Financing the Dance: Part I

To finance the dance studio that I want to open post graduation, I will need to start with a critical management function, strategic planning.  To start, “planning is a systematic process that takes us from some current state to some future desired state.” (Entrepreneurial Finance, pg. 30)  My current state is at level 1, brainstorming and doing the groundwork and paperwork to start up my company.  It is going to take a lot of planning over a lot of time to grow my business and get it to my future desired state.  Now, I need to get into the specific form of planning that I am going to implement and that is strategic planning.  “Strategic planning involves establishing an overall plan for the business.” (Entrepreneurial Finance, pg. 30)  I will need to take my two and a half years of entertainment business education and draw up a very detailed, in-depth business plan to get me to owning a very successful dance studio. 

            My next step is to decide which type of ownership I would like to possess.  I need to decide between a sole proprietorship, a partnership (general or limited), a corporation (C or S), or a limited liability company (LLC).  Upon researching all of the different types of ownership, I have decided to start up a LLC.  A LLC “is a hybrid business entity having features of both partnerships and corporations.” (Entrepreneurial Finance, pg. 41)  It is “taxed as a partnership, has limited liability for its owners, and has flow through income and losses to individual owner’s tax returns.” (Entrepreneurial Finance, pg. 41)  Also, “the business income is accounted for on each ‘member’s’ individual income tax filing.” (Entrepreneurial Finance, pg. 41)  Past the definition of a LLC, it also has some major advantages.  These advantages include: “limited liability, eliminating double taxation, no restriction on number or type of owners, and it is easier to raise additional capital”. (Entrepreneurial Finance, pg. 42)  Now, out of all of the forms of ownership, a LLC has the fewest number of disadvantages.  The two main disadvantages of a LLC are: “limited life and transfer of ownership difficulties”. (Entrepreneurial Finance, pg. 42) 

On top of my research, my father is also an entrepreneur and he recently switched from a corporation to a LLC, so that somewhat influenced my decision as well.  He is a very intelligent man with a great business sense and a very lucrative, successful business.  He has inspired me to become an entrepreneur and he is the motivation I have to pursue my dreams!

Source:

Adelman, P. J., & Marks, A. M. (1997). Financial Management and Planning. Entrepreneurial finance: finance for small business (5th ed., pp. 30, 33-42). Upper Saddle River, NJ: Prentice Hall.