Startup help needed

[atkinson4738]

I am getting ready to start a new business. Most of it consists of web based selling, but some direct selling will also be involved. My major concern is how I structure the business. I am planning on covering all my upfront costs, so at first I won't need any investor money. I am thinking that I will have to begin to tap investor funding fairly quickly. Can anyone give me advice on which business structure would be ideal?

My next question stems from splitting the company up out of the gate. My cousin and I are starting this venture. He is a web designer and has a programmer he uses for projects. They are giving me a good price, but they are still charging me. Ultimately I see the business growing to approx. $1.5 million in about three years, and offering 10-20% of the company as they would like seems a little much compared to the $3,000-$4,000 discount they are offering me. Ultimately, I am new to this and don't really have a clue on how to approach it. Again, any advice would be appreciated.

Justin

[SiteBetter]

As a former web designer, I am familiar with your situation. I have seen it many times before

I know I could help you answer your question if you could tell me what the scope of your website would be.

Your web designer may just be seeing dollar signs in his eyes.

• How much programming and functionality will be involved in the website?

• How many pages to you perceive the website to be?

I develop a fair amount of websites with web based selling. There are many things that go into that which can eat up a lot of money. But also some things may be over priced.

Now as a hopeful independent business entrepreneur, you have certainly planned out your business on paper and in an Excel spreadsheet. From the web designer’s point of view, he has seen all of this before.

Selling online is very, very hard. It’s not a matter of just setting up a website. So, in my opinion your cousin and other web developers are taking a bit of a risk. I don’t want to make any judgment calls because I don’t know all the facts of the case, such as:

• The cost of the project

• The product you are selling

• Other traffic generating mechanisms you have in place.

But you say you plan on making $1.5 million in three years. You could also make zero.

Speaking from a lot of experience, web designers get approached with these scenarios all of the time. I have written several articles about this.

Again, I don’t know exactly the size of your website is. Yes, $3,000 - $4,000 discount does sound a bit suspicious considering that most websites can be done in their entirety for that amount.

May I ask what the original quote was? Are they guaranteeing any traffic? Are you handling the traffic generation?

[atkinson4738]

First off, thanks so much for your reply. Rarely do I get on a forum where members offer sincere and valuable assistance.

I will try to answer some of your questions the best I can.

• How much programming and functionality will be involved in the website?
There will be some custom applications involved as well as a shopping cart structure. I will need the ability to send members email and text messages. There will be one flash piece.

• How many pages to you perceive the website to be?
I think there will probably be about 20-25 pages.

• The cost of the project
The cost for "version 1" is $6,700. My fear is I don't know how much it will be to get to the final version.

• The product you are selling
I want to keep my idea somewhat under wraps, but essentially the web site is what will actually be sold, sort of like selling a user license to the site. The primary selling approach will be direct sales.

• Other traffic generating mechanisms you have in place.
Due to the nature of the business traffic to the website will not be important to the success of the business. Someone finding it in a search engine would not be the goal.

Speaking from a lot of experience, web designers get approached with these scenarios all of the time. I have written several articles about this.
I would love to read the articles if you have links.

May I ask what the original quote was? $6,700 Are they guaranteeing any traffic? not necessary for business structure Are you handling the traffic generation? yes

[entrepreneurrebel]

I web designer (sitedesigner) has that. For a business structure do mean LLC, LLP, INC, ect. If so, I would suggest a LLC with a corporation tax structure. What I love with LLC is it is a virgin structure. It doesn't have the jungle of laws that a corporation has. It also gives you all the personal protection that a corporation does. **WARNING** Do not mix your personal finances with your company finances. It can be used against yourself during a lawsuit or by creditors. I suggest using a corporation tax structure because that allows you to leave (I believe 90k) in the company to lower their tax rate. Also LLC have a much easier tax filing at the end of the year.

**FYI** This does matter what state you live in. Some state are not LLC friendly. IL is a great LLC state.