Yaneek Page | Registered a new business? Here’s what’s next

More Jamaicans are starting and formalising businesses than ever before, but are they prepared for the practicalities of operating an enterprise?

That’s the main question that lingered in my mind after learning from Companies Office of Jamaica recently that new business name registrations increased by 33 per cent to 17,039, and new company registration by 24 per cent to 4,878 in 2021 when compared to 2020.

Certainly, I had other questions:

• What’s driving this significant increase?

• Did the ‘great lockdown’ of 2020 temper start-up motivation until 2021?

• How many are brand new entrepreneurs?

• How does this align with business and consumer confidence?

• Will this drive increase employment and reduce unemployment?

• Will there be a corresponding expansion in GDP?

• Can we expect innovation, improved productivity, and better service?

• Is the pandemic causing a ‘great resignation’ locally akin to what is unfolding in the United States and other parts of the world, with people resigning from jobs they dislike in favour of starting businesses for a better quality of life and more family time?

• Which industries are registering the greatest expansion in new businesses?

Those are merely a few of the many questions I have about enterprise expansion in Jamaica, and yet none is more important than preparedness. This is because historically, our people have always had impressive entrepreneurial drive, but we have also infamously claimed one of the highest levels of business start-up failure in the region.

It is estimated that 50 per cent of businesses will close within the first two to three years of operations, while upwards of 70 per cent will fail after five years. Many of those failures result from a lack of preparedness for the realities, opportunities, and challenges of the entrepreneurial landscape.

It is, therefore, my hope that the broad recommendations in this article will save some new business owners and prospective entrepreneurs from becoming a statistic of the ruins. My four recommendations fall within the realm of compliance, business model fundamentals, risk management, and leadership.

Compliance

A prerequisite for business sustainability is operating lawfully to safeguard the viability of the business, its reputation, and that of the principals.

Registering a business is only the first of a multitude of consistent steps to ensuring compliance. The next is creating a checklist of all statutory and regulatory obligations, including those that are industry-specific, and local government-related, then assign appropriate deadlines, timeframes for completion, and costs. Thereafter, you can budget for and schedule all compliance actions in a calendar, preferably one that is digital, allowing for ease of access for key players, such as accountants, and also enabling automated reminders to avoid penalties and fees.

For context, it is not unusual for a company to have five to 12 separate statutory and regulatory filings due either monthly, quarterly, or annually, with each attracting significant fines for missed deadlines. In some cases, a significant portion of the outstanding tax claims made on companies and registered business names have to do with penalties and late fees associated with late or non-filing, which may be incurred for up to six years.

Therefore, if you registered in 2022 but aren’t operational for a year after, you would still incur considerable penalties and fines if you do not make the filings and payments required by law.

I can’t stress enough how many entrepreneurs have suffered greatly, having to dispose of personal assets and taking loans to satisfy tax and statutory penalties incurred because of innocent non-compliance.

Unfortunately, ignorance of statutes or regulations is no excuse under the law. I will share in upcoming articles some commonly overlooked statutory obligations so readers may be aware.

Business model fundamentals

A sound business model is a fundamental pillar of success. It is a detailed explanation of the product and services, income or revenue streams, major expenses, target markets, and value propositions to differentiate from your competition. It may also outline the key partners, resources, activities, processes, financial estimates, and related assumptions.

However, it must specify the actions and costs involved in customer acquisition, retention, and upsell. The best business models are scalable, resilient and the essential ingredient to producing good business, strategic or operational plans.

Risk management

If there is any proactive strategy against failure, it would be enterprise-wide risk management, or ERM. Yet it is a discipline unfamiliar to many entrepreneurs.

Putting ERM into practice requires the identification of substantial risks or threats, evaluating their likelihood and financial impact, and proactively eliminating or mitigating the risks that could derail or inhibit the progress of the business. It is a specialised area of management that accountants, risk managers, or experienced business advisers can assist with. I encourage every new entrepreneur to prepare a risk management plan to decrease the likelihood of failure and improve access to financing.

Leadership

One of the most reliable predictors of success for any business is the mettle of its leadership.

Ultimately, it is leadership that ensures exceptional decision-making to drive growth, profitability, and sustainability. Good leaders invest in competent people continuously, drive innovation, and never stop learning. They build the right culture, ensure that the business model is robust, and time market entry and exit tactically.

Most important, the best leaders create other leaders, while adhering to good governance practices, including oversight and support from a capable board, which can hold them accountable, and challenge them to attain new heights by maximising opportunities aligned to the business vision and mission.

In business, there is no guarantee of success, and history has shown that external environments are major factors in the development and trajectory of the enterprise, yet the principles shared here will drastically improve the likelihood of success while reducing the possibility of failure.

Good luck to the new start-ups and one love!

- Yaneek Page is the programme lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of ‘The Innovators’ and ‘Let’s Make Peace’ TV series. yaneek.page@gmail.com