Word of mouth is the lifeblood of attracting new customers, and now it travels faster than ever before thanks to the internet. Customers can snap a picture, post a comment, or leave an online review of a business in a matter of seconds. These reviews can often be found on popular websites like Angie’s List or Yahoo! Local Listings where customers post about their experiences with businesses—many of them small businesses. Read more
B Lab, the nonprofit responsible for the passage of benefit corporation statutes in over 30 states (as of the writing of this post), has released a report on the status of venture capital raised by benefit corporations. While skepticism remains among the entrepreneurial and investors communities around the ability of benefit corporations to raise traditional venture capital, it appears that benefit corporations are able to break into the venture capital ecosystem, including at some of the nation’s top venture capital firms.
Etsy made news when it went public as a B Corp in April 2015. And now we have the first Benefit Corporation to file for an Initial Public Offering (or IPO) in the U.S.: Laureate Education, an online education platform. On October 1, 2015, Laureate became a Public Benefit Corporation in Delaware. On October 2, 2015, it filed an S-1 Registration Statement with the Securities Exchange Commission, making official its plan to become a publicly-traded company. What does it all mean?
Litigation has long been the de facto solution for companies that find themselves mired in legal conflict. However, court-sanctioned squabbling comes with spiraling costs, tremendous time investments, and a healthy dose of acrimony that can destroy business and personal relationships. For new and emerging businesses with little funds to spend on the legal battlefield, alternative dispute resolution can play an important role. Alternative dispute resolution can offer cheaper, faster, and healthier alternatives to traditional litigation. This article provides a brief overview of popular alternative dispute resolution mechanisms, and explains how to select a course of action that’s right for you and your new venture. Read more
Traditionally, the divide between a for-profit or nonprofit organization was clear: for-profit businesses would engage in revenue generation and nonprofits would engage in charitable work to solve social issues and would largely stay away from revenue generation. The rise of social enterprises in recent years, however, has made that distinction less and less clear. Social entrepreneurs are finding innovative ways to challenge the traditional thinking about nonprofit organizations (by focusing on economically sustainable models) and for-profit businesses (by focusing on solving social issues). As you set out on your mission to change the world, you will have to decide if you want to form your venture as a for-profit or nonprofit–or perhaps some hybrid of the two. The answer will largely depend on your best guess as to source of funding and your activities.
Benefit Corporations and Social Purpose Corporations are entity types that were established in California with an eye towards allowing for-profit companies to engage in socially-minded activities traditionally carried out by non-profit organizations. Such activities are typically frowned upon by traditional corporation shareholders and the law.
It should be noted that neither Benefit Corporations nor Social Purpose Corporations get special tax treatment in a way that non-profit organizations do. But both corporate types are structured as for-profit entities that can be used by for-profit entrepreneurs who consider themselves for-impact as well—that is, they want to have a social and environmental impact. But there are significant differences between the two that should be considered by entrepreneurs looking to stay in the for-profit realm while using their business to make a difference in the community and the environment. Read more