COVID-19 has caused many new businesses that have already received their startup capital from the Small Business Development Centre/Access Accelerator (SBDC) had to throw their original financial projections out the window and readjust their business models, SBDC Executive Director Davinia Grant told Guardian Business Wednesday, adding though, that the pandemic has opened doors for other fledgling companies.
Grant said companies that were prepared to build their business in certain services sectors and through the tourism industry, are now having their business plans heavily scrutinized by the SBDC in order to prepare them for uncertain economic conditions.
“Companies whose businesses are dependent on the tourism industry are definitely receiving greater scrutiny,” said Grant.
“Definitely your projections cannot be reflecting anything robust in the next six to nine months. And if they’re not expecting robust returns during that period of time, you have to be able to demonstrate how you will be able to survive with less than robust returns during that period of time.
“So we have to do our due diligence just as much as you would want the entrepreneur to do their due diligence. You do not want to walk into an uncertain environment for a brand new business. Obviously, if you were building a company that was contingent on tourism or robust domestic activity, you are having a very difficult time.
“Now, if you were already a going concern and you need to use funding to innovate or to ensure that you could continue providing your services, then that’s a slightly different story. But as a startup in a tourism-reliant industry, you’re going to have to justify how you would be able to survive during this period of uncertainty, and that’s not an easy thing to do. And we’re not going to lead you down a path that could be detrimental to your company in the long run.”
According to Grant, some startups immediately found a niche in the business environment caused by COVID-19, like companies that used technology to solve some of the problems facing Bahamians in the midst of closed borders, lockdowns and curfews.
“In some instance, you have startups… some of them who are likely doing very well because they were established specifically in response to COVID-19, and they’re actually solving quite a number of problems,” she said.
“There are a handful of sanitizer companies, some delivery companies, and some tech companies.”
She added that some service companies that were started recently, and were able to deliver their service remotely, are continuing to fare well during the pandemic.
Grant contended that new businesses under the SBDC are under immense pressure now to remain innovative, find ways to continue to produce value, create revenue, and reduce expenses.
“If you thought you had to keep a good track of things before, you definitely have to now even more so because you have to use that data to pull yourself out of the (economic) position that we’re in,” she said.
Grant lauded the move many businesses have made to build true e-commerce into their business platforms in order to continue to conduct business.
“I’m really happy to see how many of our clients have taken the opportunity to get online and they have used the product offerings and service offerings of other (SBDC) business to help them get online, to help them be more aggressive with their marketing and the like,” she said.
“So, I’m really happy to see that because these are things we should have been doing all along and COVID-19 is forcing us to do it.
“We’re still seeing some improvements in the integration of true e-commerce where they’re actually doing more transactions online as well.”