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Section 1 Business Structure

Section 1 Business Structure – includes two lessons on setting up the legal structure of your business.

Lesson 2.1 Business Case Studies

Lesson 2.2 Business Legal Types

We will now look at some of the most common business types and the advantages and drawbacks of each type.

When you need to decide on a Business Type?

In our first course, you decided on a business area, researched your business name, created a basic business plan and built a basic business website. You can do all of these things before actually starting your business. However, before you actually start a real business you need to take a few important steps in order to keep your local, state and national governments happy.

One of the first steps is decided on what legal type of business you will have. Some of the most common options include sole proprietorship, partnership, limited liability corporation (LLC) or non-profit. With a non-profit, you can either have a tax deductible non-profit also called a 501c3 or a more political but not tax deductible non-profit also called a 501c4. Finally, in Washington State, there is a new type of corporation called a Social Purpose Corporation or SPC which is run like an LLC but which can be organized for purposes other than making a profit – making it somewhat like a non-profit organization but with fewer rules.

Before we explain the legal steps for starting a business, let’s take a look at the advantages and drawbacks of each of these 7 types of businesses – as the exact steps will vary a little bit based on which type you choose.

For our first lesson, we will begin by looking at a few of the most successful businesses in the history of our planet. We will then look at some business failures to see if we can spot patterns that define the difference between successful versus failing businesses.

Let’s look first at three very successful businesses: Google, Amazon and Facebook to see what has made them so successful.

Case Study #1: Google 1 Trillion Dollars in 20 Years

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History: Google was started in 1998 by two college students. Thanks to the Google Search Engine, Google dot com is the most visited website in the world. More than one billion people visit Google.com every day. Google also owns Youtube which is the Number 2 visited website in the world with just under one billion visits per day.

How does Google make money by giving away a free search engine and free YouTube videos and free Gmail accounts?
Google makes about $136 billion per year even though most of its services are free. The answer is that Google makes about $100 billion per year from selling ads. It makes the rest of its sales from selling online movies and Chromebook laptops as well as Android mobile phones.

What are Googles expenses?
Google breaks down its major expenses into four major categoriesdata center costs (about one million Linux servers), research and development cost for 20,000 employee, sales and marketing cost for 17,000 employees, and administrator cost for 8,000 employees. If Google has about 40,000 employees and they generate $120 billion in sales per year, how much in sales does each employee generate? 120,000,000,000 divided by 40,000 = 120,000,000 divided by 40 = $3 million per employee.