PART TWO: the Way You Arranged the…the Nuts & Bolts of Your Business Idea into a Whole!
What happened with the way you arranged the nuts & bolts of your business idea into a whole? What did you imagine Your Business would look like? Certainly, imagination is one part of the “Business Idea” but to the “outside world” imagination that dominates marketing presentations to business peers, investors and the like, is perceived as too much fluff…too little foundation!
We don’t like that trap at She Is All Business, nor do I favor it in my Book of the same title. When I speak of foundation, I’m not referring to Dreams Foundation, Inc., Dr. John’s baby (and Sarah’s and my child), no, I’m referring to the foundation of your legal business structure. Know this well; the “letter drill” for businesses: SP = Sole Proprieter; P = Partnership or LP = Limited Partnership; LLC = Limited Liability Company; C-Corp = Corporation with stockholders; S-Corp = Sole Corporation (you yourself are incorporated). Are there other business models; sure, and they are legal as well, but these are just some to give you an idea about just how varied your business model can get. Over time, this “Nuts & Bolts of Business” Blog will go into more depth on each of these business models.
Ronnie is a small business owner who is contemplating expanding her sole proprietorship. Right now she’s in business for herself as a landscape planner – that is, she actually looks over the home or real estate in question, and offers up to three optional plans for landscaping these properties. Depending on her clients she may offer optional plans: based on price; based on ratios of ground to rooted growth (trees and shrubs) coverage; and based on the inclusion of decorative rock, walls, patios, grottos, etc.
Wow – what’s Ronnie’s business strength? Clearly, she can meet almost every landscape planning need, but Ronnie’s considering taking it all a GIANT STEP further. She’s thinking of bringing on workers to actually do the landscaping work!
Ronnie sees it as the next step in her business development; I see it as the first step in potentially ruining her very lucrative career as a landscape planner. What she must consider were she to expand is the question of taking on employees so she could control their hours (that means payroll taxes and withholding and added accounting; oh yes, and health insurance). Otherwise, she’s looking at independent contractors whose behavior she’s ultimately responsible for when they’re working on her landscape jobs (that means contracts, 1099s, less control of hours and schedules, and perhaps additional insurance issues). And did we mention the addition of equipment and supplies she’ll need to accommodate the transition from planning to installation.
The business model is looking a bit cumbersome, but she is in control of her destiny. While on paper it appears bleak, when we add the “X” factor to the equation everything changes. All of a sudden the employee issue is no longer an issue, because there will be no employees! Almost as if in a dream, Prince Charming walks into Ronnie’s life in the guise of Peggy and Tom “X” who had used Ronnie’s services a year earlier, and heard from one of the area landscapers that she was considering making such a business move.
The “X” factor was the financial partnership support Ronnie needed to turn her business dream into reality. Peggy and Tom came into the partnership with experience in limited partnerships, and offered to support Ronnie’s plan to use independent contractors, but not employees, for the expansion of her business, while they all agreed on an appropriate profit-sharing arrangement.
The message: THINK BIG, and invite others to the table early; our enthusiastic “killer ideas” may indeed be moneymakers, but as well be heart breakers when we lose the very business we worked so hard to create…because we kept our expansion plans all to ourselves!