By ‘Lola Thompson Makinde
When you walk into one of John Lewis’ 46 stores in England, you will be served by a genuine stakeholder of the company, not just a committed employee. John Lewis has adopted a unique business model that ensures that every employee is not just a unit’s manager, but a partner of the business. A partner who has a right, once he gets employed by the organization, to knowledge, power and profit sharing. This ‘Out-of-the-Box’ model, might be extreme to most Nigerian companies, but it is noteworthy that a store which is only 10 years old, has a turnover of over a hundred million pounds and is favorably competing with brands like Marks and Spencer that have been around since 1884.
What can we learn from John Lewis’ culture about a well-disposed employee who is not only engaged but adequately empowered?
Let us look at the 3 key rights given to the John Lewis team members (partners) that make their business outstanding:
Several studies have shown that, where clear-cut information has been exposed to team members about the state of a business or key reasons why decisions have been made, productivity of employees improves. In addition, there is improved quality as employees see the need to improve. Secondly, there is an increased respect for management’s decision as they are aware of the reasons behind such decisions. Thirdly, knowledge promotes a work environment filled with trust, which reduces staff turnover.
An organization with the culture of providing autonomy to employees encourages them to take ownership of their work, know that they are valued and also empowers them to make an impact. This in turn positively affects productivity. You can empower your team by:
Communicate when they are not meeting expectations. To maintain accountability you must ensure they understand the consequences of failure. You need to be consistent and ensure you use the same standards and rewards for yourself as a leader, as well as, all employees. For effective results, as the leader, you need to be seen as accountable to your employees as much as they are accountable to you.
Conclusively, in answering the question, “Would you rather have people work for salary or work to contribute? “ think of how big you want your business to grow and how important your employees are towards achieving that vision.
Employee engagement is having employees who are not just disposed to their employers, but who feel like partners in the business and are therefore willing to ‘contribute’. In the end, achieving employee engagement is never a quick fix, but it’s worth the efforts.
Over the months, there have been many theories propounded on the argument of what the value of the Naira is against the dollar. The loudest of these theories have most times resulted in the call for a formal devaluation of the Naira. These sounds are also echoed by the foreign and more established financial markets – and to be factual, I stood albeit without confidence in favour of devaluation. In this brief write up, my final position is quite clear and without ambiguity.
Those in support of devaluation hinge the arguments on:
• The Naira is already devalued as many imports are done using parallel (Black) market rates, so why not make it (devaluation) official…
• Devaluation will encourage exports, as inflows in FCY will be converted to Naira at high rates thereby increasing the LCY wealth of the exporters.
• From an NLC perspective, devaluation will enable the Govt. pay their new asking price for minimum wage … N56,000= I suppose ?
• Finally, our State Governors will now have more money (Naira) to pay salaries… well; this seems to be the main reason for the clamour.
However, after considering the following:
• Even in devaluation, the exchange rate will still be controlled by the CBN and pegged at a certain rate against the dollar. This defeats the theories of those that want a free slide so the Naira can discover itself as in efficient markets (depreciation).
• Devaluation means that the raw materials our small manufacturing businesses import will now be sourced at the newly devalued rate as against the current CBN rate. One may argue that the lead time to get FCY at the official market for SMEs is currently is long, but I ask – Who said it will not be long post devaluation? I think it will, because one cannot get wealthy by cutting cost. So long as the supply of USD remains the same, the waiting queue will not reduce in the long run.
• In devaluation, there will be real inflation and the already beaten pride of the Naira will take even more strokes. This has all its bad effects including the increased cost of cash handling.
A big NO to Devaluation
There is no sound logic around how the eventual value will be chosen, it will erode what is left of our Naira pride, will formally increase the cost of raw materials for SMEs and finally, it will not take the FX queues away.
Get Certain and Firm:
The CBN and the Government should find a way to assure the market that the rates are fixed at least for the next 3years. This has to be done because the dearth of foreign investments/inflow is not a result of the current value of the Naira, but a result of the uncertainty and perceived market volatility.
No More Domiciliary accounts (a hard one):
The CBN should give a short period notice for owners of domiciliary accounts to withdraw their monies from the banks or it will be mandatorily bought by the CBN at official rate. Further to this, every inflow into the country must be bought by the CBN at official rate, however, the sellers of such inflows will have the right to buy back FX when they have payment needs. This move will almost eliminate the arbitrage in the black market.
Bureau De Change Services: This should be run by banks and their subsidiaries alone (In the short run) as they can be properly monitored by CBN.
Pray Hard: We still need the oil prices up. We need a prudent Government to leverage off high prices to build infrastructure. Without infrastructure, our SMEs cannot be globally competitive in local manufacturing/production.
