How to Protect Your Small Business Ideas With Business Structures

If you have the ingenuity to come up with a stellar idea, develop it into a business, and generate profits with it, you will likely have the foresight to protect that valuable entity. Here, we talk about how you can protect your small business ideas by keeping them behind the business castle wall: your business structure.

Business structures, or entities, are generally classified into one of these categories:

sole proprietorship
partnership
limited liability company
corporation

Each type has pros and cons. Here, we will consider some of those.

The sole proprietorship is an unincorporated business run by one person, and is by far the simplest form of business to operate. The reasons are straightforward:

It doesn’t require much, if any, registering or paperwork
It is very easy to start, change, or close down
The value of the business (viewed by both buyers and the IRS) is based upon the skills and assets of the owner, not stock

The sole proprietorship may be a simple form, and is often best when there is limited capital and personnel, but there are distinct disadvantages:

The capital is limited to the owner’s capital or what he/she can generate
The owner cannot be an employee of the business for tax purposes
There is unlimited liability for the actions and debts of the business

Liability is an issue in running any business, and increasingly so with the litigious society in which we operate. Liability is the ever-present dinosaur in the cave, ready to break out at anytime. You can’t know when or why or how it may burst upon the scene of your business, but history has proven (as recent as yesterday, or any day) that IT DOES HAPPEN.

Simple can be good, but it can also be dangerous. When a sole proprietor operates, his capital, assets, and skills are what make up the business, and these assets become his payment in the event of a lawsuit. A court can freeze assets, force the sale of a residence, attach bank accounts and many other financial nightmares that you can imagine.

Fortunately, there are other business entity structures more geared to protecting your small business ideas and your thriving business.

Another of business is the partnership. It is a relationship between 2 or more persons who join together to carry on a trade or business. There are some advantages:

It involves more than one member, so it has greater potential for capital than a sole proprietorship
It combines the management skills of multiple people
It has pass through taxation

The partnership also has some disadvantages:

The authority for decision making is divided
Partners cannot be employees for tax purposes
Unlimited, joint and several liability among members

Like the sole proprietor, the partnership members can be held liable for all actions and debts of the business. In addition, there is joint and several liability, which means each partner is responsible for the actions and debts of each other partner.

It doesn’t take much thought to see how this can (and frequently does) create issues. Different people have different ideals, different risk tolerances, and different methods. If one partner decides to act in a way in which another partner believes is risky, the other partners often times have no recourse but to dissolve the partnership. Because of this, many partnerships do not stay intact for long.

The limited liability company is a more flexible, and in many ways, more desirable business structure. An LLC may be treated as a sole proprietorship, partnership, or a corporation. A single member defaults to sole-proprietorship, 2 or more members defaults to partnership, and either can elect to be taxed as a corporation or a subchapter S-corporation.

Advantages are:

Flexibility: members can be individuals, other partnerships, other corporations or even other LLC’s.
Management flexibility and pass through taxation
Members have limited liability for the actions and debts of the LLC

Disadvantages:

It is governed by the laws of the state
It is subject to a base annual tax (in some states) which is increased after profits rise to a specified ceiling
All members must also pay individual earning taxes

Over all, the LLC is a very clever and flexible way to set up a business, but the main advantage is the limited liability to the partners. This is an increasingly valuable quality as revenues and profits increase, because more money means higher chances of being sued. Following the old “risk and reward” equation, as the reward goes up, so does the risk.

Corporations are an advantageous way of establishing a business, but especially so when the profits and scope of operations increase. The law treats a corporation as a legal entity, similar to a person. It has perpetual life, meaning it does not pass away when the originator passes – the corporation remains a legal entity until such time it is formally dissolved.

Advantages:

The transfer of ownership is relatively simple
It is easy to raise capital and expand the business
All shareholders can be employees of the corporation, and have limited liability

Disadvantages:

Double taxation (C Corp), meaning the corporations profits are taxed and shareholders’ earnings are taxed
It can be difficult and expensive to organize
The corporate officers must follow procedures, such as board meetings, corporate minutes, and others

Again, corporations are ideal for any business that has expanding operations, substantial earnings, or defined liability. Some businesses, by their very nature, encompass more risk, and some businesses are quite complex and require a more centralized structure. For these reasons and more, the corporation can be the best form of business to operate in.

Why Small Businesses Need to Invest in Mobile Marketing

Business is no different from a conflict. The market is the battlefield and your marketing tactics and strategies are the weapons you use to defeat the ever increasing competition and bring profit to your business or organization. There are business dictators who know the tricks to win all kinds of battles and in any battlefield. The elite businesses control the market at their disposal and these are the people who set the standards for us and we need to view that as a benchmark or a target to achieve. These big guns stamp their authority from the roots of the market to the very top of the business chain.

