In light of the failure rate of start-up businesses in Jamaica, the Development Bank of Jamaica (DBJ) said it plans to integrate a pre-incubation advisory service for entrepreneurs to vet their ideas before investing money.

This pre-incubation advisory service will complement the incubator and accelerator programmes implemented by business service intermediaries (BSI) in partnership with the DBJ to help prepare micro, small and medium-sized enterprises to access funding and/or scale their operations.

During the pre-incubation phase, the entrepreneur will sit with an advisor from a BSI who will provide guidance in creating a prototype product or service, determining the mode of distribution (business to customer or business to business), assess the market including identifying potential competition, and identifying opportunities to scale.

“So one of the gaps that we had noted is that there is no pre-incubation,” Natalie D’Oyen, technical director of intermediary relations, Boosting Innovation Growth & Entrepreneurship Ecosystem (BIGEE) at DBJ, outlined.

“So what we want to do this year [2022], and it will begin to manifest next year, is to set-up or support pre-incubation. If someone has a business idea, there’s someone they can go to who provides free or subsidised service” that involves sitting with the entrepreneur and helping them work through the idea, she told reporters at a recent Jamaica Observer Business Forum.

At present, the DBJ works with a number of BSIs who offer incubator and accelerator programmes such the University of Technology, Jamaica’s Technology Innovation Centre; The University of the West Indies Mona Entrepreneurial and Commercialization Centre; and the Morris Entrepreneurship Centre at the Northern Caribbean University in Mandeville. The bank also partners with RevUP Caribbean, Jamaica Manufacturers and Exporters Association, Kingston Creatives, Jamaica Business Development Corporation, among others.

D’Oyen did not indicate, however, if these BSIs will also provide pre-incubation services. But she pointed out that entrepreneurs will get a chance to sit with an advisory who has access to gold standard global platform designed to support the advisor while helping the entrepreneur to refine his business concept and develop the business model before embarking on registration.

On this note, programme manager for BIGEE Christopher Brown told the Business Observer that a common mistake among entrepreneurs is to jump from the ideation stage to business registration.

“Currently in the ecosystem, what typically happens now, given that there is no pre-incubation, you have lots of businesses that get registered that don’t do anything after that because it was an idea but they didn’t realise there are so many competitors. People spend money either in registering or they spend money in starting the business for it to die very shortly after because it wasn’t properly thought of or properly [vetted],” he stated.

According to a joint study commissioned by the MSME Alliance and the Jamaica Deposit Insurance Corporation, an estimated 6,000 businesses are started annually in Jamaica with a failure rate of approximately 50 per cent. Another publication has estimated the failure rate of Jamaican start-ups to be approximately 66 per cent.

When asked if the incubation stage is the point at which entrepreneurs, D’Oyen noted, “So, if a business plan is needed, yes…because we don’t necessarily need a 40-page document anymore.”

“So something like the business model canvas, that would be done in the pre-incubation stage and when you get to the incubator they can refine that,” she added.

A business model canvas, as defined by the University of Oxford, is a business tool that helps entrepreneurs visualise all the building blocks of business before start-up. There are nine components of the business model canvas: customer segments, value proposition, revenue streams, channels, customer relationships, key activities, key resources, key Partners, and cost structure

“So if the entrepreneur believes the idea has legs and they’ve refined and tossed out the parts that don’t work, they now have a workable idea in pre-incubation. Then they can get to the point where they register a company and, of course, we’re going to encourage that — to register a company,” D’Oyen said.