Structuring your business

How you structure the business is one of those early decisions that can have lasting effects on the longevity of the business.

Do you intend to operate the business as a solo entrepreneur, or is your ultimate desire to grow and have multiple employees?

Do you want a business partner? If so, what role will they play? Will they be primarily a financial partner with no involvement in the day-to-day activities, or will they be an active participant in daily operations?

If you plan to have a partner or multiple partners, who has ultimate decision-making authority? When decisions have to be made, you will need someone to be able to break a tie.

Do you offer a singular product or service, or do you offer multiple products and services? Consult with your attorney about the risk profile for your offerings. Not all businesses have the same risks. Some businesses are riskier than others. Your attorney should be able to help you figure out which legal entity will best protect your assets given the type of products or services you are providing.

Do you want a formal board of directors—a group of people tasked with making decisions for the business? This is not usually an immediate consideration for small businesses, but it is worth thinking about how you envision the business operating as you grow.

If you are starting small and do not have the capital for massive hiring, consider what responsibilities could be handled well by independent contractors. Outsource as much as possible and negotiate rates that you can afford. Alternatively, where it makes sense, consider trading services with another service provider. Be sure to document the agreement in a contract to ensure both parties are clear on their rights and obligations in the exchange.

Here’s to more business birthdays!

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