Do you run your business like a Corporation or a Sole Proprietorship?
Below I have created a table that outlines the differences between a corporation and a sole proprietorship. Examine it closely, because it tells a story.
Corporation Sole Proprietorship
Unlimited Life Span Limited Life Span
Limited Liability Unlimited Liability
You earn a salary You and your business share income
So, how do you run your business? Like a sole proprietorship or a corporation? The differences between the two are important, not only in the legal sense, but also in strategic and operational ways.
If you want to be a corporation, you need to start acting like one. If you look at my chart the first item I listed is the difference in the life spans between a corporation and sole proprietor. In a sole proprietorship the life of the business is determined by its owner. When its owner dies or retires the business ends. Corporations on the other hand, are assets that have an unlimited life and can be transferred. So basically, if the founder of the company dies, the business continues.
That’s why when Walter P. Chrysler, the founder of Chrysler Corporation died, the corporation continued to make automobiles. The same holds true for Sam Walton, the founder of Wal-Mart. When Sam died, the business of Wal-Mart continued to grow and later became the largest retailer in the world.
How did these entrepreneurs create assets that continue to throw off large chunks of revenue decades after their death? One, they treated their business like a corporation. They created great systems and business models for their employees to follow.
A system is the method, process, and the planning of actions needed to carry out a task with consistent and predictable results. Take McDonalds for instance. McDonalds is run by one shift manager and group of inexperienced teenage workers. Right? How is it possible for a billion dollar corporation to be run by a large group of teenagers earning minimal wage?
The answer…McDonalds has great processes. Everything they do is well documented. When new workers are hired they are trained on the processes and methods necessary to perform their required tasks. For example, to make a hamburger, McDonalds post pictures above the grill, so there are no mistakes on what goes on a Big Mac, Quarter Pounder, or Fish sandwich.
With that being said, what does your business do to error proof mistakes or make training for new hires faster, easier, and cheaper? If you document all the processes, you can duplicate the procedures and deliver a predictable outcome within reason. One of the best ways to leverage yourself is through duplication. Think about this for a second; if there was only one McDonalds, it would just be a mom and pop hamburger place that you’ve never heard of before. But, because there are 4,000+ McDonalds, they are a billion dollar business.
Part two of this three part series is coming tomorrow. Limited Liability and Unlimited Liability
Bobby Ellis
Xspology.com
Corporation Sole Proprietorship
Unlimited Life Span Limited Life Span
Limited Liability Unlimited Liability
You earn a salary You and your business share income
So, how do you run your business? Like a sole proprietorship or a corporation? The differences between the two are important, not only in the legal sense, but also in strategic and operational ways.
If you want to be a corporation, you need to start acting like one. If you look at my chart the first item I listed is the difference in the life spans between a corporation and sole proprietor. In a sole proprietorship the life of the business is determined by its owner. When its owner dies or retires the business ends. Corporations on the other hand, are assets that have an unlimited life and can be transferred. So basically, if the founder of the company dies, the business continues.
That’s why when Walter P. Chrysler, the founder of Chrysler Corporation died, the corporation continued to make automobiles. The same holds true for Sam Walton, the founder of Wal-Mart. When Sam died, the business of Wal-Mart continued to grow and later became the largest retailer in the world.
How did these entrepreneurs create assets that continue to throw off large chunks of revenue decades after their death? One, they treated their business like a corporation. They created great systems and business models for their employees to follow.
A system is the method, process, and the planning of actions needed to carry out a task with consistent and predictable results. Take McDonalds for instance. McDonalds is run by one shift manager and group of inexperienced teenage workers. Right? How is it possible for a billion dollar corporation to be run by a large group of teenagers earning minimal wage?
The answer…McDonalds has great processes. Everything they do is well documented. When new workers are hired they are trained on the processes and methods necessary to perform their required tasks. For example, to make a hamburger, McDonalds post pictures above the grill, so there are no mistakes on what goes on a Big Mac, Quarter Pounder, or Fish sandwich.
With that being said, what does your business do to error proof mistakes or make training for new hires faster, easier, and cheaper? If you document all the processes, you can duplicate the procedures and deliver a predictable outcome within reason. One of the best ways to leverage yourself is through duplication. Think about this for a second; if there was only one McDonalds, it would just be a mom and pop hamburger place that you’ve never heard of before. But, because there are 4,000+ McDonalds, they are a billion dollar business.
Part two of this three part series is coming tomorrow. Limited Liability and Unlimited Liability
Bobby Ellis
Xspology.com
posted by Xspology.com at 7:37 PM
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