7 Reasons to Stop Using Someone’s Company to Serve Your Clients

After reading this, you wont ever use someone’s company to serve your clients. There are many entrepreneurs without registered businesses out there who have had to offer their services or do supplies using a company that doesn’t belong to them.

Opportunity meets preparedness

Just imagine an opportunity meets you now to offer your services to a company. The first thing that comes to your mind is you count yourself very lucky. Then, you’re told it requires you to have a registered company!

That’s not good news at all, right? The first feeling is regret for not having a registered company.

Secondly, you start to look for someone who has one in order not to miss this great opportunity.

The Roman philosopher, Seneca said “luck is what happens when preparation meets opportunity”. This means it’s an opportunity only when you’re prepared.

You now find yourself lucky because you have someone who has a company which you can use. You’re happy! What a great deal? Unfortunately, this is not all that rosy as you think in your excitement.

Did you take into consideration that:

  • you’ll pay a commission?
  • your business will loose exposure?
  • you may not get your money on time or never?
  • you’ll miss the history your company would have made?
  • your client identifies the company you used, not your business?
  • you’ll miss funding from banks or investors?

Disadvantages of using someone’s registered company

Below are some of the things you need to know when taking the risk of using someone’s company to offer a service or supply a product.

1. You have to pay a commission

Majority of those who beg other’s company to use them for business because they don’t have a company pay a commission to the owner(s) of the company.

This commission may look small to you in the beginning. Put this together, you’ll realize you’ve been stifling your business’ growth by dishing out money you’d have used to grow your business.

In 2010, I used a friend’s company to go in for a bidding and succeeded. The deal was good to me at the time until I received my own share and felt cheated.

This was the deal:

After all expenses removed, the profit of the deal was to be shared like this:

Company and input – 30%

Owner of Company – 30%

Me – 30%

Tax and bank charges – 10%

Since I was the one putting the money, I got 15% for the input and he got 15% for providing his company. This brought my share of the profit to 45% and his 45%.

See for yourself! I lost more than 45% of my income just because I had no company.

As a business, we need to reduce cost and business expenses tocompany the minimum if we want it to grow. In this case, if I had a registered company, I would have had my 100% profit which I could use to grow my business.

2. The risk of not getting your money on time or never

Once you use someone’s company to carry out an activity, the payment will be in the company’s name. This is a very risky situation for you because you have no control over your money.

Since you have no control, you become vulnerable. I have a friend who lost a huge sum of money after using another person’s company. Until today, they’re still in court as the person says the client company has not paid yet. This has been going on for more than three years.

In my case, the client company respected the payment terms of 15 days after delivery. It took me close to a month to get my own share of the money.

My friend told me one story to another, until I had to call in another friend to put him pressure. After he paid, I gave my friend something for his help. That’s another irrelevant expenditure just because I never had a registered company.

3. The company you use benefits from the exposure

When the client company needs another delivery or service, they’ll call the number on the letterhead, especially if the person who was in charge of the deal isn’t there.

In my case, I paid a visit to the company one day to ask if they will be needing my services again. That was when I discovered my friend had already done two supplies without my knowledge.

Just imagine how frustrated you’d be after discovering such. It’s not just bad for your business, but will strain relationships between you and the owner of the company. The worse part is that you have no case, so you become the loser.

4. You miss that transaction your company would have made

Most businesses find it very essential to establish mutually beneficial and strong business relationships. Once business relationships last longer, the parties benefit from improved performance, cost reduction and most of all, mutual growth.

This is what I lost in my first transaction with the company, and my friend gained because I used his company. Companies deal with registered businesses and not individuals. I couldn’t tell them it wasn’t my company, else I would have lost the business.

After our first business, they were happy with the service and hence called back for a repeat business. Unfortunately, the number on the letterhead wasn’t mine. I had myself to blame and learned a lesson which I am passing over to you now.

5. Your client identifies the company, not you

Many companies prefer to deal with other registered companies and not individuals, even if your business is your skill. They expect you to have a legally registered business, especially a company.

In Cameroon, many big companies prefer to deal with registered companies for tax purposes and other benefits. The tax administration is suspicious towards transactions that involve a company and individuals, so many companies avoid this situation.

I had that great opportunity, but then, one of the conditions was for me to have a registered company, not even a sole proprietor business. The company has a policy of using only suppliers who have a limited liability company.

They don’t trust individuals, even if they have a business registered in their name. Take note of this when choosing the structure of your company.

Read Also: Why should I choose a limited liability company for my business structure?

6. You miss funding from banks or investors

One of the benefits of having a registered company is that you can attract investors and raise funds for your business easily. Having a registered company gives you the ability to raise capital from borrowing or sell shares to raise equity capital.

A company with a good transaction history can easily raise capital from banks as well as investors. Banks oblige you to show your business is registered. They go as far as asking for your company’s financial statements for some years back.

There are some who ask for the list of your customers or suppliers. These are things you can’t show when you’re using a company that’s not yours to carry out business operations.

Raising money for your business could help develop and expand your business. Without a legally registered business, your chances of expanding your business and ensuring its success through raising funds are very slim.

7. You miss all marketing and branding opportunities

Having a legal business structure is necessary if you want your business to be successful. Many big brands you find out there are registered companies. Having a registered company enhances your business’ perception and reputation.

That is lost when you use another person’s company to carry out transactions. Your host company benefits from brand awareness and legitimacy, which is very important for future dealings with other companies.

Your business contracts will be in your company’s name if it’s legally registered, without which your host company will benefit from the exposure.

You don’t have to make such a mistake again

You don’t deserve to ever make such a mistake ever again. You need to save your business from such an error because the disadvantages are many.

If you’ve never had such a failure before, ensure you never have by requesting for a quote now to help you incorporate your business. You need that extra cash you give as commission to grow your business.

How can you avoid such a situation?

Get your business registered now! Make sure the structure chosen is a company. A company does have a lot of advantages.

Why should you choose OpenHub Digital to help you get a registered business?company

– We’re fast and reliable

– We have the competent advisors at your disposal at all times.

– We can have your company registered within 14 working days.

– There are many freebies you will benefit from after you use our services.

– In addition to being fast and reliable, we offer you quality service at the best price you can find in the market.

Don’t wait until the opportunity hits you on the face! Incorporate your business now in Cameroon. Fill the form below, and one of our team members will be in touch with you as soon as possible.company

Was this post helpful? If yes, someone out there is looking for this also. Sharing is caring. Share this post with your family and friends.

You can also leave a comment in the comment section below if you have some questions or get in touch with us now using any of the mediums below.

Leave a Reply

Your email address will not be published. Required fields are marked *