Excellency in a business plan Business concept Management team Financing Keys to success Understanding of challenges

Legal Ownership options IssuesSole proprietorshipPartnershipsCorporationLimited Liability Company Number of owners One2 or moreLimited to 75 in case of S Corporation 2 or more LiabilityOwner liableGeneral partners liable. Limited partners only liable to amount of investment Shareholders liable to amount invested. Officers maybe personally liable Members only liable to amount of investment Transfer of property Free to sell. Assets transferred to estate upon death with valid will General partners require consent from others. Limited partners can transfer but subject to partnership agreement Free to sell. Slightly limited by S corporation status. Permission of majority of members needed to transfer interest Continuity of life of business Dissolution on death of owner Dissolution on death or separation of one general partner unless otherwise specified Continuity of lifeMost states allow perpetual existence. Unless otherwise stated in agreement. Start- up costsFiling fees for DBA and business license Filing fees for Attorney’s fees for agreement Attorney fees for incorporation, documentation and filing. TaxationPass-through (38 percent rate) Double-taxation (35 percent or 38 if S) Pass-through (38 percent rate) Ability to raise capital limitedmoderateHighhigh Distribution of profits Go to ownerShared as established in agreementPaid as dividends according to agreement and shareholder status. Shared based on agreement or articles of organization

What form if….. (1) What form if…. Minimize paperwork and lawyer involvement Sole proprietorship or General partnership Minimize LiabilityCorporation + Insurance with any form Never a general partnership Business must survive owners No sole proprietorship, No partnership Owner wants maximum control but needs partners First, limited partnership; second corporation Flexibility to trade ownership Corporation Need to pay some investors more than others Corporation

What form if….. (2) What form if…. It is clear the company will “lose” money Sole proprietorship, partnership, LLC, S corporation It is clear the company will “make” money Corporation, may want to file for S corporation, LLC It is clear the company will grow and have many employees Corporation Minimize problems from mixing personal and business dealings Sole proprietorship Flexibility to allocate profits and loses Limited Liability Company (LLC) The owner will want to sell the business Corporation

Founders memo

Dimensions of organizational blueprints Criterion for selectionSkills Exceptional potential Fit with the team Basis for attachmentCompensation (“money”) Qualities of the work (“work”) Work group as community (“love”) Coordination and control Direct monitoring (content) Peer and/or cultural control (context) Professional standards (results) Formal processes or procedures (behavior) Source: Baron, J., and M.T. Hannan Organizational blueprints for success in high-tech start-ups: Lessons from the Standford Project on Emerging Companies. California Management Review, 44:3: 8-36.

Mark Pitts 1.Describe problems hiring for a start up? 2.Describe the hiring priorities identified in the case 3.How well do Mark Pitts' credentials and accomplishments fit the Peoplestreet job description? (Skills) 4.What do you learn from his resume? (Attitudes – fit) 5.What questions would you want to ask Mark in the interview in order to decide whether or not he is right for the job? (skills and fit)

Resources The entrepreneurial approach to resources –Staged capital commitments –Less capital –More flexibility –Low sunk costs –Lower costs –Reduce risk

Networking Effective entrepreneurs are more likely than others to systematically plan and monitor network activities Effective entrepreneurs are more likely than others to undertake actions toward increasing their network density

Other people resources Board of directors –Selection: add value with know-how and contacts –Liability Advisory boards

Other people resources Attorneys –Almost all companies –Areas: incorporation, franchising and licensing, contracts and agreements, formal litigation, liability protection, Real estate, insurance, and other matters Copyrights, trademarks, patents, and intellectual property protection. Employee plans Tax planning and review Federal, state, and other regulations and reporst Mergers and acquisitions Bankruptcy law Other matters (e.g. collection) Personal needs –Selection: add value with know-how and contacts

Other people resources Bankers and other lenders –Almost all companies –Selection: add value with know-how and contacts

Other people resources Accountants –all companies –Selection: add value with know-how and contacts Capabilities Cost Chemistry

Other people resources Consultants –Compensate for a lower level of professional experience –Market research –Undertake projects that require a large startup investment in equipment.

Designer table lamp manufacturer

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