The number of social-networking tools continues to expand rapidly, and keeping up with all of them is a challenge. However, these alternatives can help you make connections easier, faster, and more conveniently-but only if you use them
Regardless of how you pull it together, an active and robust network is necessary for building social capital, which we refer to as the advantage created by an individual’s connections within a network of social relationships. But this advantage doesn’t develop overnight or by accident. It takes years to build social capital, and the building blocks are well known-being reliable as a friend, being fair in your dealings, being true to your word.
The principle of reciprocation can be extremely helpful in adding to whatever social capital you already have. In his popular book on influence, Robert Ciadini defines reciprocation as a subtle but powerful sense of obligation, deeply embedded in every society, to repay in kind what another person has done for us. In general, people naturally feel that they should return favors. You can easily prime the pump of social capital by being the first to lend a hand and then watch those you assist come to you run up against a challenge and ask for help. You don’t have to fake it; Just slow down a bit and take a genuine interest in the needs of your friends and acquaintances. And helping others doesn’t have to be costly; in today’s information economy, passing along an important bit of news or insight is easy and free-but it can be as good as gold! So think ahead, and reach out to help where you can. Your social capital is sure to increase, binding friends and contacts to you and providing a solid foundation for building a business.
CHOOSING A LEGAL FORM OF ORGANIZATION
Social networks are fundamental to success in business, but these focus on external relationships. When launching a new business, an entrepreneur must also choose a legal form of organization, which will determine who the actual owners of the business are. The most basic options are the sole proprietorship, partnership, and C corporation. More specialized forms of organization exits, but many small businesses find one of these common forms suitable for their needs. After outlining the primary options, we look first at some criteria for choosing among them and then introduce a number of specialized forms (see Exhibit 8.1) that offer their own unique features and advantages.
THE SOLE PROPRIETOSHIP OPTION
A sole proprietorship, the most basic business form, is a company owned by one person. An individual proprietor has title to all business assets and is subject to the claims of creditors. He or she receives all of the firm’s profits but must also assume all losses, bear all risks, and pay debts. Although his form certainly is not right for everyone, forming a sole proprietorship is nonetheless is simplest and cheapest way to start operation. Most states do not even require such companies to have a business license. Because of the ease of startup, the vast majority of small businesses (68.5 percent) adopt this legal structure (see Exhibit 8.2)