Businesses need to familiarise themselves with legal jargon in order to avoid failure to comply with the country’s business laws.
So says Joshua Janks, senior associate attorney with law firm Bowman and Gilfillan, speaking at a recently-held two-day #Shape eKasi Entrepreneurship Conference in Khayelitsha. The conference was hosted and attended by officials of the Western Cape Department of Economic Development and Tourism in partnership with Silulo Ulutho Technologies, owned by local businessman Luvuyo Rani.
According to Janks, a popular trend had set in which saw struggling businesses failing to recognise legalities because they did not understand the language style.
“There exists within the small business sector, which holds more growth potential than many industries, executives that struggle to make sense of the legal language and failing to get a grip of what is expected of them as business runners,” says Janks.
Added to this, some of these enterprises could not afford “expensive hour-by-hour legal consultations” offered by conventional law firms.
An apparent lack of legal advice designed to suit the understanding of startup entrepreneurs, typically township-based ones¸ was also the driving force behind the trend.
This meant that businesses failed to comply with essential policies instituted to ensure legal practices and risked distancing themselves further from corporate and government support, therefore undermining growth.
Addressing government, corporate and small business stakeholders, Janks says potential job losses were on the cards as long as small businesses faced issues that caused them to stray from legal requirements.
Conventional legal statements, often left largely unexplained, clouded good decision-making as some proper legal assistance remained at an expensive high cost, leaving businesses “clueless or confused as nothing is explained to them in simple detail”.
“Some small businesses do not understand what is expected of them when dealing with legalities.
Matters dealing with licence registration, tax and other matters are still an unfamiliar scene to most businesses, particularly start-ups,” says Janks.
This showed a clear lack of compliance from the business side and “more room left for co-operation between government and the small trade industry.
Paul Hobden, head of the small business division at MWEB and an expert in modern communication, says modern communication skills also played critical part in the issue.
He says interpreting and simplifying ‘’twisting’’ legal language could be achieved through the use of modern technology, leaving out the option of face-to-face consultancy, which came at a high price.
However, Hobden says, the issue was not unique to formal business alone, and more awareness was needed to also help push informal traders, who found themselves at odds with the law, to understand the legal system.
In townships, non-compliant business practices faced a myriad of penalties as some operations were not in line with government laws.
Phumzile Nqayi¸ who runs a large chicken stall in Makaza, is one such entrepreneur.
He says repeated attempts to obtain a government operating licence over the years has fallen short, forcing him to close half of his business so as to cope with the festive season demand. His plan was to move his business, which he runs from home, to a proper facility to meet with the strict health laws.
“Some of the policies I must comply with still confuse me. I cannot afford proper legal help, which I greatly need. I feel hopeless because I’m losing money.”
Formal start-up businesses vying for economic progress were often left “confused” as they could not understand what was expected of them when dealing with legalities. Pro bono legal services were offered by Bowman Gilfillan for free to formal and informal traders as a solution to many small business challenges.The event ran parallel with the Global Entrepreneurship Week, an initiative set up to recognise efforts by start-up businesses vying to gain economic freedom.
Organiser Elvis Sekhaolelo described the conference as “a step in the right direction” but acknowledged problems faced by businesses in the township.
“There still remains an unacceptably wide gap between the two industries largely due to an absence of communication and working relationship.”
The event brought solutions to challenges faced by many small business owners through its networks.