“Even though we have improved many things, there are still a lot of barriers stopping those who wish to become entrepreneurs,” said a business expert.
In an island thirsting for a sustainable economic future, Hurricane Maria made visible Puerto Rico’s untapped entrepreneurial potential.
For Puerto Rico-based entrepreneurs, whether they were locals or recent transplants who had set up shop in the island, the worst storm in a century proved to be the ultimate test in keeping and growing a business despite unimaginable setbacks.
Yet the U.S. territory has to prioritize how to facilitate and promote business creation, especially for those who lack funding and resources, according to analysts.
“Even though we have improved many things, there are still a lot of barriers stopping those who wish to become entrepreneurs,” said Javier Hernandez, director of the School of Business Administration at Universidad del Sagrado Corazón in Puerto Rico.
Though four in 10 Puerto Ricans reported losing their jobs during the storm’s aftermath, most small businesses —which are one of the island’s main sources of job creation — survived post-hurricane. Roughly 36,000 out of Puerto Rico’s nearly 44,000 small employers were able to resume operations over the last year.
According to a survey from the New York Federal Reserve Bank, the entrepreneurial energy among surviving firms in Puerto Rico increased over the same time period — even though many faced significant hurricane-related financial impacts such as decreased revenues, increased expenses and indebtedness.
Business confidence also soared in the year following the storm with most surviving firms saying they expect to remain in business.
One of these surviving firms is Cleancult, an island-based small manufacturer of “green” non-toxic laundry and cleaning products. Ryan Lubperger, 23, left California and relocated to Puerto Rico shortly after founding the company in 2016.
Lubperger found he could reduce manufacturing costs and other expenses by producing in Puerto Rico. Four months before the hurricane hit, Cleancult had produced about 10,000 units and the company was planning on rolling out products into 200 stores in Puerto Rico by December. Then the storm upended those plans.
Instead, a new set of challenges were heaped on Lubperger. From lacking WiFi services to be able to fulfill online orders to not having electricity to function and depending on generator power, Cleancult had to temporarily move its manufacturing to New York.
Amid the challenges, the goal that initially brought Lubperger to the island is still present in his entrepreneurial plans.
“It never crossed my mind to leave. Now my family is here [on the island], our employees are here,” Lubperger told NBC News, adding that the hurricane gave him a sense of responsibility to the island. “I feel more committed to staying here.”
Cleancult donated 100,000 loads of laundry to the Light and Hope for Puerto Rico campaign and helped them raise $60,000 for hurricane relief efforts.
Fifteen months after the disaster, Cleancult has still not resumed manufacturing in Puerto Rico, but the company has many plans for 2019 — from moving into new laboratory facilities in Mayaguez, Puerto Rico to investing $1.7 million in research and development in the next two years as well as hiring new employees.
The Puerto Rican government-backed economic development and accelerator program known as Parallel 18 has been recruiting entrepreneurs like Lubperger for three years.
Parallel 18 was created in 2015 to attract young entrepreneurs to the island in the wake of Puerto Rico’s financial crisis, when the island racked up a $72 billion public debt. The program offers funding, mentoring, consulting and introduction to investors in exchange for living and operating their business in Puerto Rico, as well as working with students at local universities.
The program has successfully attracted hundreds of entrepreneurs and participating companies have generated $14 million in sales — more than half of that on the island.
Yet the program only serves one small part of the entrepreneurial population in the island.
“Programs like Parallel 18 focus on high-growth businesses,” Hernandez told NBC News. “But there are stages that are still not covered.”
Hernandez explained that one of the toughest stages entrepreneurs face is turning their idea for a new company or product into a business and making their first sale. “That requires seed funding, a chance to test the product in the market… Many, many things have to happen before that first sale,” he said.
Puerto Rico’s gubernatorial policies to support entrepreneurship in the island were ranked as not sufficient by most experts surveyed in the latest Global Entrepreneurship Monitor (GEM) report.
Source: NBC News