Small businesses have very little scope to succeed when it comes to competing with bigger or more established businesses. The market is already flooded with many businesses competing for profits and customer and consumer attraction, so in a practical sense there small businesses stand no chance amongst them. The reasons for the same are given below-

Established-

Big businesses have been in the market since a considerable period of time so they have established their name and popularity across all corners of the market. Small businesses are lesser known so their capacity to attract customers is meager.

Clients-

In an established business clients, customers and consumers are in abundance and because of the long relationship between the business and the people, there is a trust which develops easily. A reputation is earned. When small businesses compete with the bigger ones, they find it hard to get clients as most of the latter are with the bigger businesses and the upcoming prospects will mostly opt to follow the reputed ones rather than new ones.

Money-

Big businesses have a humongous amount of money. Small businesses don’t. So when it comes to marketing, smaller ones are found in the shadows of the investment done by the bigger ones. Without the money the smaller businesses either perish or join the bigger ones.

Does this mean that the bigger companies will get bigger and the smaller ones just disappear? Is it better to join an established business rather creating a new business at a small scale? Is there any solution to overturn this?

A big ‘NO’ is the answer to all these questions. As it appears, the market is dominated by the elites and small businesses will be consumed by the power of the former- just like the case of David and Goliath. But, in real sense we forget that ‘the bridge is not crossed until we reach the bridge’. Yes. It is an overwhelming challenge to step foot into the market with a small business, but it is not a crime to do so. There is space for new prospects because the business thrives on competition, and with a smaller establishment you are certainly competing.

The biggest factor that might sway you away from setting up a small business is the element of limited money at our service. But, with a smart and tactful utilization of the limited amount money available, big targets can be achieved. Planning is one of the major things required as assistance to money, without proper planning millions of dollars might just be invested for nothing, in an opposite case- a few hundred dollars might earn you a fortune so planning is of prime importance.

Smart advertising and marketing are the ploys that one should implement tactically into the business growth plans. Marketing is key to do execute absolutely anything in a business. If you need to attract customers- marketing will help. If you need to increase sales- marketing is the answer. If you need to create an image in the market- marketing will come handy. If you need to build a brand- marketing is certainly the best option.

The only problem lays in the fact that marketing requires money and small businesses certainly don’t have that. The prominent rise of telecommunications has certainly answered the call for help by smaller establishments. Mobile marketing can become a phenomenon and help small businesses prevail. The mobile is a device used by all so there is a medium which can deliver the message effectively and hence support the business cause. The expenses required too, are minimal and help a business expand and spread its word across on a larger scale.

What is Mobile Marketing-

Mobile marketing is the procedure of advertising to the masses through their portable gadgets or mobile phones. This sort of marketing is relevant to online or internet advertising, nowadays with the advent of more usage of mobile phones and tabs- more individuals are beginning to invest more time on their portable devices and less time on their computers, so it is obvious that the concentration of marketing platforms have shifted from computers and internet to mobiles and portable devices.

There are a great l similitude between web advertising and portable advertising however there are some really vital distinctions and differences.

Mentioned below are some tools and methods of Mobile marketing-

Mobile phone marketing-

SMS (Short message services) on mobile phones are used to optimum effect for mobile marketing. Text messages regarding new offers or new business prospects would be sent to potential customers who would read the message and act according to their interest. Messages sent in bulk cost less and the target of reaching out to the people is achieved without making any heavy investments. SMS method is the most well-known way of mobile marketing. This is truly simply sending quick messages to individuals’ mobile devices or telephones and in a ton of routes is like message promoting. The most amazing element here is that you are endowed to have the ability to send your message to target customers who may read the message at their convenience.

Mobile media marketing-

Similar to SMS, there is an MMS (Multi-media message service) as well on our mobile phones. MMS service gives a business the freedom to deliver a more dynamic an effective message. In an MMS, sounds, pictures, videos, ads etc can be forwarded to potential customers who would respond if they are in need of the business propositions.

Online mobile marketing-

There are websites which are specially designed for mobiles. Portable devices do not have the same internet speed as computer routers and servers. Mobile websites are very easy to access due to the size of the webpage i.e. in Mb’s (megabytes). The costs of advertising on such mobile web pages are very affordable and are also a tool to get many customers.

This is one of the most common ways to market and advertise to the masses through the mobile marketing medium by placing advertisements on web browsers and search engines. With the advent of a huge number of people accessing the web pages using their mobile device recently, the mobile marketing platform is wider than before. Sooner or later, but inevitably mobile devices will surpass the computer as the mainstream or general way to browse the internet and get access to it.

Mobile app marketing-

With the introduction of tabs, androids, i-phones and smart phones, the usage of app’s (applications) on mobile and portable devices have increased. This is a complex procedure but a really effective method of mobile marketing. In this kind of marketing, businesses develop apps which are used by mobile users. If the app is liked by the mobile owner then the business name is considered and maybe a customer is attracted.