We have now covered how to establish a business model and the need for prototyping and testing. Are you ready to start your official business?
Some of you may have started your business journey from scratch with the help of this course, while others may have been in business for years and wanted to try a new business development methodology. It does not matter which group you belong to. This chapter is relevant for everyone. If you have not yet do so, now it is time to register your business and make it formal.
I had many of my friends who were selling homemade products, trading and doing all kinds of businesses informally. They all had different justifications. Some said they did not have time to register, some said they did not know how to, some said they did not want to pay the related taxes. I am proud to say that I managed to convince all of them to register their businesses.
Registering gives our business an identity. With it, you transform into a reputable businesswoman with legal rights and protections.
Running an informal/illegal business has its risks:
1. You can lose all your investment, as you do not have legal protection. For example, Mama Njeri, kiosk owner, lost her investment when the City Council found out that her shop was located too close to a road that was scheduled for expansion.
2. It is illegal: Informal/illegal business owners risk facing legal pursuits. Offenders, such as illegal scrap dealers, can get fines of KES 1 million or up to 3 years in jail.
3. It can be more expensive: You may think you are saving money by not paying taxes but informal illegitimate businesses can be quite expensive. For example, bribes may seem cheaper than taxes but that is never the case. A coffee shop owner friend told me that bribes eventually cost more than legal fees, permits and other regulatory expenses together. She said that Kanjo would come to her place like clockwork and expect a specific amount of money at the end of every month. Eventually she registered her business and paid once. After that she never paid bribes as regulations protected her business’ rights.
4. It limits marketing and publicity activities: Informal/illegal businesses are forced to avoid publicity and advertising can therefore be troublesome. Although businesses want more customers, exposure puts them within the reach of the law. For instance, a butchery illegally built next to a sewerage pipe can be closed down based on the health hazards it presents. Hence, when you operate illegally you cannot grow your business without the risk of being caught. If you want to grow your business you must register.
As you can now understand, registering your business will protect you from all these problems. My advice to you is that it is worth it!