Wednesday, November 17, 2010

Incorporation Mysticism

I thought of calling this blog entry "Incorporation Blues", but it isn't really a downer - on the contrary, it's incredibly exciting! But it is rather mysterious...

I have actually been through the incorporation process three times before, so it should be no great mystery. I was a shareholder in a company a couple of my friends created way back in the 80's - I sold my shares back to my friends when I realized I couldn't participate as fully as I had originally expected, and eventually one of them took over the whole company and that was that.

Then, for four years, I was Associate Director and later Director for a large pan-Canadian research network with an incorporated Business Centre. That was the second time, but it wasn't me who actually drew up the paper work, even though I learned by the seat of my pants how a CEO with no vote on the Board still has to manage the Board and how much power a non-voting member can still have. A very interesting experience, with a budget in excess of 25 million dollars, so not small fry at all!

Finally, I co-owned a small business with my collaborator and business partner of long date, Marie Louise Bourbeau. Here I really learned the nuts and bolts of incorporating, setting up shareholders meetings, a Board of Directors, and so forth. However, our company didn't actually make any money! We incorporated before we knew where we needed to go with the concept (my fault actually, I was the one who jumped the gun!) and we ended up funding most of the things we wanted to get done through my research grants at the university. We did remarkable things at the edge between the sciences and the arts .... but it wasn't really a business. It was also a constant nightmare trying to keep separate my business for the company from my contributions as a researcher, so as to avoid conflict of interest situations. We finally decided to close down the "business" last year since we were still not making any money and had no idea how we were going to!

So this is my fourth venture, albeit the first really commercial one based on my personal initiative. Nonetheless, the other experiences give me background and a certain amount of experience with the mechanics of setting up a business, including developing a business plan (we developed business plans for both the research network and the arts-science initiative), developing Articles of Incorporation, developing a logo and brochure, etc.

My business coach in Toronto tells me that my number one principle for spending money (or doing anything at all), is "lead with revenue" - that is, make sure that there is a direct line between what I'm doing/spending and how this is going to generate revenue! It seems such an obvious thing, somehow, but I find it really useful to review all my expenditures in light of how they relate to income!

So after reviewing all the choices (do I incorporate or merely register as a single-person business? do I incorporate under provincial law or federal law? does the company offer a single type of share or more types of shares? how many shares should I issue, and of what value? how many directors do I need on the Board? etc.), and consulting with some people with good knowledge of what is appropriate, I am moving forward to the next stage. Still, the process still seems mysterious and somewhat heady - one is making a rapid series of decisions that will set in place many of my activities over the next umpteen years!

It turns out that I may need to contact the bank initially before incorporating, as they may have some requirements regarding the Articles of Incorporation. These could always be accommodated later, but I'd have to pay another chunk of money to have an amendment made, so it makes sense to do it all in one go (I think!).

My workshop is ready - I shall be posting some photos of the space shortly. I've been working on a business card, and I am starting to look into creating an initial website. And the sewing still has to happen as well!

Wednesday, November 10, 2010

Setting the Company Up

Well, my logo is done, as is my Business Plan, both in English and French. My next steps are to look into the incorporation process and to set up a meeting at the bank.

The logo turned out to be a fascinating experience. I have done work with local graphics companies in the past, and was not looking forward to a reprise of the difficulties encountered. But before I could even think about that, my business friend and coach showed me the "" website. This is essentially a kind of online brokerage for doing graphics design. The site claims to have nearly 70000 graphics design individuals available. You prepare a "creative brief" describing your project - about 70% of the business on the site seems to be logo development, but they also do website design, printed documents, stationary and business cards and so on as well - then post it and pay your money. The cost of the service is incredibly cheap - 200$US minimum for a logo (actually, it's a bit more, because the crowdspring site charges a 39$US fee to use the service, and a 15% overhead, and they also offer several options to improve your chances or gain greater control over the process). I spent 390$, including the option of having my brief sent to the "50 best creatives", which turns out to mean the 50 designers who are the most productive. You also determine a length of time for the submissions with a closing date - they suggest 7 days for a logo, which I followed.

Now, get this - I had 199 submissions for my logo over the week interval! With so many submissions from nearly 60 different companies, I had no trouble selecting a winning design. So within 10 days and 400$, I have a logo for my new company. The last time I worked with a company in town, it cost me nearly 1000$ and 6 months to get a logo!

At the same time, working with my business friend/coach (actually, I'm going to promote her, she's a really savvy real estate agent in Toronto - her web site is Just Call Jane - but she used to run her own company doing marketing and graphic design, so she's very knowledgeable about business as well), I drafted and then completed a business plan. This week, I used a Quebec City translation bureau to have it translated into French.

In the mean time, I've completely re-organized my home. I live in a three storey town house looking north down the "falaise" or cliff between upper and lower town, hence a view of the city and the mountains to the north. My bedroom, for the past 8 years since I moved in has been the top room at the front, the one with the view and the incredible light, and my sewing room has been a small room at the back of the house (south side). So I've switched them - my bedroom is now the small room at the back, and the front room at the top has been converted into a full scale designers workshop!

Next steps are to start moving my designs forward again as well as pursuing the funding efforts. More to come!