Monthly Archives: December 2011

Benefit Corporations vs. B-Corporations

Benefit vs B-Corporation Social Enterprise from The Startup Garage

Benefit Corporations vs. B-Corporations

With the new era of Social Enterprise upon us, we are seeing more and more companies blend their business structures between for-profit financial efforts and philanthropic social returns. This rise in social awareness and communal benefits has led to rise of Benefit Corporations and B-Corporations across the nation. Often confused, these two types of enterprises contain many similarities yet key differences that are outlined below.

1. Benefit Corporations are corporate structures. They are legal state entities that are similar to those of S-Corps, C-Corps, or LLCs. Not all states have passed Benefit Corporation legislation; as of 11/14/11, only 6 states have legally recognized them.

2. B-Corporations are regular enterprises that have received “B-Corp” certification. By filling out an Impact Assessment, meeting established requirements, and passing an advisory board review, a non-profit organization by the name of B-Lab distributes “B-Corporation Certificates.” B-Lab then requires the company to alter their bylaws and structure to that of similar legal Benefit Corporations. There are currently a little under 500 recognized B-Corps across all 50 states.

3. A company may be both a Benefit Corporation and B-Corporation. This may only be done in states that allow Benefit Corporation entities and if the company in question has met B-Lab certification requirements.

4. B-Corporation certificates are mostly applied for in states that currently do not have legal Benefit Corporation structures.

5. Although Benefit Corporations must produce and publish annual Benefit Reports, it is not required that a third party assess or audit their performance and verify their procedures. In comparison, B-Corporations must first pass B-Lab’s B-Impact Assessment with a minimum score and are then liable to be randomly reviewed on-site every two years to make sure standards are being met.

In general, both Benefit Corporations and B-Corporations have the same objective: to further their social aims through a for-profit driven business. They are both held accountable for their decisions in regards to their customers, shareholders, and the environment as well as for their transparency in their publically published reports on social and environmental performance.

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Writing a Mission Statement that Matters

Business Plan Mission Statement from The Startup Garage

Writing a Mission Statement that Matters

Your company’s Mission Statement is regarded as the guideline of your company’s direction. While also representing your company’s beliefs and values, your Mission Statement will give you goals and direction. It is an opportunity to show what you wish to accomplish and how you will go about doing so. These few lines of your business plan serve to create the identity of your company.

Your Mission Statement represents you and your ideals. While it a good idea to read other companies’ mission statements to form ideas, it is easy to get caught up in creating an identity that you think will appease the masses. Stay true to what you believe your company represents in terms of beliefs, value, and purpose – it’s easy to spot a fake.

What sets you apart? A great mission statement will set you apart from your competitors. It will help to show investors, employees, and customers know what your plans are and what gives your company a competitive advantage.

Why are you here? Your mission statement will help you evaluate your company’s growth over time. By consistently referring back to your mission statement, you can see if your company has stayed true to it’s purpose and assess what future steps the company should make.

State your purpose. The main question any mission statement should answer is: why does this business exist? It is critical to identity what makes your company special and to defend it’s purpose. Going further is being able to answer: if this company did not exist, what opportunities is the world missing out on?

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Delivering a “Kitchen Table Pitch”

Kitch Table Pitch for Investment from The Startup Garage

Delivering a “Kitchen Table Pitch”

Before a meeting with formal investors such as Venture Capitalists and Angels, entrepreneurs fine tune their Elevator Pitch. But when startup owners want to gear their pitch towards family and friends, the Elevator Method become far too formal; instead, they utilize what is called the Kitchen Table Pitch.

Compared to an elevator pitch, the Kitchen Table Pitches adapts to the pre-established relationship with the potential investor. These informal pitches are geared towards informing family and friends of your business idea and if and when the discussion leads to investment, you need to be sure you protect your relationships. Here are a few tips for avoiding the pitfalls:

Loans are simpler than equity. With family and friends, it is often easier to ask for simple loans into the company rather than offering equity. To learn more about debt vs equity capital, read here. Try not to complicate the procedure by offering ownership and decision-making privileges because your friends and family are probably not involved in the industry you are working in. Rather, ask for a monetary loan.

Create a formal repayment plan. Be reasonable in the amount of money that you ask from family and friends and come prepared to offer them a structured repayment plan. Because your family and friends want you to succeed, they will tend to be more lenient than formal investors with your repayment plan timeline. But, that doesnt mean they dont deserve proper legalities. Dont ruin relationships by failing to stick to a feasible timeline where you pay back money, with interest.

Follow-Up. Keep your family and friends updated on the progress of your company this doesnt have to be a weekly chore, but rather try to do a follow-up once every 6 months. By showing that you stick to your word and your work, you will help to build confidence in your business as well as strengthen relationships for the future.

As is the case with any investor, be prepared to present your friends and family with a business plan that clearly outlines the product and service, the operational roadmap and the business opportunity.

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