Guidelines For Young Entrepreneurs

Today I feel inspired to write few guidelines to help young startups. At times we come up with ideas that seem great and will give great impact to the community, but the problem arises when the startups lack the right channel to guide them through their journey of development. Today I would like to guide such innovative minds in a few paragraphs.
I would like to take you through a few things to consider and comply with in terms of running a business in Kenya.

Source: Google

Compliance with the Government Of Kenya.

When we talk about compliance what comes to your mind? In simple terms, these are laws or rules that we have to abide by when running a business in the Kenyan soil. Here it comes with a lot of paperwork and the most important ones include;

1. Registration of your business. This a top priority. Registering your business following the necessary requirements for you to be said you are conducting legal business in Kenya.
2. Register for a K.R.A PIN for your business. As a law abiding citizens its a good that even if we pay our own taxes, also our businesses’ taxes have to be paid for.
3. Register for a VAT for your business. Mind you, this is not advisable for a business that record less than KSH 5M in turnover(The annual sales volume net of all discounts and sales taxes)per year. Check out more elaboration on
   BusinessDictionary.
4. Register for NHIF/NSSF for your company. This enables you to pay for health insurance for your employees in case they would need medical/health facilities.
5. Register your company for HELB. Most of us in Kenya have been able to see through the universities because of funds/loan we received. The government now makes HELB be a requirement for a company to register with in order to track those who owe HELB loans. This applies when a student has acquired a job and it's time to pay back the loans they applied for during their years in the university.

The must haves for your business.

Under this section, I am going to highlight the important skills or utilities needed for your business to run smoothly and effectively includes:

1. Basic knowledge in accounting. We need these accounting skills for us to even be able to monitor our business cash flow well. Without this being put into considerations, you could have opened an empire for someone else to benefit. The main reason you are in business is to make a profit, and when it comes to profit acquisition every coin counts.
2. Maintaining all source documents (receipts, invoices, vouchers etc). This is actually where we say history in documentation never lies. All important company documents need to be properly stored for future purposes, might be auditing or even for reference purposes.
3. Systematic recording of all transactions carried out during the business year. The systematic recordings can even include someone having to sign a receipt book or on a spreadsheet to approve that he/she has been assigned a certain amount of money for certain purpose. This should include even date and time for accuracy purposes.
4. Defined revenue streams. When we venture into business, its wise and more of importance for us to define accurately our sources of revenue/income generating activities or services.
5. Defined cost center. When doing business, do we categorize our cost areas accurately? For instance, are you able to correctly differentiate between an expense in your business and a direct cost?
6. Chart of accounts. Under the chart of accounts, as a business owner its mandatory that you understand your business fully in terms of the following:

• Assets. Know the different assets you have in your midst. Use a system to give them unique identities.
• Liabilities. These are actually your company’s financial debt or obligations that arise during the course of its business operations.
• Revenue/Income. The most important thing in business is to know what stream of income generates how much money for your company and how each coin is accounted for.
• Expenses. When running your business, what expenses do your incur? like rent if you have rented an office space, paying your employees’ salaries, etc.
• Capital. How much capital your company owns is a great thing to have in your finger tips. How much worth is it?

The six costly mistakes people do in business

1. Lack of financial records. It’s a good habit to keep all financial records of your business. They help in handy when compiling your financial year records and checking your transactions.
2. Lack of internal controls. I would urge young business people to embrace being top-notch when it comes to being great managers in their businesses. With time when these skills grow, the hustles become less in matters managing the business.
3. Lack of payments of taxes. At times the issues of not paying taxes arise and when caught on the wrong side of the law, we end up paying huge amounts of penalties. I would actually say prevention is better than cure.
4. Keeping all monies “under the mattress”. It’s advisable to embrace banking platforms for money storage or safe transactions. At some point in the line of business, we tend to apply for loans from financial institutions, having bank accounts helps a lot when they all need to see your bank statements to be able to predict your cash flow. this also is to see how potential are you in paying back the loan.
5. “Pinching” from your business. It’s actually advisable to keep business money away from personal needs. Pinching from your business for your personal needs tends to be a very risky behavior because that reduces the capital of your business, keeping in mind for you to be in business you need to invest money where it bears fruits.
6. Lack of a general overview of your business. Last but not the least, own your business. Don’t let anyone have a better understanding of your business than you.

For more insights on the same topic of entrepreneurship, watch out for my next article. You can also check out my previous articles on Medium. Don’t forget to leave claps and share the stories. #Blessings