We’re midway through 2021 and the going seems to be tougher but hey, we soldier on. Many companies are failing to meet the critical obligations from their budgets like full salaries and utilities- marketing and bonuses aside. While some latched on the opportunity to start a business in this pandemic, other seasoned players are burning from both ends, literally losing hope.
When starting out, businesses are usually informally set up. Some operate from home or shared premises and usually the staff compromises of family members. There are no defined salary structures as the regularity of income is not guaranteed and more often than not, loans are secured to cater for operating costs with personal assets being used as collateral.
It is a common practice world over but for countries with unstable economies and ever changing policies, it could mean serious losses should things go south. A classic example is being sued by creditors and they end up attaching property from your premises, which is also your place of residence. You not only lose the business’s assets but also your family’s too, a scenario which can be avoided by following a basic business principle: you are not your business and your business is not you. One might argue that it is a difference without a distinction but I strongly disagree and here’s why…
- Operating informally might be a comfortable option but it is best to register your business. With the assistance of reputable consultants, you can chose on whether you want a Private Business Corporation (PBC) or Private Limited Company (PVT Ltd). The PBC is ideal for small businesses and single ownership. Familiarize yourself with the country’s company act and also understand that you and your company are separate
- Your contact list, when starting a business, should include a legal advisor and a financial advisor. You cannot simply rely on your own counsel even though you are the brains behind the business. Make it a priority to meet often. A financial advisor is key for coming up with sound salary structures and reports at the end of each month while the legal advisor will draft contracts and assist with the applicable code of conduct for your industry. If you are lucky to hit it off and make profits right away, pay yourself reasonably. Do not be greedy and desist from drawings. (No matter what fancy name you call it, you’re taking money from the business… Stop it)
- Statutory requirements should be honoured. Pay your taxes, remit to NSSA. Do not fall prey to the syndrome of many established companies who are constantly dodging local authorities like ZIMRA. Do the right thing.
- Lastly, your business is like a child and you want to nurture it so that it grows. To achieve that, there are phases from birth, infancy etc. You have to be know what each phase requires and feed in the adequate elements for progression. When your child reaches adulthood with inherent values of ploughing back, you can be assured that they will take care of you. The same goes for your business. What you put in at each stage will eventually bring something back. It should be more than a source of income but your investment and retirement plan.
Avoid stressing yourself by personalizing the business. You are not the business and the business is not you.