10 Steps to Become a Money Savvy Entrepreneur

Step 6 – Compliance for Success

What do you think I mean if I ask you the question, “Is your business compliant?” Most new business owners don’t understand what compliance is required for their specific type of business. Compliance will differ across different industries and income brackets.

There are a few non-negotiable compliance requirements if you want to work with corporates or government departments. For example: a registered business with the CIPC, a tax clearance certificate, and registration with the relevant regulatory body.

There is also business best practice and some compliance processes that should be mandatory in your small business.

The type of compliance you need will depend entirely on the type of business you want to build. The best advice I can give you is to start from day one. If you plan to work with big organisations or have an exit strategy to sell at some point, then you will need to register with the CIPC, SARS, and industry bodies. You might even want to consider registering a trademark or patent for your products. If you plan to grow and scale into other territories, trademarks and patents can help ensure competitors don’t use your name or trade off your good reputation.

As a business owner myself, I always do my due diligence on future suppliers and contractors. I always check that they are exactly who they say they are. So, in my onboarding process, aside from making them sign an NDA, I check with the CIPC that they are, in fact, a registered business and that their CIPC annual returns are up to date. Then, I check with SARS to see if they are tax compliant. I also verify their bank account. These are standard processes that big companies use when small companies work for them—why not check out who you are working with as a small business?

I have seen some terrible cases of fraud with some of the mentees I work with, and it usually boils down to a lack of process and due diligence around compliance. I have seen companies close because they have not correctly vetted their customers.

For example, I was mentoring a security company in the North West. They won a big security contract. The contract was a game-changer for this small business, and they were promised an R200,000 retainer. For them to fulfil this contract, they needed a bakkie, five new staff members, five staff uniforms, equipment, and a quad bike to patrol the property. The security company went out and bought the bakkie, the quad bike, and the staff uniforms, employed five more staff members, and started their contract. Three months later, the client had still not paid them.

When they came to me for assistance and we did some due diligence, we found out that the mine they were guarding had actually been hijacked by criminals, and they were securing a mine that did not legally belong to the contract owner. The owners of the business had many Google complaints, and the company had been deregistered by the CIPC two years previously.

If this client had just taken the time to check the CIPC status and do a brief background check on the owners, they would not have lost so much money. Now, they had no way of getting that money back, and they had not been able to pay their staff for three months.

Don’t ever be so desperate for work that you take on clients without checking their compliance. Compliance is there to protect us and our customers.