What to expect growing your business into a corporation?
By now, most people know that Mark Zuckerberg started Facebook in a dorm room at Harvard University, a little project that is now worth more than $190 billion. Larry Page and Sergey Brin pursuing PhD’s at Stanford rented out a garage to start Google in 1996, which is now worth over $365 billion. Under Armour’s Kevin Plank ran his startup out of his grandma’s basement also in 1996 selling his special brand of sports clothing out of his car. His company is now worth over 14.5 billion with experts speculating whether or not UA will be able to unseat Nike as the new sports behemoth.
Many other absolute behemoths of their industries, Apple, Dell, Skype, and others started as small startups with little capital. These companies had to deal with the challenges and stress that every small business faces; brand recognition and promotion, logo design, marketing, gaining and maintaining a customer and client base, office space procurement, even type of corporation, etc. All of these require a lot of careful research and contemplation.
Types of corporations
The “C” Corporation is the most common, traditional form of corporation. It is a distinct, separate legal entity from the owners/stockholders. As such, the shareholders are not personally liable for the debts and liabilities the company may incur, thus forming a separation of corporate and personal funds. This protection is obviously attractive to investors. Shareholders elect the board of directors who oversee the day to day operations of the corporation.
The “S” corporation: Sometimes referred to as an S Corp- is a special kind of corporation created by filing Form 2553: “Election by a Small Business Corporation” with the IRS. To qualify, they must have only one class of stock and have less than 100 shareholders. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) that C corporations are subject to.
Professional Corporation (“PC”): Groups of professionals from certain fields can form corporations known as professional corporations. The list of professionals covered by professional corporation status is different dependent on the state; typically engineers, lawyers, accountants, and veterinarians. These professionals must be organised for the sole purpose of providing a single professional service, e.g. a law corporation. A professional corporation offers many of the limited liability and taxation benefits offered by a traditional corporation.
When potential investors see that you are a corporation, there is the idea that you are a company ready for the long haul, and the protections offered by your status inspire further confidence. This is critical if you intend to raise capital through investors.
A logo is essential to building a brand. It can go a long way to building the perception of a large, capable corporation. It need not be a fancy bit of art that you pay a lot of money for. It could just be your name, in a constant font, spacing and colour that you put on all your products, business cards, letterhead, etc. The key is that you make it a familiar sight to your customers, as it will impact upon them the recognition of your brand.
In this day and age, not having a website is equivalent to being up to the river with no boat. Not having one deprives your company of a valuable money-making source and might even drive current customers/investors away. Web hosts can be expensive, but it’s worth it in both the long and short term. After all, it’s the standard that we have all become accustomed to. With a little over 55% of adults using smartphones, and a billion smartphones predicted to be sold next year, one can’t afford to underestimate the impact of a good website on the success of a business. When building your website, brand identity should be at the forefront of your mind. Make your fonts easy to read and pleasing to the eye. Use your logo everywhere.
Every company needs a place to meet with investors and consumers. While actual office space can be a daunting, even impossible bit of expense to deal with at the start, virtual offices are temporary solutions to that problem. Services include; remote receptionists that take your calls from an office replacing a traditional receptionist, a professional address in the city of your choice at a fraction of the cost of renting there, and more. If you work from home or on a laptop, having a professional office at your disposal can be an advantage.
These are some of the things needed to move a small business into the big leagues. You’ll have to be prepared to go up against the “big guys” in your industry. It can be scary at first but stick to your innovation. Success will be based on your divergence from those that are more established. Your commitment to hard work will give your company the best chance at a long and successful life.