Benefits Of Incorporating An Idea

1926: “While theoretically and technically television may be feasible, commercially and financially it is an impossibility.” — Lee DeForest, “Father of Radio” and a pioneer in the development of sound-on-film recording used for motion pictures. He had over 180 patents.

Dr. Lewis Terman, inventor of the Stanford-Binet IQ test conducted a longitudinal investigation of 1,528 gifted children with IQs at the genius level. The objective was to understand better the relationship between human intelligence and human achievement. It continued for decades, and became world famous for its discovery that intelligence was the lesser of several factors that determined achievement.

Discipline and self-confidence were found to be more important than intelligence for achieving things.

Newton’s laws of motion state, “A body at rest remains at rest, a body in motion remains in motion unless acted upon by an opposing force.”

To become a successful entrepreneur you need to start thinking and behaving like one. That means you build self-confidence while at the same time rewire your brains away from thinking like an employee or homemaker and to thinking like the boss. You do it by remaining in motion toward our dream, and you can achieve all these things simply by incorporating your idea.

With my first company I took this step to react forward immediately I got home from the airport where the idea had popped into my head. With my second company as soon as I parked the car back at home, I dashed to my office and did this step before doing anything else. With my third company I was at a restaurant when the brilliant idea hit me over the head. I got the check, dashed home, and reacted forward.

What I did on each occasion was simply to incorporate my idea. I searched online for incorporation services, picked the one I liked best, and after a few mouse-clicks and about the price of lunch for two I turned the idea into a real company by incorporating it.

How revolutionary an idea is that? Well, 90% of even established start-ups don’t incorporate. By doing this you are already going to be one step ahead of them. It has a powerful psychological effect and who can say which of you will, by doing this step, become the next Michael Dell?

Incorporate an Idea.

Within a few days of completing the process online, you receive a package of paperwork in the mail. For the first time you will see your company/idea name in a bold header and your name and title as owner and CEO. It is a thrill to see that, and it gives you a massive psychological boost.

Your brain’s 100 billion neurons say “hang on a minute, our host is on to something. This is real. This is a company and no longer just a crazy idea. She means business. Jeeze, we’d better start re-configuring our pathways to help her out. “Red alert. Synapses and proteins start getting organized. We’re a business-person now!” That fires messages to the RAS to be on the look out for anything that supports the new idea and to filter out anything that is against it.

The idea has magically just formed into a real company even though it does not have much substance to it yet. That is not important. What is important is that you have made it real. You have breathed life into an idea and created a tangible result. You are finally your own boss. If that does not make your stomach flutter with excitement and anticipation, you probably should not start a company at all.

Now, it is essential to keep a copy of that letterhead with you everywhere you go. Make many copies, and populate your life with them. You want copies on your desk, next to the bed, in your wallet, in the car, in front of the TV, and just about anywhere you spend time. Your RAS will ensure you focus on it often.

Every time you notice the header with your company name emblazoned, it will make you think about the idea, and with each thought you inspire further and expansive ideas. The more you look at it, the more you rewire your brain to a new way of thinking. The more you rewire the brain, the more attention you place on the company. What we pay attention to… grows because our RAS makes it so. Everyone has had the experience, let’s say, of one day seeing an advertisement for a car that triggered a positive emotion. One recalls never having seen that car on the road before. Then on the next day’s journey the car seems to be everywhere. We simply hadn’t noticed it before and the RAS shut out the observation because it had not been important up to then. Now the RAS works hard to keep it in your focus.

While you commute to regular work, which is now known as paid cross-functional training, and notice the paperwork in your inside pocket or in your briefcase, you might start to imagine other things about your company such as how it would be structured, who would manufacture the product, and who the ideal customers would be.

When you read the paperwork again on the bedside table before going to sleep you might imagine how much finance you need to raise, what the final product would look like in the hands of the customer, the difference it makes in the lives of others, and even what it would feel like to sell the company for millions.

This is how we achieve neuroplasticity.

