The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A small business advocate yesterday voiced fears the sector will suffer “a slow death” if Bahamians cut back too much on spending after the Prime Minister’s inflation warning, adding: “We don’t want to frighten people.”

Mark A Turnquest, head of the fledgling 242 Small Business Association and Resource Centre, told Tribune Business that while his members “understand” why Philip Davis QC called for consumer caution they were concerned it may provoke too sharp a reduction in purchases from Bahamian-owned companies.

Also a consultant to the sector, he warned that the first casualty of any spending slowdown would be employee salaries and, potentially, jobs if consumer demand and the wider economy nosedived and the right balance was not struck.

Mr Davis, in comments to the media on Sunday, called on Bahamians to be “frugal” and careful over what they spend their money on given the global inflationary pressures that are driving broad-based price increases locally and eroding living standards.

While the Prime Minister’s concerns over the cost of living crisis were supported by his members, Mr Turnquest told this newspaper many of his members feared the comments may tip the pendulum too far in favour of a spending slowdown that undermines the post-COVID recovery for local businesses.

“Once we cut down too much that will be the slow death for Bahamian businesses,” he warned. “We might frighten people. We don’t want to frighten people right now. We understand what the Prime Minister is saying as an Association, but we have to be real.”

Noting that all the Association’s members are micro, small and medium-sized businesses earning less than $500,000 per year, with 90 percent generating $250,000 or less in top-line sales, Mr Turnquest added: “We don’t need no cutting down too much. If that happens, salary cuts will be the first thing to occur, and then employees will be let go,.

“We understand the Prime Minister, being the leader of the country, wants us to tighten up and knuckle down. Small businesses, though, we need to encourage people to buy but for the right reasons. That’s why our members are lowering costs and offering discounts to be competitive. What we don’t want is for the consumers to buy from overseas and ship their purchases in. We had that problem in the pandemic and have still not overcome that challenge.

“Although the Prime Minister indicated that he wanted consumers to act in a frugal way, we as business owners need to stay open.” And the only way that will happen, Mr Turnquest reiterated, is if Bahamian consumers continue to spend their disposable income with local merchants on products such as clothes, electronics and other technologies.

“Right now we cannot worry about profitability. We cannot hurt our head over how much we make in profit,” he added, with many Association members still battling to rebound from COVID-19 and other challenges. “They have to pay their fixed costs and expenses; rents, salaries, light bill and other monthly obligations to stay in business.

“Nothing will get paid unless a cash sale is made. That’s the way we pay our bills and that’s how we stay in business. A lot of us have made sacrifices. I personally have been in business 22-23 years, and all I can do is save my business and stay in business. I have encouraged my members and clients to budget what it costs them every month. If they need $3,000-$4,000 to pay their monthly costs, try to get sales above that of $5,000-$6,000 to stay in business for next month.

“We call it business survival mode. All of us are in business survival mode right now and waiting for Christmas and Thanksgiving.” Mr Turnquest said many Bahamian small businesses were now sourcing product from US states such as California in a bid to avoid shipment delays and backlogs from China and Panama. “It doesn’t make sense to hurt your head by pinching pennies and stuff from China reaches a month or two later,” he added.

“Another thing my members are doing, and I have encouraged them to do, is they like to mark up 200 percent to 300 percent over first cost. What I did was encourage them to reduce it to a 106 percent mark up so the customer benefits and they get the sales. The pandemic has made it very competitive.”

Established small Bahamian businesses, Mr Turnquest said, are now competing against home-based rivals created by workers furloughed during COVID. The latter, he added, were operating with less overheads and costs which enables them to keep prices down.

The Prime Minister, speaking to the media earlier this week, told consumers: “I’ll advise that they be vigilant and be frugal, and let us work together to combat the challenges that we have for inflation....

“When you look at all what I call the economic indices that speak to whether inflation is going to be stabilised and/or it’s going to be a runaway horse, as it has been, from their prognosis it seems that we are in for yet a rough ride for another few months.”