I was approached by a client the other day with a question I couldn’t immediately answer. He has a small construction business and was looking for a partner so he could win bigger contracts, and he wondered how he should go about doing that. I had to tell him I couldn’t give him advice on structuring a small business because I’m not a lawyer or an accountant, but I knew I could give him information, so I started to research.

I knew from setting up my own company about the various structures Canadian small businesses can use. I thought his choices would be limited to sole proprietorship, partnership and incorporation. There’s also a co-operative, but that doesn’t apply to my client. I guessed that the best way to help him out would be to define and give him the advantages and disadvantages of each.

Sole proprietorships are owned by one individual, and are legally considered an extension of yourself. That means that any liability or obligation your business incurs is also a personal liability or obligation. So, if your sole proprietorship fails, your personal assets can be seized to pay for that liability of obligation. I’d say that’s a pretty big disadvantage. On the plus side though, sole proprietorships are the easiest to set up and, and don’t even have to be registered if its name is exactly the same as your own.

A partnership is an agreement between two or more persons to carry on business together. Partnerships are a separate legal entity from you, and must have at least one general partner. All partners can be general, but there must be at least one general partner. Partnerships are relatively easy to set up, but although not a requirement, the parties should have a contract between themselves outlining responsibilities and obligations.

A general partner is responsible for business decisions, running the company and acting on its behalf. Each general partner is jointly and severally liable for partnership debts. This means one partner can be held responsible for the decisions, debts and obligations of another partner. Strike one against general partnerships, I’d say.

So what about a limited partner then? Limited partners are not involved in decision-making or in the day-to-day running of the business. Usually, a limited partner’s contribution is financial, and their liability is limited to the amount they invested in the firm. What that means is you basically have no say over how the money you invested is used, which means you have zero power. And, the moment a limited partner becomes involved in running the business or acts on behalf of the business, they become a general partner.

A corporation is a separate entity from yourself, which means you don’t have personal liability for debts, obligations or even acts of the company. You’re not personally responsible for any decisions someone else in the corporation makes, and you’re only liable up to the amount of unpaid portion of shares you own. Sounds pretty good so far.

Limited liability is a big advantage over other forms of small business structure. And there are more advantages. Corporations continue to exist after their shareholders die and can be passed on to family or friends. Raising money is easier for a corporation than either sole proprietorship or partnerships. There can also be tax advantages.

So what are the disadvantages? Well, there’s more paperwork because you’re required to keep records and you have to file a separate tax return. It costs more to register a corporation than setting up a sole proprietorship or a partnership. And, if you give a personal guarantee, which banks often ask for, you may be liable for that amount even if your company ceases to exist.

I thought my client’s choice would be limited to those three choices, but further research showed I was wrong. There is another one: joint venture. A joint venture is like a partnership because it’s an agreement between two or more people or small businesses, but there are important differences. In a joint venture, two or more people contribute goods, services or capital to one business enterprise. To date, Canada does not have specific laws governing joint ventures, as it does with all the other small business forms.

A joint venture agreement outlines joint venture terms, contributions of each party, management structure and how the profits will be divided. Joint ventures avoid the partnership disadvantage of joint and several liability, and also allows each joint venturer to regulate their own tax deductions. That’s a big advantage for joint ventures.

However, a joint venture has sometimes been defined by the absence of key partnership elements. This means small businesses intending to enter into a joint venture agreement must thoroughly understand partnership elements and avoid using them in order to avoid being deemed a partnership rather than a joint venture. What might have started out being a joint venture could lose its joint venture advantage by being deemed a partnership, and inherit the disadvantages of a partnership instead.

You can incorporate a joint venture, which would then have the same advantages and disadvantages of any corporation. And it would have the advantages and disadvantages of a joint venture. Could this possibly be the best solution?

So, I showed all this information to my client last week. He was glad to be able to understand all the differences, and wants to make a decision by the end of the month. I wonder what his decision will be. I know what I would do. Do you?

Want to buy a franchise opportunity? Great idea! Here is a high-level overview on what to look for:

Operating History - A long history of success is the #1 thing to look for. If many other franchisees have been successful over the years, your chances are probably pretty good that you will be successful too.

Location, location, location – Investigate the territory rights. Make sure that your site selection is a good one. Don’t settle for a second rate site.

Investigate – Don’t believe everything you hear or read from the franchisor! Investigate. Lean on those experts around you such as an attorney or an accountant. Visit some existing franchisees(choose to visit ones that the franchisor does not recommend, not just the ones that they feed you).

Labor pool – If your franchise is labor intensive (example: restaurant), what is the depth and quality of the available labor pool? Any business needs a strong qualified workforce in order to succeed.

Initial training – Make sure that you and all key employees are adequately prepared. Grand opening support is a must.

Ongoing support – A critical component for success. Make sure that all levels of support are included, and get it in writing upfront! Don’t rely on their statement, “Don’t worry, we will take care of you”.

