There are several mistakes investors make when with business start-ups in Ghana. Find below six costly business start-up mistakes investors make:
1. The mistake of having several objects; one company
- Many foreign investors and generally several business start-ups begin their commercial enterprise with the view of using one entity as a launch pad to invest in several areas of business. The company's code 1963, Act 179, Section 27 (1b) requires that all persons incorporating a business clearly indicate the objectives of the business. It is common to see companies incorporate one business entity in Ghana with several activities as its objectives. For example, a company can have mining, tourism, manufacturing, general trading, import, export and many more as its objectives. It is mostly the view of the project promoters to explore opportunities in a number of these investment areas, thereby adding on several additional objects under one company. The resulting effects on their business compliance is high cost and bottlenecks in the processes. All businesses in Ghana depending on their objectives or nature of business have peculiar set of compliance, authorizations and permits to obtain before business commencement. Adding-on several objectives therefore means that you will be required to comply with several other compliances, meet a higher capital threshold and have a higher tax assessment than you would have ordinarily met if it had been just your main project (one or two projects/areas of investment you intend to start with). In our consulting and compliance experience, we have realized that in most cases when people indicate 3 to 4 different projects or sectors of investment in their company objectives, they are most likely equipped to start with only one project, and then later expand into those other areas.
Our Advice
Our advice is, before you incorporate your business in Ghana; clearly outline the business you want to do. Streamline the activities so that they are interrelated, possibly in the same value chain in the same sector, rather than several different activities in several sectors. Also, have different companies for different activities in different sectors. This will help reduce bottlenecks, cut down costs, lower capital threshold, lower tax assessment etc.
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