ECONOMYNEXT – Sri Lanka’s needs to encourage risk-taking and remove stigma attached to failure to create an entrepreneurial culture needed for business and job creation and give state-funded support for coaching and seed capital, says an American entrepreneurship expert.
The start-up eco-system is just beginning to emerge in the island with a full system including entrepreneurship at all stages, said Samira Cook Gaines, Chief of Civil Rights and Economic Empowerment for the National Community Reinvestment Coalition (NCRC).
“Now it seems to be more support for those already in business,” she said in an interview. “But a full eco-system includes people thinking of starting a business, taking initial steps and also people in the exit phase.”
Gaines was in Sri Lanka to meet with budding entrepreneurs, university students and the business community.
The NCRC provides leadership and direction in the areas of wealth creation and asset building for its Housing Counseling Network, the National Neighbors Civil Rights program, and four small business development centers located in Washington, DC and New York City.
Gaines believes Sri Lankan policies and culture are too-risk averse to encourage the kind of entrepreneurial culture seen in the US.
“Americans take risks. We see that as a smart thing to do, a sign of intelligence. Our policies really support that. In America we see failure as just part of the entrepreneur’s road to success. So we have a culture of risk-taking and support.”
She said there is a need for additional entrepreneurship training, in walking people through steps of starting a business and the natural highs and lows of managing a business.
Gaines believes Sri Lanka could set up business development centres like in the US where “entrepreneurs can can come for free and talk to business coaches and counsellors.”
And government support for start-ups means not only supporting entrepreneurs to start business but to help sustain them as well such as having the government buy from SMEs and micro-businesses.
The US Small Business Administration has several small centres across the country which provide seed funding and support for entrepreneurs.
The US government also provides guarantees for business loans so that banks give loans but the default guarantee comes from government.
And bank lending to small business is not confined largely to collateral-based lending as in Sri Lanka but use cash flows as well.
“Cash flow based lending is based on how much revenue the business is getting back in,” Gaines explained. “It allows banks to take higher risk on new businesses.” (Colombo/October 28 2015)