Entrepreneurs concerned over rising cost of doing business
The rising cost of doing business in Bermuda is the number one concern among small business owners and entrepreneurs, according to a survey conducted by The Royal Gazette.The study, which was facilitated by the Bermuda Small Business Development Corporation, also revealed that most traders want Government to scrap payroll tax for lower income industries, reduce import duties and lower health insurance.The survey of small businesses asked owners about their concerns, the impact of the recession on trade, their plans for the future and outlook on the local economy.Darren De Silva, of Water Now, said that the increased cost of fuel, tyres and parts as well as a diminishing client base due to people leaving the Island were among his biggest issues.Mr De Silva called for a duty relief on parts and fuel in order to avoid having to pass the cost on to their customers, many of whom were struggling to pay their bills.“We are seeing both local and expat customers leaving the Island,” he said. “Regrettably our Government is forcing out many of our regular expat customers, including those that work in construction and landscaping.“On the other side many locals are more regularly asking for credit or struggling with the bill - despite it being a necessary household cost.”Mr De Silva believes that tighter cost controls and superior customer service will be key to his company’s survival and growth in the future.But he is concerned about the economy in the short term and beyond due to the issues of work permits, escalating crime, rising taxes and Government spending, as well as the behaviour of some of the country’s politicians.“It seems we continue to shoot ourselves in the foot by chasing out those that bring income to our Island - through work permit politics to satisfy the masses, uncontrolled crime, more petty taxes on exempt companies even as the global competition for their business increases, and out-of-control bloating and budgeting within the Government,” he said.“And it’s our fault; we as a people continue to accept irresponsibility, childish bickering and teenage outbursts from many of our politicians - do we think the international business community does not take note?“As a young Bermudian businessman in his late 20’s I am most concerned for how my seniors in public service are failing to set good examples of financial responsibility, transparency and selflessness.“I am worried for the future Bermuda my generation will inherit to live, work and shape.”One trader who asked not to be named said the rate of increase for key expenses such as rent, external service charges and taxes had exceeded the growth of his company.As a hand-made manufacturer, he said his business faced stiff competition from companies that imported cheaper products and as a result of the shortening of the season and smaller window of opportunity to bring in income he was finding it harder to retain workers to produce stock for the new season.The business owner urged Government to change the social insurance contributions to a sliding scale based on income, adding that as a self-employed person he would go without a salary in order to keep his operation going all year round and his staff employed, albeit on reduced hours.“I have been unable to pay key bills in a timely manner,” he said. “I have had to choose keeping people employed over paying bills in full in order to keep the business in operation.“I have not taken a personal regular salary since September 4 and have just paid myself according to my immediate needs in order to keep others employed.”Admitting that he had to downsize his company and take on the job of another employee, he said growth was limited by the size of his rental space, having turned over room for art-related activities and workshops to production work.And while the entrepreneur was upbeat about the economy and just happy to be in business, he said it was a hard balancing act of keeping the operation going on depleted finances and resources in the off season.“Better to have two staff working on less hours and adjusting their lifestyle choices to match their income than to keep one employed full-time and make another jobless,” he said.Ashley, Anjula and Sydney Bean of Juice ‘n Beans Cafe said that the overheads of staffing and buying from local vendors had increased while it was a constant battle to keep on top of bills, health insurance, pension, company insurance, corporation taxes and land tax and making enough money to cover them all.They said that the economic downturn had impacted sales and the business was run by part-time staff and downsized out of season, while any new products they introduced had to be cost effective.Their outlook on the economy was a timescale of one year or more for a recovery.Corey Cross, of Planet Coffee, said that his main concern was just staying afloat while trying to maintain a positive revenue stream and he had been affected by the increase in licensing fees for food service businesses.“The average person doesn’t have the spare change to purchase the ‘extra’ things,” he said. “I sell hot and cold beverages at outdoor and public events. People don’t have the extra change so they don’t buy.”Because Bermuda is so intricately linked to the US economy, Mr Cross’s view is that they were going through the recession together and the only way to better control the Island’s destiny would be to develop some new industries complementary to but separate from tourism and re/insurance.RoseAnn Edwards, of Personalised Designs, said that economic worries had led to a slowdown in trade with fewer Government contracts due to departmental budgets being slashed while high rents meant that she was unable to expand her business to new premises.However she was optimistic that the economy would pick up again sooner rather than later.