Before setting out into the great sea, it is wise to chart the waters. What's the destination? Where are the currents? Where are the shoals? What's the fastest route? How's the weather? There are a lot of pitfalls at sea and just as many in launching a small business. The essential chart to success is a business plan.
In an ocean of blue sky and blue water the chart is essential with maps, radio, GPS, and compass. A new business requires its own plan. So many entrepreneurs set out enthusiastically on an idea, without thinking through the elements for success. Charting a business strategy requires knowledge of the:
• Corporate structure
• Purpose of the entity
• Goals of the owners
Will the corporate structure be a C-corp, and S-corp, a partnership, a limited liability corporation, or a non profit entity? There are reasons why one or the other is best for you. The C-corp is the common stock corporation that has stockholders, pays taxes on profits and pays dividends on those profits to the stockholders. The S-corp is owned by individuals, not corporations, passing all profits or losses to the stockholders. The partnership limits the liability of the owners and pays them profits. The limited liability corporation can be owned my individuals and companies, passing through profits and losses without paying taxes at the corporate level. For those that want to depend on gifts, grants, some government contracts and contributions, the nonprofit structure is the way to go. After incorporating as a nonprofit a 501c3 form must be filled out and returned to the Internal Revenue Service in order to qualify the company to reward donors with tax credits.
So, the structure of profit corporations is based on the purpose of the organization, who the owners are and the best advantages for them in avoiding liability and benefiting from profits or losses.
The products and services of new businesses are central to the success of those businesses. They must be:
• Appealing products and services
• Priced competitively for the customers
• Reliable, beneficial and fulfilling
Assets for any business are products and services that are in demand. The process of creating demand for a product or service is slower, more intensive and more expensive. The more appealing the product has the faster it will fly off the shelves. Understanding the competition is critical in positioning your product so it will move. And having a higher price on a product is not necessarily a hindrance to success. A better marketing strategy can make up for cheaper prices. The feature of reliability in a product or service, its benefits, and the fulfilling role it plays for the consumer, the better the competition