The Portable MBA in Finance and Accounting, 4th Edition

8

Choosing a Business Form

Richard P. Mandel

The Consulting Firm

Jennifer, Jean, and George had earned their graduate business degrees together and had paid their dues in middle management positions in various large corporations. Despite their different employers, the three had maintained their friendships and were now ready to realize their dream of starting a consulting practice together. Their projections showed modest consulting revenue in the short term, offset by expenditures for supplies, an administrative assistant, subscriptions to various online services, computers, software, and similar necessities. Although each expected to clear no more than perhaps $45,000 for his or her efforts in their first year in business, they shared high hopes for future growth and success. Besides, it would be a great pleasure to run their own company and have sole charge of their respective fates.

The Software Entrepreneur

At approximately the same time that Jennifer, Jean, and George were hatching their plans for entrepreneurial independence, Phil was cashing a seven-figure check for his share of the proceeds from the sale of the computer software firm he had founded seven years before with four of his friends. Rather than rest on his laurels, however, Phil saw this as an opportunity to capitalize on a complex piece of software he had developed in college. Although Phil was convinced that there would be an extensive market for his software, there was still much development and testing ...