How to Choose the Right Corporate Structure When Starting a Business
If you’ve decided to strike out on your own and start a business, then you may want to sit down and determine the best way to manage your new business before you open your doors. One of the first things you should consider, aside from how you’re going to finance your operations, is what type of corporate structure you want to have when you open for business. Many investors are going to want to know what your corporate structure will look like before they agree to extend
Here are some ways to help you choose a structure that works for you.
Scale of Business
One of the first things you should consider is the overall scale of your business. How big do you plan to be? Perhaps you’re only planning on being a one-person operation, in which case your corporate structure will look very linear. However, if you plan on operating multiple departments and having a large pool of employees working for you, then you need to parse out the different roles to reduce risk and make your business operations easier to understand on paper.
Who to Fill Roles
Let’s say you’ve decided to have several people fill key roles within your business. Your next step should be to determine who will fill each role and then vett out possible candidates thoroughly. Some key roles you may want to consider for your business include chief operations officer, chief legal counsel, chief information officer, chief marketing officer and chief financial officer. These roles should be filled by qualified people who are experts in their field. You don’t want someone managing your finances, for example, if they’ve never had experience managing another business’s finances before.
Along with determining how you want your corporate structure to look and how you want those roles to be filled, you should also consider your own role within your company. How involved do you want to be in the daily operations of your business? Perhaps you want to act as CEO and have a high level of involvement in your business on a daily basis. Or, perhaps, you simply want to own the business but don’t want to be involved in the daily operations at all. This should be clearly laid out before you move on.
Once you have all these pieces of your corporate structure in place, you’ll be ready to move on to the next step of opening your business. The more prepared you are, the better your chances for long-term success.