Having an unregistered business can negatively impact growth and sustainability
Fresh out of business school, the young man answered a want ad for an accountant. He was being interviewed by a very nervous man who ran a small business that he had started himself.” I need someone with an accounting degree,” the man said. “But mainly, I’m looking for someone to do my worrying for me.” “Excuse me?” the accountant said.” I worry about a lot of things,” the man said. “But I don’t want to have to worry about money. Your job will be to take all the money worries off my back.” “I see,” the accountant said. “And how much does the job pay?” “I’ll start you at eighty thousand.” Eighty thousand dollars!” the accountant exclaimed. “How can such a small business afford a sum like that? “That,” the owner said, “is your first worry.”
As an entrepreneur myself, business jokes have a unique appeal to me.
Now here is one that I like:
“Do you want to know how to run a fifty-million business?”
The answer is easy. Start with a Hundred Million unregistered businesses.
Many businesses start from homes and schools in their private spaces. Their scope and coverage are small because of their limited resources, and their market has yet to spread fully. But as they grow their business and the demand for their products or services increases, the business owners need to understand that a hobby or a home-based business has to enter the next phase of expansion. And that expansion covers more than just finances and physical resources but considers the legal conditions required to run their businesses efficiently.
Today, there are still many businesses that have grown in scale yet need proper registration. While they are doing well, they have yet to encounter pains that would cost them more than what they gain. They still prefer to operate under the radar and that would not be a good thing.
There are several pain points of having an unregistered business, which can negatively impact the growth and sustainability of the business.
Operating an unregistered business can lead to legal problems, as the business may not be compliant with local regulations and laws. This can result in fines, legal action, and even the closure of the business.
I have known of closed businesses as they needed to comply more with the legal requirements of running a business. One business I know, involved in direct selling, started with just a handful of dedicated people and good products. The business scaled in no time and the owners started focusing on operations, sales, and other activities that a growing business would encounter. However, they did not register their business, thinking that everything they did was legitimate and above board. They were gravely wrong, as an unregistered business is not considered legitimate in the eyes of the law. As the business grew and gained more customers, it caught the attention of the authorities, and soon the big boys came knocking at their door, filing cases against them. The heavy penalties, fines, and legal fees caused the closure of the business and this tremendous loss would have been prevented had the owners properly registered the business.
Many business owners need to understand that their unregistered businesses limit their access to funding. They may need help securing loans or other financing forms from banks and other financial institutions. And an unregistered business needs help finding access to required funds and financing.
This next pain point is enormous and cannot be ignored. Suppliers, customers, and other stakeholders want to do business with legitimate companies. When the request for registration authentication is not there, it is a red flag that the company or business is not legit. An unregistered business leads to a lack of credibility.
Now here is a biggy! Unregistered businesses do not have the same legal protection as registered businesses, making them vulnerable to fraud, disputes, and other legal issues.
What about hiring good talents and employees? The potential of a business to grow and succeed cannot depend merely on the owners; they need to have good talents to help them run the business. But good talents would not want to stake their future on a company they perceive as “fly-by-night” or illegal simply because the enterprise is not registered.
And when you add up all these negative factors that may happen to unregistered businesses, it means that the business would have limited opportunities for growth and expansion, as they may not have access to the same resources and opportunities as registered businesses.
Overall, while operating an unregistered business may seem like a convenient option, it can lead to numerous pain points that can negatively impact the business’s long-term success.
Have your businesses registered and avoid the pains. Consider the possibility of growth and expand your success but make sure it is not just “perceived” but also accepted as legit.
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