10 Factors to Consider When Choosing a Business Structure

by | Oct 8, 2021 | Blog, Uncategorized

What is one factor to consider when choosing a business structure as a Conscious Capitalism company?

To help entrepreneurs center their business around Conscious Capitalism, we asked CEOs and business leaders this question for their best advice. From lining up the structure with your higher purpose to defining your stakeholders, there are several pieces of advice that may help you decide on a business structure that aligns with Conscious Capitalism. 

Here are 10 considerations for choosing a business structure: 

  • Align Structure With Your Business’ Higher Purpose
  • Keep Employee Rewards in Mind 
  • Understand That You Make an Impact
  • Give Something Back
  • Define Your Stakeholders
  • Eliminate Hierarchical Structure
  • Remember That Minimal Efforts Yield Minimal Results
  • Align Decision-Makers With the Conscious Business Model
  • Consider Ownership Value For All Stakeholders

 

Align Structure With Business’ Higher Purpose

As was learned from Whole Foods, business raiders or opportunistic investors may seek to acquire a controlling interest in the business with the purpose of maximizing the value enjoyed by one and only one stakeholder (e.g., the stockholder) at the expense of the others. The business structure and the bylaws can play an important role in helping the company remain aligned with its higher purpose.

Eric Moss, Adjunct Professor and Conscious Workforce Advocate

 

Keep Employee Rewards in Mind

One factor to consider when choosing to set up a business structure as a Conscious Capitalism company is how you are going to reward employees beyond their normal wage or salary compensation. In other words, how much (or little) should you reward others for the contributions that they are inevitably going to make to your company? In addition, in what form will you reward them (i.e., stocks, warrants, cash bonus, acknowledgments, etc.)? 

In this regard, I would caution against being overly miserly. If your employees don’t feel like your reward system is going to get them where they want to go, they’ll likely leave you for greener pastures.

Howard Stewart, AGM Container Controls

 

Understand That You Make an Impact

A huge factor to consider that people often miss is that businesses are made up of people, which includes you. Establishing yourself and operating as a Conscious company means that you understand that you bear some influence in the world — even in the most subtle of ways — through daily interactions within your business. It’s empowering to recognize that you have an impact on the world around you and that your employees and customers do as well.

Tanya Moushi, Moushi & Co.

 

Give Something Back

Find an identity to have our capitalistic business be a force for good for society as a whole. In our case, 50% of our business revenues go straight to our Give Something Back Foundation, supporting disadvantaged kids with mentorship and full four-year college scholarships to partner schools throughout the US. 

Simply put, when a business enrolls in our company’s credit card processing and payroll services, they are automatically enrolled to help as half of the monthly fees paid to the company is allocated to making a difference in our society.

Anna Lam, Beyond Payments

 

Define Your Stakeholders

Understand who all your stakeholders may be. Then, ensure that shareholders and team leaders know from the get-go that, while the focus on supporting them and taking into account their needs is important, they are absolutely not the only stakeholders that matter.

Eric Keosky-Smith, Hownd, Inc.

 

Eliminate Hierarchical Culture

One factor we are working on is to eliminate any hierarchical culture. We believe this cultivates a culture of mutual trust, respect, collaboration, and creativity. This takes conscious effort, and we’ve seen Conscious Capitalism principles and tenets lead the way.

Laurel Elders, The Institute for Integrative Coach Training

 

Remember that Minimal Efforts Yield Minimal Results

I believe that to have success with Conscious Capitalism, you have to be fully invested and willing to do what it takes to be a force for good. Minimal efforts will yield minimal results. It’s critical to follow through on the commitments you make because there’s a clear line in the sand between ethical business practices and unethical or even indifferent business practices.

Jonathan Keyser, Keyser

 

Align Decision-Makers With the Conscious Business Model

Whichever structure is created, it is imperative that final decision-makers are aligned with the conscious business model. It is not likely a problem under a sole proprietor structure, but it gets a bit more tricky as you move into partnerships and corporation structures. Leadership communication of values is imperative as more influences (i.e., investors, partners, etc.) are added to the structure.

Ken Hunt, Elevate Society

 

Rely on Insights From Organizations and Consultants

There are several organizations that exist to guide businesses through this exact scenario. For example, out in the Northwest, there’s an organization called Benefit Corporations For Good that consults to help businesses be a force for good as benefit corporations. In Arizona, Conscious Capitalism AZ is a tremendous resource to educate business leaders in determining the right routes to pursue. There’s no need to reinvent the wheel when others around you possess the knowledge to help out. 

Brett Farmiloe, Markitors

 

Consider Ownership Value for All Stakeholders

The single most important factor is how value is going to be shared with the company — not just employees but consultants, contractors, advisors, and directors. Many make the mistake of hurriedly adopting an LLC structure without considering long-term ownership value for contributing stakeholders.

Fred Whittlesey, Compensation Venture Group

 

Terkel creates community-driven content featuring expert insights. Sign up at terkel.io to answer questions and get published. 

 

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