Many of the financial books that I have read indicate that establishing a business can be a means of increasing your personal wealth. Whereas being frugal and saving consistently may eventually produce a significant nest egg over time, if you wish to fast-track your money growth, then business ownership might be your best route.

Last week we looked at the option of joining an established network marketing organisation as one method of getting involved in a business system. However, many persons who desire to be their own bosses may prefer to personally create a unique entity in order to satisfy their business dreams.

The reality is that starting and building a new venture can be one of the most difficult strategies of wealth creation.

To be successful, an entrepreneur must commit a lot of time and resources, acquire specific business knowledge and skills, and develop a persistent outlook that can overcome the various challenges that will inevitably arise in operating an enterprise.

If you want to win in your own business, you must commit to learning everything you can about what it takes to build a sustainable enterprise, and applying what you learned to improve your operations.

Learning about business success

I usually recommend that people should search for the wisdom stored in books to find the answers to their financial problems. While there are many excellent resources available that can help you to learn more about business, it is also vital to seek guidance and mentorship from persons who have succeeded in creating profitable businesses.

The experienced advice that can be provided by business owners, who have already learned the essential principles of operating a successful enterprise, is priceless entrepreneurial education. You should also obtain training through enrolling in business courses and by participating in relevant seminars and workshops.

I recently attended a business seminar, Strategies for Enhancing Jamaica Competitiveness in the Global Knowledge Economy, which delivered presentations from several local and international business consultants. Organised by the Knowledge Society Foundation and Spatial Innovision Limited, the conference provided me with some invaluable business insights.

In fact, it helped me to decipher an economic anomaly that has puzzled me for a long time. Despite the increase in the number of Jamaican small businesses every year, the level of prosperity in our nation is in steady decline. If establishing a business is a way of achieving financial success, then shouldn’t increased business activity result in a wealthier society?

Declining productivity is a problem

As several presenters offered their viewpoints on methods to achieve growth through business development, I got a clearer understanding that although there may be more business endeavours, our productivity levels are actually declining. This deterioration of our efficiency in production is a key factor in the absence of resultant wealth for more Jamaican people.

Some of the contributors referred to the work of Michael E. Porter, an expert in business strategy and economic development, so I searched online to learn more about his ideas. In a 2005 newsletter, Porter explained that “a country’s standard of living is determined by the productivity of its economy, measured by the value of goods and services produced per unit of resources.”

Porter pointed out that productivity depends both on the prices that a country or firm can command for its products and services, and the efficiency by which these outputs can be produced. “Productivity is also dependent o¬n the ability of an economy to mobilise its available human resources,” he added.

Therefore, if Jamaican businesses cannot adequately make use of available resources to efficiently produce goods and services that can successfully compete in the global marketplace, then our productivity will suffer and we will not be able to realise our dreams of economic prosperity.

Competitiveness is key

So, what is the solution to increasing productivity in Jamaica? The consensus from the conference presenters was that if we are going to improve our productivity levels, there needs to be a national focus on encouraging competitiveness in industry.

Kenneth Hynes, Managing Director of ontheFRONTIER Group, an organisation that seeks to create prosperity through good business strategy, defined competiveness as “the ability of a firm to offer products and services that meet local and international quality at competitive prices, while providing adequate returns on the resources employed in producing them.”

Although many companies complain about negative conditions that affect their ability to compete in Jamaica, Hynes revealed that competitiveness was not simply about having a favorable exchange rate, subsidies or a low inflation rate. Competitiveness results from the productivity with which a firm’s resources – capital, physical assets, and people – are deployed.

The essence of competitiveness is how efficiently firms can create products and services that offer premium value to their customers, so that they can continuously make a profitable return from selling them. I believe that if more Jamaican businesses learn how to do this, we will see a dramatic change in our nation’s fortunes.

Next week I will continue to share what I learned about the importance of competitiveness in business.

Copyright © 2011 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, April 21, 2011

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Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl