Making informal businesses formal

17 May, 2019 - 00:05 0 Views
Making informal businesses formal

eBusiness Weekly

Kudzai M. Mubaiwa
There are contentions over what the true unemployment rate is in Zimbabwe. Some postulate that it is over 80 percent and these point to the scarcity of jobs in companies that require people to wear suits and ties.

The other side suggests that we discard the external definitions and make peace with the fact that most employment here as well as many parts of Africa is informal. Indeed, there are many now who wake up daily and head to the city centre or other places of economic activity and make more money than those in air conditioned offices, behind desks and on laptops!

A recent presentation by the leading mobile money company cemented this with empirical evidence and she further buffeted the position by sharing numbers and their current philosophy, to serve those informal workers, traders and small business owners.

Once we appreciate that this sector makes up the majority of the economically active, we must begin to programme for them and incline policy in their favour.

However, such players must also work on their internal policies so that they can build sound enterprises that can work efficiently. After the usual initial formalising activities are done, such as registering a company or private business corporation or registering oneself as a sole trader, then opening a bank account, signing up for tax, branding and getting a digital/social media presence; the small business owner must also think about internal guidelines for doing their business. Small business owners will always face a variety of risks, especially as they begin to work with more clients and hire employees.

Every business deals with a certain amount of liability each day and one can reduce some of that exposure by having policies clearly outlined in writing. Granted there is always a lot of work to be done in running an enterprise, but maintaining extensive policies and procedures manual is vital.

Thankfully, in the internet age one can find several free templates to start with that can be from the same sector, then customise for specific needs. These can be updated as the business grows. The following six basic policies should be in place before you add another client or hire additional employees.

Workplace safety policies
Whether your business operates in a factory or a standard office complex, anyone who steps onto your property faces some level of risk. Such a policy is necessary to mitigate any damages caused by an employee’s negligence, or things that may just happen.

Companies in mining, construction and manufacturing tend to be more conscious of this and can seem overboard when they require even visitors to wear safety apparel, get some induction on site or go for a quick health check.

It is always better to be safe than sorry when someone gets injured or dies on site. Safety and health matters and in this age where many use computers for daily work, there are discussions now on things like ergonomics, where design must be deliberate in ensuring workers are comfortable.

Human Resource policies
Human Resource policies are also important and these include various subsections. One such is disciplinary policies — there must be an objective way to hire and fire employees in all fairness.

Angry workers are very difficult to deal with and tend to be vile even where they may be in the wrong. If the policy was clear and read by all to begin with, you will have a much more straightforward experience if the employee has been cautioned about the process. If your expectations for performance are outlined in the employee’s initial job description, you can show a history of problems by detailing those issues in regular evaluations and write-ups. The key here is objectivity so that both parties can transact fairly.

Device use policies
Device Use policies are now an important part of human resource policies. Often it is safer to manage the level and type of activities done using your company infrastructure so as to manage being held responsible for the actions of those in your employ. If one of your workers conducts illegal activities on one of your systems, you may be answerable for it.

Businesses can protect themselves against liability by having a clearly written usage policy that outlines what workers can and cannot do on devices connected to your network.

It is quite acceptable to block access to specific websites for both work and personal devices. It is also important to discuss reasonable use of personal devices during working hours and the key on here is balance. Perhaps staff may have unlimited use of personal devices during dedicated breaks and only access social sites outside office hours. This helps improve quality of service and attention to customers, as well as improving productivity.

Work hours and turnaround time
Work hours and turnaround time are also an important human resource policy aspect. In the early days, your policies may relate more to your business processes than your team, since you won’t have a robust team starting out. One important first step should relate to your availability, including your working hours, then this also extends to your staff.

Boundaries are necessary because research shows that customers prefer talking to live customer service representatives. Those expectations must be managed up front to avoid disappointment on either end. Everyone needs downtime and rest so there must be cut off times for business engagements. This extends to actual delivery. A service level agreement is critical, a clearly outlined policy regarding response time. If a customer or client asks that you dramatically reduce that response time, you should also have a written policy in place to cover whether this will incur an extra charge.

Financial policies
Financial policies are also important as they deal with the full cycle and process from giving quotations, delivering, actual invoicing and even forms of payment that will be accepted? Set a grace period for payments to be made before a small service charge is added.

Many businesses allow 30 days from the time of invoice for the payment to be made before they begin sending late payment notices, but this may not work well in the inflationary environment Zimbabwe.

Even quotations may be good for nothing longer than a week. These conditions must be clearly communicated to clients in written form.

Return/refund policies
Return/refund policies are also important and for retail or e-commerce business, you should have a return policy clearly posted on your website or store signage. If you put a strict return policy in place, ask yourself whether you plan to stand firmly behind that policy or capitulate for those customers who escalate a complaint up the chain of command. Refunds are still a possibility for service-oriented businesses, even though there is no product to resell.

You should consider ahead how you’ll handle things when a client or customer is dissatisfied with your work or product and this helps when something goes wrong.

Written policies
Written policies are a good way to protect yourself, while also providing a safe, fair working environment for your employees. They may not eliminate the issues you’ll face as a business owner, but they will provide an element of protection as you hire new team members and work with clients. In that way your informal business can become more formal.

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