“If I have the belief that I can do it, I will surely acquire the capacity to do it even if I may not have it at the beginning – Gandhi”

By Chester Dimairho

Last week I briefly introduced the “Statutory Compliance/Operations” pillar. Starting today, I am going to write in greater detail about statutory compliance and how to structure your operations. Both matters are critical. However, I will start with statutory compliance first. A few weeks ago I had a meeting with an official from Small and Medium Enterprises Development Corporation (SMEDCO). The meeting did two things for me. On one hand, I was excited and on the other hand, I was deeply disappointed. The official said to me that SMEDCO has sufficient funds to lend to SMEs but they are failing to lend to them simply because the SMEs themselves are not compliant and are not well structured. This bothered me a lot that there is a lot of money lying around and borrowers are being sought, and the targeted borrowers are failing to meet the standards. And guess what? The standards are not out of this world. Any man or woman who is organized can easily meet the standards for their business and access the funding they badly need. Let us talk about the low hanging fruit. You need to register with the Registrar of Companies. The new Companies and Other Business Entities Act Chapter [24:31] allows for a variety of businesses to be registered. True you may be registered with other government departments and/or offices, but you need to take note that there is no act which governs your registration with those government departments and/or offices. Being registered under an Act of Parliament adds a whole lot of credibility to what you want to achieve. It opens doors to bigger and better markets than the ones you are currently serving. The NDS1 highlighted that linkages are going to be created between large businesses and small businesses and SMEs will get more work from PRAZ. If your business is not registered, it certainly will not qualify for the linkages so stated, meaning you lose out on potential revenue. The challenge that a lot of business owners face is that they fear the cost of compliance, rather than focusing on what they will potentially lose from non-compliance. The reasoning is very simple. The cost of compliance can be easily verified, and the potential revenue from compliance cannot be verified as it is based on future assumptions. So the attitude an SME owner has is that I am not putting up anything for a bird in the forest. There is a proverb that says a bird in hand is better than two in the forest. Fair enough. The value from being compliant is not immediately determined. But think about this. What would you say about the farmer who starts planting maize right in the middle of the rainy season just because he did not want to lose his crop? While you think about that, “The start is what stops most people – Don Shula”

“Chester Dimairho is a fellow of the Association of Chartered Certified Accountants, a Public Auditor and an Associate Member of the Institute of Directors. The views expressed in this article are his personal views and should not be treated as professional advice. He can be contacted at chesterdimairho@gmail.com”

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