Wednesday, June 22, 2011

What Entity do We Want to Be? (...29)

I'm trying to digest the information and advice in an article called "Choice of Entity for Entrepreneurs" by Scott Edward Walker.  Much of the information in this article is unfamiliar to me.  It's not too tough to wrap my brain around the options he describes. but it is tough to make a decision on what will work best for us now, while we're bootstrapping this oroject, and in the future, when potentially we seek outside funding.  There's a lot of information to consider here.  What I didn't know before reading this article was that the choice of entity for a startup company isn't so much dependent on what your business is or how you plan to operate it (online vs a brick and mortar type of store) but whether you plan to seek VC funding at some point.  When this is the case, according to the article, you should form a corporation (C or S) and not an LLC.  Heck, I'm about to form a corporation!

A second article I read this morning is called "For Startups, the Forecast is "Cloudy" by Kurt Dobbins.  Kurt begins by declaring that the timing for starting a new company couldn't be better.  His reason is that despite the current economic environment, the resources available now versus a decade ago for building a business are more widely available and for less cost.  This is because of the "cloudy" environment we're in, meaning much of the resources for creating a business are available on the web.  Dobbins says "For a startup, being cloudy means using or consuming infrastructure and services over the Internet, on-demand, as needed."  This means the costs of doing business or even needing a physical space to do business is greatly reduced.  In the article he shows a chart comparing how his experience with starting two companies changed dramatically over a decade.  It's remarkable and inspiring to see the contrast.  He also writes that the "cloud" reality creates a new business mantra, which is to launch sooner and make fixes later.  It's a lot different than the idea of creating a product and sending it to market perfectly polished, as in when you're selling something in a brick and mortar store.  Online businesses are ever changing.  You can give them a go, see how they work, and modify as needed.  As a budding entrepreneur, this article encourages me to think perhaps we are not in over our heads imagining we can make our biz venture take flight before long!


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