Saturday, September 22, 2012
How To Start A Business
“Looking for independent, confident individual willing to take on the world single-handedly. Any age, any gender, no experience required. Must be very motivated, strict yet flexible, outspoken yet reserved, and above all willing to work without pay at your own expense for several months at the bare minimum. Job scope vague and must be able to juggle accounts, human resource, sales, public relations, personal life and have money left over to repeat routine over and over again.”
I admit that it is a rather off-putting ad which wouldn’t receive any calls – but while it isn’t the world’s greatest job advert, that’s really what it is when you run your own business. Undoubtedly one of the manliest ways to make a living, rest assured this isn’t for the faint of heart (and faint of work)!
Registering A CompanyIt is possible to operate a business without a company, address and/or venue, such as a home-operated business. But having a company to put it all under makes accounts and cashflow much easier to manage as it isn’t mixed up under your personal savings account. To do this you need to pay a visit to the Malaysian Registrar of Companies (Suruhanjaya Syarikat Malaysia) to pick a name and legally register it.
There are generally two types of companies that can be registered; a private limited company (Sendirian Berhad) and a sole proprietorship (commonly - and wrongly, I believe - known as an “enterprise”), both with advantages and disadvantages. A Sendirian Berhad company is a properly licensed legal entity, with paid-up capital and subdivision of shares among the owners. As a separate legal entity, the company’s debts are separated from the owners’ debts – which means the company is only liable to pay back a maximum value of paid-up capital should it fall into debt, therefore protecting personal assets of the owner. As a sole proprietorship/partnership, the name and company is basically an extension of the owners and any liabilities are borne by the owners’ personal assets directly - and should the owner pass away the business is no longer valid unless in the case of a partnership (under the impression that the partner(s) survives).
On the other hand, starting up a sole proprietorship is much simpler and economical – the registration cost , which is basically all you need to own the name, would cost you only RM95 should you do it yourself, which I would highly recommend to get familiar with the system. There are no tax audits (all done in-house), no company secretary to sign legal documents, no resolutions or AGMs (annual general meetings) to call for and as such, a vast majority of businesses out there are sole proprietorships. Bear in mind that this requires a lot of trust should other partners be involved as there is no law and/or legal agreement regarding shares and ownership – the form only lists down the name of the partners and nothing more!
Naming Your CompanyYes, it’s just a name, that’s true but there are certain words that cannot be used as a company name unless under specific orders from a government body supporting it. For example, the word “King” is disallowed as it is associated with royalty – a good example is why the parent company of Sushi King in Malaysia is called “Sushi Kin Sdn Bhd”, intentionally missing the letter “g” at the end. Any name associated with a political party is also disallowed – which means “UMNO Photo Printing” and “Nasi Kandar Pakatan Rakyat “ are out of the picture. Anything to do with the corporate definition of securities (“Securities Trading”, “Stock Market”, “Bursa Saham”) are also unusable so check with the Registrar before you go about designing that logo and font that took weeks to perfect only to find out that the name cannot be used.
Another issue with a name, this time for practicalities’ sake – is that one must be able to spell and write down the company name with ease. The name “Max Karl Ernst Ludwig Planck Sandwiches”, as interesting and memorable a tribute to the great physicist as it may seem, is a nightmare for our local Malaysians to spell and write down. All someone has to do is to miss a letter in it for a cheque to bounce, taking up precious time and throwing a wrench in your banking movement. But say you like the name “Max Karl Ernst Ludwig Planck Sandwiches” and want to keep it (you must really REALLY like this name) it is always possible to trademark it and run it under a parent company, as with the case of Sushi King.
Actually Running The CompanyHundreds upon thousands of books and articles have been written with regards to running a business, and like this article, there are hundreds of thousands more to come. While the basics of running a business remain (i.e. proper balancing of cashflow, profit vs loss, stock checking, etc) each business is unique; methods that may work for others might not work for you and vice versa. It’s all about experimenting and taking a risk – but above all, the one word that should always be in the mind of a businessman is consistency. Consistent opening hours, consistent stocks and products, consistent salesmen and consistent operating hours will result in consistent cashflow and income. Consistent headaches as well, mind you but it’s all part and parcel of the game.
There you have it! In a nutshell, this is how most businesses start up; in upcoming articles I hope to write about more business strategies and out-of-the box thinking for company growth and capital gain.
Now if you’ll excuse me, an attorney from the Max Planck Foundation is here to see me...!