Different ways to set up your business
- Sole proprietorship
In most cases, a sole proprietorship is a good choice.
If you have 5 broke friends you hang around with…you’ll probably become #6. In other words, it’s important to be smart about who you surround yourself with. Your success will depend on it.
- Easy to set up
- Receive all profits (you don’t have to share)
- You are the sole decision maker
- Credit is based on your personal credit (this could be good or bad!)
- Keep secrecy (trade secrets come into play here)
- Dissolution happens simply
- Vulnerable when it comes to liability
- You are limited based on finances
- You wear many hats as the entrepreneur (you may be better at certain aspects than others)
- The business depends solely on you (you can never be sick or take too many days off)
- Typically have more capital to work with than with a sole proprietorship
- Credit standing is based on partners involved
- Several decision makers
- Several skill sets
- Too many points of view
- Dissolution: if one decides to leave, the partnership is dissolved
There are several kinds of partnerships:
- General: everyone is equally liable
- Limited: certain partners will hold more liability than others (typically the main partner will be the head of the company, and limited partners are less involved)
- Separate entity: any liability goes to the company and not to individuals
- Tend to be larger companies
- Lifespan of corporation isn’t dependant on individuals
- Government restrictions
- More expenses
- Decisions will be based on what fits the best; rely on professionals
Profits vs. Non-profits
If you’re in the business of making money, you should be a for-profit.
Non-profits provide benefits to others; you are paid via grants you’ve built in.
- A plan defined by a company to generate revenue
- The traditional ways of doing business was a simple concept and is an attempt to produce income
Consider expenses in order to make a profit.
- Separate personal and business expenses.
- Set a specific salary for yourself as an entrepreneur so that you can put the remainder back into the business to cover expenses.
Read leadership books…because you’re a leader as an entrepreneur.
Start with a business plan
- Determine your business plan, then decide: How am I going to make money?
- Determine your 5 closest competitors. Then find out: how can you do it better?
- Focus on cost: how much time and investment will your product or service need? How much overhead will you have? How much should you charge for your product or service with all this in mind?
- Be flexible. Issues will always arise. Be prepared to take on the challenge.
- Prepare to sacrifice.
- Provide great service.