You awake in the middle of the night with a business idea that will change the world. The only problem, of course, is you need money to get the business moving. What do you do?
Investors and Equity
Practically every economy is built upon the backs of small businesses and entrepreneurs. Every day someone comes up with an idea that will make a great business. Every day, these same people wonder how they will come up with the cash to get the business off the ground. The classic answer is to look for investors, and this is where things can go bad.
If youre seeking investors for your business, you are going to need to form a business entity. Corporations and limited liability companies are the most popular, and give you the ability to trade ownership interest in exchange for cash contributions. With a corporation, investors will buy shares in the corporation. With limited liability companies, the investors will buy membership interests. Regardless, this traditional exchange gives rise to a problem common among small business owners, to wit, giving away too much equity.
From Joy to Misery
A common mistake made by new business owners is to give...
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