Starting up or running a business in a first world country is relatively easy, at least when it comes to the administrative side of things. But when it comes to developing markets, you’ll need Mr. Miyagi-esque levels of patience to deal with the red tape. For a first-time entrepreneur, the experience can be terribly frustrating.
With that in mind, we managed to put together a list of things you ought to know when trying to build a business in Sri Lanka. Regardless of whether you’re the founder of a startup, or a full-time student helping out with the family business, you definitely ought to be aware of these facts. Trust us, it will save you a lot of stress and headaches down the line.
1. “Prices Shown Are Not Inclusive Of Taxes”
This takes number one on our list, because it is one that people tend to forget. Sri Lanka is not one of those countries where sticker prices tend to be reflective of all inclusive taxes. So whenever you pay for something that is not exempt from taxes, you’ll have to do a little bit of mental arithmetic to figure out what you’ll actually end up paying.
Always make sure to factor in the effect of taxes like VAT and NBT, where applicable. And be especially mindful of this if you’re dealing with agencies run by the Government. They don’t usually accept card payments, so be sure to carry enough cash and some spare change.
2. Forms, Forms Everywhere
In this part of the world, e-filing tends to be at a nascent stage. Simply put, you can’t always expect to be able to fill out a form online, make a payment, and receive a confirmation email from the comfort of your home or office. Often, you’ll have to make multiple trips. One trip to collect the forms, one to submit the forms, and another to go and collect the final, official document (or whatever it is you were looking to obtain in the first place).
You *MAY* have to fill in multiple declaration forms, multiple KYCs (Know Your Customer forms), and multiple “The-information-provided-here-is-accurate-to-the-best-of-my-knowledge” forms. You might possibly end up grumbling to yourself, and wishing for a much more flexible, and centralised system.
But all of this is part and parcel of life in emerging and frontier markets. And as a wise man once said, “Sometimes, you gotta just roll with the flow.
3. It’s Going To Take Some Time
If you’re used to the swift nature of government processes in developed countries (at least when they’re business-related), you’ll be in for a rude shock if you expect similar levels of efficiency over here. A little bit of patience goes a long way, as the types of administrative delays you can encounter tend to be wide and varied. Of course, this is not always the case, but it sure happens a lot.
For instance, you might walk into your local municipal council in the hopes of securing a permit, and you might find out to your dismay that the official you ought to meet is on leave. Or sometimes, the said official may have gone out for a cuppa. In the worst case scenario, nobody in the building would know where he/she is, and there’ll be no-one to pick up the slack either.
In certain other instances, you may end up having to deal with a severely understaffed government department, and there’ll be nothing you could do (A very real example of this would be SL’s IP office, where it can take a couple of years for your trademark to be granted official status. But in all fairness, you do get the rights to use it as soon as you file the documents).
If you find yourself in such a situation, here’s our advice: take it easy. Sometimes, that’s just the way things are. And, if you’ve got a friend who’s one of those extroverted types and can easily strike up a conversation with anyone, make sure to take him or her along (promise them a Cheese Kottu, and an Ice Milo if they seem reluctant *wink wink*).
4. Backup Like Your Life Depended On It
This is a no-brainer, really. No matter what form you submit, or what letter you write, always, always, keep a few more copies with yourself. Sometimes, the very people to whom you handed over your documents might lose them.
And when that happens, you’ll thank your stars for having the foresight to make that trip to the copy shop.
5. Build A Decent War Chest
Again, another no-brainer. No matter how accurate you think your expense forecasts are, things can happen. Sometimes, your business might get slapped with an annual license fee, as set out in the last budget. Or, there might be a sudden, overnight increase in customs fees, and your expenses might go up. A decent cash reserve will help you steer your ship during those times.
6. Be Prepared To Pay A Professional
Become comfortable with the fact that you won’t be able to do everything by yourself. Especially in Sri Lanka, the law and the taxation system can get quite complex, and it takes a pro to know the ins and outs. This isn’t to say that you can’t go solo. You can, but you run the risk of leaving cash on the table, or creating a business with a shaky shareholding structure.
Given these reasons, it makes sense to hire a professional. Remember to shop around a little bit, and try talking to your contacts. But whatever you do, don’t ever skimp on an accountant.
7. Find Good Service Providers, And Build Solid Relationships With Them
Every business needs people to design its t-shirts, create its ads etc. It is tempting to try and do everything by yourself, but don’t. Nine times out of ten, it’s only going to serve as a distraction from running your startup, and that is not a luxury you can afford. So invest some time to get to know a few people to whom you can outsource your non-core activities to, and build a genuine, solid relationship with them. Over time, that relationship will help you negotiate better prices, and perhaps get priority service when you need to get things done in a hurry.
8. Sign Up For Online Banking
It is scary how a lot of SMEs in Sri Lanka still rely on cheque books to pay out their expenses. Every major bank in Sri Lanka has its own online banking platform, so don’t hesitate to sign up for one. You won’t have to worry about the bank being closed, and you can transfer money any time, to anyone you want. You’ll also be able to retrieve transaction records in no time, and your accountant is going to love you for it.
9. Focus On The Basics
By basics, we mean the really basic stuff like Company Incorporation, Intellectual Property, VAT, Accounting, Payroll, Bank Accounts, EPF/ETF etc. If you don’t understand how to get these things done, a simple Google search will help you find specialists who’ll be able to do them for you. Don’t try to DIY your way through this, because you may come to regret it later.
10. Get Comfortable Being Uncomfortable
This goes without saying, but very few actually understand what it means, perhaps because it is difficult advice to follow. Building a business is a challenging task, and you will most likely see your plans go for a six, just months into your entrepreneurial journey (or sooner). But as long as your assumptions about your industry, and your business, remain valid, you should believe in yourself to keep going. Because let’s face it, life is tough, business is tough, and hard work is the key to success, no matter how you look at it.
By now, you must be thinking “Wow, this sure sounds tedious…” Yes, it can be a drain on your energy, but some common sense will go a long way towards alleviating your stress levels. Besides, you are going to have to deal with these very same issues at some point in the future anyway. So you might as well get them over with, as soon as you can.
[Also, if you’re reading this before August 10, 2016, and already have a solid idea, you could try sending your applications to the John Keells X Open Innovation Challenge. Winners will be able to receive no-strings-attached funding, while also gaining the opportunity to tap into the expertise of Sri Lanka’s most valuable blue-chip conglomerate. Watch this space carefully for coverage of the event, and more.]
What have we missed? Let us know in the comments!
Featured image courtesy taisa.si