Rush on Business : Iowa Corporate Lawyer & Attorney : Rush Nigut of Brick Gentry Law Firm : Serving Des Moines, Cedar Rapids, Davenport, & Sioux City

Do you have a new technology-based business idea? If you do, I encourage you to check out the Dream Big, Grow Here contest that is sponsored regionally by the Business Innovation Zone.  The winner of the regional business pitch contest will be awarded $5,000 and then move on for the opportunity to win another $10,000 in a state-wide contest here in Iowa.

The background information (from the BIZ Web site):  In June of 2010, the University of Northern Iowa Regional Business Center (RBC) developed a partnership with the Iowa Bankers Association and the Community Vitality Center to attract and link emerging Iowa entrepreneurs with the capital resources available in the state to serve them.

A statewide contest entitled Dream Big Grow Here was launched, featuring $1,000 monthly grants awarded online to emerging and existing Iowa small business owners who uploaded their ‘dreams’, then encouraged friends, family and other business owners to vote for them.

Wildly popular, Dream Big Grow Here attracted 63,489 visitors during the five month beta test. Given the success of Dream Big Grow Here and increased interest in online resources among innovators, the RBC approached a small group of statewide sponsors to provide matching funds for regional contests-with cash awards of $5,000 and fund a statewide pitch-off among winners for a grand prize of $10,000.  

There will be 8 regional contests, including ours here in Central Iowa.  Each region will select (through crowd voting) a winner, who will receive $5,000.  Those 8 regional winners will then compete against one another (again, crowd voting) for the statewide $10,000 prize.

It's my understanding the business idea must be pre-sale. So if you have sold your product or service to anyone, you won't be eligible. It is for true start-up technology-based businesses. For more information be sure to contact Mike Colwell of the BIZ at MColwell@desmoinesmetro.com. You can also check out a recent podcast on Silicon Prairie News discsussing the program and other interesting issues.

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I spend a substantial amount of time fielding questions about whether a new Iowa business owner should form a corporation or LLC.  It's an important question but I caution new business owners not to get too bogged down in the details. Instead, I suggest putting a team of advisors in place to help navigate the issues of business formation. I highly suggest not only consulting an experienced business attorney but also an accountant to help advise on tax issues. In my opinion, tax issues will often drive the choice of entity decision as much as any single issue. That's why advice from an accountant is very helpful in the process.

Some basic items often considered in whether to form a corporation or LLC:

• Will your business entity have only individuals or will business entities be shareholders / members? S corporations have restrictions that make it impossible for business entities to be shareholders. Consequently, business entities with businesses as shareholders / members will most often consider C corporations or LLCs.
• Are you looking for venture capital? Venture capitalists tend to favor C corporations.
• How much income do you anticipate (realistically) making? Depending on how much money you make, the S corporation may be more advantageous from a tax standpoint than an LLC due to self-employment and other tax issues.
• A single member LLC may be especially good in certain situations depending on income level because it offers less formalities than corporations and you may be able to file taxes on your own individual return without the need of a separate tax return like corporate entities.

These issues only touch the surface of choice of entity questions. There are often other issues to consider. Seeking advice from an experienced business attorney AND accountant is important to set your business on the right track. And don't worry, many business owners change their entity after the initial formation when circumstances change. Choice of entity is an important decision but there is nothing that says it must be set in stone throughout the entire existence of your business. If circumstances change, your choice of entity may change too.

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New York franchise lawyer, Charles Internicola, has good blog post on Buying a Franchise: What do the franchise fees cover? It's an excellent overview and Charles is right on point with his factors that are more important than the franchise fee itself.

The key in my opinion is to find a franchise that will deliver you a return on your investment. Don't fall into the trap of buying yourself a job. The most successful franchisees I have seen are usually multi-unit operators that work "on" the business rather than "in" the business. They also make sure they have plenty of start-up capital to get through the lean times. Raising just enough capital to pay the franchise fee is not enough.

Plus, focus on franchises that deliver superior brand recognition in their marketplace. Buying an unknown franchise in any marketplace is seldom worth the expense in my experience. If you and your friends haven't heard of the franchise, you might want to think twice.

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