Ignorance may be bliss, but it certainly is not freedom, except in the minds of those who prefer darkness to light and chains to liberty. The more true information we acquire, the better for our enfranchisement. ~ Robert Hugh Benson, Intellectual Slavery
While setting up a small business, the cost burden is huge for an individual. Owners try hard to reduce costs through various means including (frequently) trying to do multiple things on their own. Thus, they often miss out on important data or information which can prove costly after a certain period of time. We have to accept that we cannot do everything on our own but at the same time we cannot depend on others completely.
A series of events in the recent past has given me some wonderful lessons in understanding operating business more efficiently and cost-effective way. The reason I am writing this article is because I have been told many people make such mistakes and end of up paying a lot as a consequence.
Lesson 1 – We often remain dependent on one person (usually the accountant or sometimes the dispatch person) who knows what is happening and seldom is the information available on paper for retrieval. Accountants in small businesses are good at book keeping and only understand certain amount of the tax laws which are in repeated daily use. Owners should not depend on one person especially when it comes to Accounts or Production. Get two people to do the job. You might argue that does it make sense? Yes, it does. What happens if one person quits or falls sick? Can you imagine the chaos?
Owners are too engrossed in running the business and managing day to day operations thus remaining ignorant of the general gist of business laws. One cannot claim ignorance as an excuse and knowledge would never hurt. Business continuity and compliance should never depend on the activities of one person.
Lesson 2 – Business in India (or elsewhere too) is surrounded with many laws and regulations. It is practically impossible for one person to know everything. To navigate these complex compliance factors, if the business owner does not have good consultants or domain experts then there could be pricey pitfalls. Retaining the services of a consultant (Excise/ Sales Tax/ PF-ESIC) is an investment and not a cost. Do not try to cut corners. But do not depend on them blindly. Join an association. Be a part of an umbrella body. This will help enrich knowledge and gain frequent insight on changes in the business world especially the law and regulations aspect. Sit and discuss, ask the right questions, and understand the information, process it, analyze and store it for future reference. These associations are also genuine source of references of good consultants. Getting stuck with an undesirable consultant can also be a sad burden.
Lesson 3 – Try and walk through each and every activity of your business and make notes. As cumbersome it may seem; the benefits are manifold. How is a sales invoice made? How do you take the backup of your data? What is the procurement process? Do this frequently and compare your notes. At face value, it might seem absurd but take a moment and deliberate internally. We may not be able to do everything all the time but we must have the knowledge of how an activity is being done and why it is being done. As an entrepreneur, we must be able to chip in wherever there is a need for additional resource or to share the load.
As a business owner, you are the person in charge. You cannot claim to be unaware or dodge from the details of laws impacting your business. Since you cannot evade it, the judicious thing is to embrace it with open arms and remain truly “in charge”. Be aware, read, ask questions and educate yourself. Spending time in learning subtleties of business is not cost but a life-long investment.
Peter Drucker said “Today knowledge is power. It controls access to opportunity and advancement.”