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Legal issues to consider as your business expands – Business Daily

QUESTION: Dear Cathy, I started producing shea butter beauty products in my kitchen, first as a hobby but it has grown into a small business. The demand for my products is so high that I am considering quitting my job to focus on my new venture. What are the legal issues to be considered at the production stage?
Dear Terry, your enterprise can be classified under the cottage industry.
The cottage industry is business or manufacturing carried out from one’s home, hence the name “cottage.” Your business has very strong characteristics peculiar to cottage industries in that, your production is home-based. The legal issues peculiar to cottage industries are as below.
The first consideration is the laws attached to the premises or business location. Land laws have an important aspect known as “use of the land.” As implied, this is simply a regulation limiting usage of land within particular geographical areas.
The permitted use clause applies whether you own the home or have leased it. The main types of permitted users include residential, commercial, or industrial. Going outside permitted users is risky.
Understanding the permitted user will guide you as to the extent to which you can undertake production in your home. A residential user may limit your production capacity as you cannot, for example, invest in heavy equipment without flouting the rules.
It is even riskier if you are resident in a neighborhood that has residential rules barring any commercial activities within its precincts.
If you are starting small, then you can continue with your kitchen-based production, but as you expand you will need to consider getting suitable production premises, to avoid flouting the user clause.
The second consideration is licensing and compliance, mainly the Kenya Bureau Of Standards certification mark as an attestation to your product’s quality and fitness for human consumption.
Certification marks are recommended as they also give the consumer reassurance of quality. You could also consider sector-specific certification marks and global certification marks to further boost your brand.
Environmental issues must also be considered in the cottage industry. It is important to ensure that you are compliant with environmental laws and regulations, especially in aspects such as waste management and others.
As you grow and expand, you might require a licence from the environment watchdog to allow you to undertake certain aspects of production.
Intellectual property issues ought to be considered at this stage. Your product may fall into up to three different classes of intellectual property rights depending on advancement. Terry the question is; do you have a “secret recipe” that makes your product stand out?
Did you come up with the recipe yourself? If so, trade secrets would be ideal protection to guard your secret. Trade secrets are protected internally, for example using non-disclosure agreements and limiting the recipe content to a few persons.
Protect your brand and logo using a trademark as the second type of intellectual property right.
Third, are industrial designs. Is your product packaged in a fancy container that you may have designed? If so, go for an industrial design. Both of these are done through Kenya Industrial Property Institute.
I hope that you grow as the beauty industry is worth billions of shillings.
Ms Mputhia is the founder of C Mputhia Advocates



Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.