the devices used including, smartphones, laptops, tablets and computers, and the services accessed by individuals from theft or damage. Cybersecurity is also about preventing unauthorised access to the large amounts of personal information often stored on these devices and online.

In IBM’s 2023 Cost of Data Breach Report the following was revealed:

• The average cost of a data breach reached an all-time high in 2023 of USD$4.45 million, representing a 2.3% increase over the 2022 cost of USD$4.35 million.
• Security AI and automation were proposed as critical investments to help reduce costs and minimise time to detect and contain breaches.
• 82% of breaches involved data stored in the cloud - public, private or multiple environments.

More startling from the report was the indication that one-third of businesses discovered a data breach through their own security staff. This underscored the need for better threat detection.

An Annexus Technologies report on Caribbean Small Business Cybersecurity revealed that the Latin American and Caribbean region suffered a combined 137 billion attempted cyberattacks between January and June 2022, with ransomware emerging as the most prevalent breach.

Based on the report, some of the most common threats confronting firms are:

Phishing Attacks: A shocking 91% of cyberattacks start with a phishing email.

Ransomware: 71% of ransomware attacks target small businesses in the LAC region.

Malware: In the Caribbean, 68% of small businesses reported experiencing malware attacks in the past year.

Insider Threats: A shocking 44% of all security incidents in the Caribbean were attributed to insider threats.

DDoS Attacks: Over 40% of businesses in the Caribbean have faced Distributed Denial of Service (DDoS) attacks, causing an average downtime of 7 hours.

Social Engineering: Social engineering attacks realised a 27% increase in the last two years.

Weak Passwords: An astounding 65% of small businesses in the Caribbean use weak passwords.

The report further proffered that the average cost of a data breach for a business in LAC in 2022 was US$2.09 million, representing a 15% increase from 2021. During the first six months of 2022, approximately 384,000 ransomware distribution attempts were detected worldwide. Of these, 52,000 targeted victims in Latin America. The Major Organised Crime and Anti-Corruption Agency reported that Jamaica estimated losses due to cybercrime in excess of USD$12 million annually. Other countries in the Caribbean also reported severe cyberbreaches crippling their supply of public services and affecting private sector entities in the financial, insurance and retail sectors.

It was further projected that 60% of companies increased the cost of their services following a data breach to offset losses.

After 20 years of commemorating cybersecurity month, it would appear that cyberattacks and security breaches are more prevalent than before.

A discussion on solutions is needed to combat cybersecurity risk, particularly since 95% of cyber security issues are reportedly traced to human risk factors.

The work done by Julien Sorano on How AI is changing the security landscape for small business proffered that Artificial Intelligence (AI) is increasing the sophistication of cyberattacks, but AI can equally help companies build advanced training methods to enable employees to detect scams and new types of risks. The report suggested that AI can act as a ‘copilot’ for junior staff who may not have the requisite cybersecurity ‘combat experience’, through a guided approach in the direction where threats occur. People and technology are intertwined in building security strategies for businesses. By investing in AI-powered solutions, organisations can assist their security teams to build capacity to mitigate cyber risk.

Whether it's implementing multi-factor authentication, encrypting sensitive data, or conducting regular security audits, businesses need to be proactive in fortifying their defenses against evolving threats.

Business Basics supports the call by Sonja Raath in her article on Cybersecurity Spending, that a whole of country approach is needed to combat cyberattacks and build cyber resilience.

There must be enabling laws and a legal framework for data protection and rules to address breaches and penalties for cybercrime.  

Government support is critical and must include a strategy and resources to build national cyber resilience.

Strategic cooperation is key domestically and internationally, between governments, private companies, and educational institutions to share intelligence and strategies and create a stronger, more adaptable defense system against cyber threats.

Investment in a secure digital infrastructure acts as the first line of defense. This should include regular updates and maintenance of network security.  

Awareness and education to inform citizens and train employees are required to  prevent cyber incidents.

Vigilant monitoring, research and analysis of cyber events assist in detecting and responding swiftly to threats, minimising the impact of attacks and developing innovative solutions to outpace potential attackers.