The impact of all these recommendations should take out the inefficiencies that are currently making the effect of the fallen oil prices worse. Also, when uncertainty goes away, foreign investments come in, the capital market would likely become bullish and stability will follow. As for telegraphic transfers, the banks will debit client’s Naira accounts, convert and send the FCY to recipients, but this will only be for properly documented transactions.
By Obinna Ukachukwu
Questions to ask
QUESTION 1: Do I really need to start this business? Is it the right time? (Cause it might simply be a hobby).
For a business it might not be your idea, you can key into a business or simply buy into a franchise, example Mr. Biggs.
QUESTION 2: Do I have a sufficient capital? Do a capital investment calculation.(Do the maths)
QUESTION 3: Will I be able to pay myself a salary?
QUESTION 4: Do I want to manage my business on my own, hire workers or a temporary staff?
QUESTION 5: What Business structure do I want to use?
Once a business is established the law has given it a ‘legal status’ it is different from you
• It can sue and be sued
• Can own land and enter into contracts
• There’s limited liability
Benefits depending on the business structure
i) Attracts investors
ii) You can transfer ownership
iii) Continuity of management
iv) You can have stakeholders (plan your estate)
v) Gives you control
Note that for a business begin with an end in mind
TYPES OF BUSINESS STRUCTURE AVAILABLE IN NIGERIA
Not all structure is appropriate for the type of business you want to have
1, Sole Proprietorship – you are the business and the business is you
2, Partnerships with other people MAX of 20 except law firms and accountancy firms
3, Limited Liability Company (either public or private)
– Public companies are regulated- make returns to the securities and exchange commission
– Private are not so regulated but there’s a cap on the total number of members you can have
They must have at least 2 for both private and public and as many as 50 for private limited liability company
4, unlimited liability company – liability is limited only to your unpaid shares
5, non-governmental organisations,
6, cooperated trustees
Most common structures in Nigeria for businesses going for profit making ventures are
– Business Names (sole and partnerships)
– Limited Liability Companies
Business name is easy and straightforward but there’s unlimited personal liability as the business is you and you are the business; the tax is less as you are simply paying tax for yourself. Also, you have complete control though there maybe issues of raising substantial capital limiting investors and succession isn’t guaranteed partnerships as an edge as the partners share the load
Limited Liability Company has a separate legal entity, has succession, attractive to third parties as the there are regulations and the structure
For a business name ten thousand naira is enough for registration of your business which can be done through a lawyer or on your own, for a Limited Liability Company it depends on the share capital if the share capital is 1 million the fee is 10,000naira every extra million incurs an extra fee of 5,000 naira there are also stamp duties on them.
Unlimited Liability Company with a share of 1million for registering is 10,500
THE LEGAL REQUIREMENTS
1, get the licences and know the regulators
2, for non-Nigerians there are other requirements to consider and it’s not open for business names.
Firstly, registration with the Nigerian investment promotion commission which simply monitors the foreign investment coming into the country and a business permit. If the foreign workers are coming to come and worker will have to obtain an expatriate quota or they are bringing in new technologies there is a need to register with National Office for technology acquisition and promotion
HOW DO YOU PAY YOUR FOREIGN INVESTORS
Through the (CCI) certificate of capital importation it enables you to access the related market and exchange at CBN rates
Once you’ve started your business you register for tax register with the federal internal revenue service and also the revenue service in the state. Income tax could be either 20% or 30%, 20% is for companies that are into manufacturing, agriculture or fully involved in exporting or turnover must be 1 million or less and only be done for the first 5 years and there is education tax 2% and also personal income tax from employee’s salary with can be up to 24% for pay as you earn scheme
value added tax on goods and services there are some exempted like dairy products basic food items academic books (5%), withholding tax which like an advanced payment on income tax it can be 5%-10%. then are taxes from local governments.
NOTE: verify all taxes with a lawyer
There are certain mandatory contributions that you’d be required to make, there’s the Contributory pension fund which only applies with total employees exceed 15 (18%-20%), industrial training fund (1%) of annual payroll, employees compensation fund (1%) of monthly payroll, 2.5% to the national housing fund that is 2.5% of the basic salary of your employees and non-payment incurs penalties
Pioneer status given to persons in industries that are considered valuable to the economy, it is a tax holiday for 5 years.
Export incentives like GTdrawback, like importation of raw materials and export of finished goods with the government refunding the import duties.
Public infrastructure and employment relief basically is when you generate and maintain employees and when you provide an infrastructure of a public nature
HOW TO PROTECT YOUR BRAND = You go to a trademark registry and have it registered.
All companies are to file annual returns to the CAC which is basically your financial statement. There’s also tax statement, there may be more filing depending on the industry you are going into.
This is simply a checklist to go through.