Marketing programs – Franchise marketing is important. Make sure that any marketing dollars contributed to the franchisor are spent wisely.

Purchasing power – Can the franchisor pass on cost savings to you based on mass purchasing power?

Investment amount - While the upfront cost of the investment can seem expensive, in the long run it is probably not. A more significant expense can be the ongoing royalty and marketing fees.

Exit strategy – If the opportunity does not work, what is your exit strategy? Will the franchisor assist you in re-selling the franchise? Will they help market it for you? Many franchisors will actually provide a section on their web site for franchise re-sales. Beware if there are a lot of re-sales relative to the total number of franchises in existence.

A web site is a crucial ingredient of your marketing strategy because it can widen your target market to include anyone who has access to a computer and the internet. Almost 60% of Canadians had access to the internet at home in 2003, and around 8 million had regular access to the internet from somewhere, either at home, at work or at school.

And that’s just in Canada. Ecommerce sales from Canada were $7.2 billion, and we only captured 4% of the global ecommerce market! So, how can you reach some of those internet surfers, and how can you capture some of that $7.2 billion spent in ecommerce?

First, you build it
The first step is designing your website. If your company already has business cards and letterhead, it’s best to design your website around them. A matching corporate identity and website helps with branding.

I like uncomplicated websites, with a simple layout and easy navigation. A nice, simple layout, with good graphics, balanced look and good color combinations is my #1 goal when designing a small business web site. Remember to use graphics sparingly and to optimize them for your website because internet surfers are impatient. If your page loads too slowly, they’ll leave.

Navigation should be easy to find and to use, and it should be consistent from page to page. I’ve left more than one site frustrated because I couldn’t easily find their navigation.

Small business web sites aren’t static. They evolve. You need to start somewhere, and starting with an introductory web site is probably easiest. All you really need to start is five pages. You can always add pages later. The important thing is to just do it-take the plunge and get it out there.

Your five pages could include an index, or home page, about us, services, contact and a sitemap. The index page is your landing page. Typically its design is a little more detailed than the others, but it doesn’t have to be that way.

I like to use CSS (cascading style sheets) for designing because it’s simply easier to build a web site and to edit its layout with CSS rather than just HTML (hypertext markup language) alone. A change on a CSS sheet changes all the pages on your site at once.

Content is king
Once your site is designed, you’ll want to start thinking about content. Design is very important, but it does little good to have a beautiful site without high-quality content.

Your small business home page introduces you and your company-who you are and what you do. The about us page is usually used to give more detail than the home page about who you are, and your services page gives more detail about what you do. You might wonder why you’d “waste” a page on a sitemap since you only have 5 pages, but sitemaps help search engines find all the pages in your site.

As far as content goes, more is better, up to a point. Your pages should be content rich and informative, but they also need to be relevant to your small business. If your visitor can’t figure out what your web site is about in just a few seconds, they may leave.

The internet was at first strictly informational, and that’s how it remains today. Several times people have tried experiments using copywriting similar to direct mail sales letters, but they’ve all failed. It seems as if people surf the internet more for information than anything else. Knowing this will help you write pages people will want to read.

Attracting visitors
You could follow your instinct and just start writing, but wait. There’s research you must do first, or your web site simply won’t be high enough in searches to be found. Search engine optimization is far too big a subject to cover in this short article, but among other things, search engines find your pages based on keywords.

So, pretend for a moment that you’re on the other side of the desk. If you were a customer of your own business, what words or phrases would you use to search for your product or service? Ask friends and neighbors how they’d search for your product or services.

When you’ve come up with a few, check them out on a keyword suggestions tool. You can also use that tool to suggest similar words and phrases. Then find out how many results there would be if you searched for that term. What you want to do next is narrow down your choices to the words or phrases that are searched for the most, but have the fewest results.

Remember that people generally don’t look beyond the first three pages for any search term, so if you’re not in the top three pages, your business is not likely to be found at all. If there are millions of results for your phrase, you might simply need to make it more specific.

For example, let’s say you have a small business consulting company that specializes in communication for small business. Using “communication” as a search term is nearly pointless because there are almost 2 billion results for that word. But, there are only 974 results for “small business communication”.

Much better, but how often is that searched for? According to WordTracker, it’s searched for 10 times a day. Not bad, but I think we can do better. How about “small business consulting”? That’s searched for 261 times a day, and there are 373,000 results. That could be the best primary phrase for a small business communication consulting company.

What you want to do, is write your content around those words and phrases. You don’t want or need very many-three or four are plenty.

Getting them to come back again and again
Getting visitors to come back to your site again and again is relatively simple. Keep your content fresh and lively, make sure it’s informative, and add to it often.

I hope you decide your small business needs a web site. It’s the best way I know how to reach a wider target audience with a relatively small investment.