Last week we had the Fiji Economy Update, a conference jointly organised by the School of Economics, Faculty of Business and Economics, of the University of the South Pacific and the Australian National University.
At the conference various papers were presented on the Fiji Economy.
The media over the week covered some of the topics that were discussed at the conference.
The one-day conference was held at USP Campus in Suva and the same topics and presenters repeated the session in Nadi at the Novotel Hotel. Both the venues had good turnout and a wide selection of topics such as road safety, devaluation of currency, investment strategies, small business policy and other economic issues were covered.
The Fiji Economy Update is an annual conference and over the past few years it has become an attractive venue for small business operators to get together and voice their concerns.
For the Pacific island states, a small business is one that is mostly family owned, employs less than 20 workers and the annual turnover is around $250,000. This is a very crude definition and details can vary significantly.
In both the venues small business challenges were voiced by the audience. The concerns centered mostly on the inability of the government institutions to respond to their difficulties.
This article will discuss some of the challenges and concerns relating to small businesses. Do small businesses have a case, do they deserve special attention, what are some of their key concerns, are only some of the many issues that call for answers or attention.
Some important matters relating to small businesses
The small to micro businesses employ 60 per cent - 70 per cent of our labour force.
However, these businesses constitute only 10 per cent of the GDP. This suggests a significant opportunity to improve earnings from small businesses. We need to assist small businesses to perform better and our government policy relating to small businesses needs to take into account how this sector can be helped.
Outlined below are some of the major difficulties faced by small businesses.
Financial planning: most do not do a good job in this matter.
There are many reasons for this state of affairs such as running the show by their hearts rather than by accounting data, no contingency funds, poor cost management, poor credit rating, tax issues, etc.
Customer service: product or service of poor quality, poor customer service delivery, personal problems, lack of training, inadequate knowledge of business and other general customer related problems.
Legal issues: these mostly relate to business licence and registration, compliance with OHS regulations and tax and other government regulatory matters.
Supply chain relationships: most buy and sell in small quantities and as such do not have access to volume discounts and other favourable trading terms. Synergy and other networking advantages are generally not available to small operators.
Accounting system and finance records: given the small nature of the businesses, many do not keep a good system of accounts.
This is mainly because of the lack of training, inadequate funding and the attractiveness of using the cash on hand without saving some for the rainy day.
Human resource issues: specialist small business activities suffer from lack of skill replacement opportunities and a lot of workers are trained on the job. A lot of employment in small businesses is on casual terms and security of employment can be a matter of some concern to employees.
Tax matters on small businesses
During the recent Fiji Economic Updates in Suva and Nadi, the audience voiced concerns relating to tax matters and the general frustration of running a small business.
A presenter, Salvin Nand, of the University of Fiji talked on legal matters relating to small business. He presented a paper on small to micro enterprise policy formulation in Fiji.
In his paper he suggested a "one stop shop" concept to assist small businesses get legal and other information to assist them to form and then to run their businesses in a legal friendly manner.
In the discussion forum of the Fiji Economic Update, questions were raised on the delay in refunds and on not getting timely responses especially from Fiji Revenue and Customs Authority and also from other government departments.
The audience was requested to take up their individual cases directly with the department concerned.
However, it was a matter of some concern that the revenue authority was regularly brought up as one of those that was difficult to deal with.
It may be advisable for the revenue authority to create a special section for the small and micro business segment in Fiji.
The regulations relating to these businesses can be reproduced in simple language (anyone who recently tried reading the Income Tax Act would know how difficult it is to understand even the simple provisions).
The revenue authority could also provide sample accounts (format, etc.) for small business operators so that they comply with basic income tax procedures.
Small business operators who often cannot afford tax accountants will find this type of practical assistance very helpful. Both parties will gain from this exercise, there will be less arguments, better understanding of each others' expectations and this will result in less frustration and a better relationship.
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* Satya Samy is a business management lecturer with over 35 years of industry work experience. The views and opinions expressed are the writer's and not of The Fiji Times nor that of the University of the South Pacific's School of Management & Public Administration, Faculty of Business and Economics where the writer is employed. Email: email@example.com