Start-up tips for motor entrepreneurs

Hopeton Morrison, Contributor

Some of us approach entrepreneurship from the wrong perspective. Faced with redundancy, a windfall, approaching retirement, loneliness, separation, or any manner of crisis, some persons grab for what appears to be the nearest idea without any conception of the probability of success and failure.

Today, we examine two types of related businesses that some Jamaicans pursue as a first option. Both are loaded with pitfalls, and we examine these and suggest some ways around them.

Buying a vehicle to operate a taxi or minibus service used to be a very popular thing to do with a little spare money until more and more persons realised that if you are operating a taxi or bus service, you are probably going to be best off driving the vehicle yourself.

Financial institutions in Jamaica have discovered a lot of problems with establishing transportation services. For one thing, there is a glut of taxis and minibuses on the market. In addition, some prospective entrepreneurs are unwilling to engage in the legal requirements to purchase the public passenger transport licence and prefer to stay under the radar by engaging in robot activities.

We alluded above to the problem of who would drive the vehicle if you are unable to do so yourself. In our experience, we have not found one case of a paid driver who cares for a taxi or minibus in the way that we think he would were that vehicle his own. You have to grapple with that unfortunate fact.

A second related entrepreneurial activity, although not as popular, is that of persons engaging in car-rental services. Here, also, persons tend to stay below the radar, not wanting to establish themselves properly because of the taxation implications.

Problems encountered here sometimes include careless and inconsiderate clients who treat the rented vehicle almost with malicious contempt.

So then, as in any kind of business, it is a good idea to legitimise yourself.

One way is to join up with the Jamaica Union of Travellers Association (JUTA) and get your vehicle registered under that umbrella organisation. JUTA's requirements include acquisition of a road licence, a police record, and a recommendation from a justice of the peace, minister of religion or senior police officer.

Trained and Certified

More specifically, JUTA also requires that members get trained and certified under the Tourism Product Development Company, provide at least a contract letter from a school or other business institution, and pay a one-time membership fee of J$106,000 as well as annual membership dues.

There are benefits that accrue from membership in JUTA. These include concessionary parking in some places such as hotels and airports, ongoing contracts negotiated by JUTA, and duty concessions when purchasing vehicles. JUTA will also provide you with capable and experienced certified drivers.

Once you have legitimised your business, you can now tackle another common weakness, which is that some persons who are starting up a business for the first time do not set goals and targets. One of the simple facts of entrepreneurship is that persons who write things down on a regular and consistent basis tend to make better decisions and end up with significantly superior outcomes.

It is easy for someone to internalise business start-up decisions and plans in one's head, but many studies have shown that writing down one's business goals and plans results in far superior outcomes. So write down your financial projections for at least five years. Why five years?

In entrepreneurship, five years is a magic number. The reason is that if your business survives the five-year threshold, chances are you are well on your way to success. In North America and other developed countries, it is very popular for entrepreneurs to launch, fund, and manage a start-up for one, two, or three years during which time they achieve significant profitability and then turn around and sell the business.

There is a good strategic reason for doing this. After that amount of time, a business goes up the conceptual life cycle from introduction and growth to possibly any one of maturity, saturation, or decline. It is at these later stages that problems often arise that were not encountered earlier.

In conclusion then, when starting up a business, experts such as investors, bankers, and consultants recommend two fund-amental first steps. Write a one- or two-page summary of your business plan. It may challenge you, but it is important that you labour through the challenge of articulating on paper what you have been thinking.

Next, put together a set of financial projections for a five-year period. Although some persons believe otherwise, figures don't lie. They tell you whether you are meeting your financial targets or not. With that, we suggest that you are approaching entrepreneurship from the right perspective.

Hopeton Morrison is general manager of St Thomas Cooperative Credit Union Limited. Send questions to: hmorrison@stccu.com