When you are sitting in another mind-numbing meeting at work or find yourself stuck at home doing the laundry, you can take frequent sneak peeks at the incorporation paperwork. Every glance gives you a psychological boost, and every boost increases your level of self-confidence that the idea is a good one, and you can make it real. Every glance causes neural-growth-factor to hard wire your brain to a new way of thinking. You are on your way to start-up success and only a deliberate decision to stop the process can slow the motion.

Anne Procrastinates and Fred Reacts Forward

Recently, I was impressed by the quality of work done on a remodelling job at my home. Of the three-person team, Anne stood out as the best worker. She was the youngest and newest to the company, but went the farthest to ensure that I was a satisfied customer. She seemed to be the main source of inspiration for the other two, and she was also the one who had the most innovative solutions to problems.

I asked her if she had ever thought about starting her own company. Her eyes lit up, and she confessed that she was always thinking about it. Just as quickly she thought of all the reasons why she could not pursue her dream, and I saw the light in her eyes fade.

When I pushed a little to see what she had done beyond just having an idea, she reeled off a list of reasons why she had done nothing. She had insufficient savings. The economy was shaky. She was inexperienced. Because these were her thoughts, they had become her reality, and she lacked self-confidence. She was stuck in a neural-pathway-loop that had her always feeling she wanted to start a company, but never actually being able to react forward.

To break that neural-loop, and rewire her brain to a new way of thinking, I suggested she turn her idea into a real thing through the process of incorporation. Then I saw the new look in her eyes, first confusion, then fear. It is a common enough reaction. To many like Anne that sounds complicated and daunting. I explained how it is neither of those things, and then I described the process and enthused about the psychological effects. She never acted on the advice and still works as a technician at that company.

Fred worked as a software engineer for a well-known company. He is always coming up with interesting product ideas. He acted on my advice to incorporate his best idea. Every time he glanced at the corporate paperwork he became more enthusiastic.

He said, “I started to think that perhaps it is not such a crazy idea. Then seeing the documents everywhere I went… I even kept a folded cover version in my back pocket at all times… somehow made it seem less and less crazy until I knew I had to do it. After all, the Google founders and people like Dell and Gates were just students, right? They had no business experience either. It got to the point where I knew I’d never be able to forgive myself if I didn’t try to do something with it. I know if I had not made the idea into a legal company, and kept reading the paperwork, I never would have had the confidence to try it out.”

Fred fleshed out a business plan during his spare time. He asked one of his best customers from his regular job for some feedback. He really just wanted to know if it was a crazy idea or not. The client loved the idea, and as chance would have it, he also had investor friends who were equally impressed.

Fred is now CEO of his own company and strongly backed by $5 million of investor funds. When I saw him recently his confidence and CEO-like demeanor astonished me. He still has no business training or experience, but his neural pathways have rewired his way of thinking. Suddenly he thinks and acts like a CEO.

If only Anne could see his success and understand that it is purely down to reacting forward in order to build self-confidence. It just happens that way, but we must react forward first. Once in motion our brains do the rest.

The Additional Benefits of Incorporation

When an idea is incorporated, it becomes its own legal business. This new business entity transforms the way the business is seen through the eyes of the law, and it often has more credibility with potential customers, vendors and employees.

Two years after Larry Page and Sergie Brin had started Google, Sun co-founder Andy Bechtolsheim wrote a check for $100,000 to an entity that did not yet exist, a company called Google Inc. and handed it to them. At first confused, the founders soon got the message. On September 4, 1999 they filed for incorporation in California as Google Inc. Larry and Sergey opened a bank account in the newly established company’s name and deposited Andy Bechtolsheim’s check. Google became real.

Simply by incorporating, you may be lifting your mentality into that 4% of successful companies. At the risk of trying to crack a peanut with a sledgehammer, let’s look at the many practical advantages of incorporation, and then you’ll see just how simple the whole process is to complete.

1) Protect Your Assets

With a sole proprietor or partnership, there is unlimited personal liability for business debts or lawsuits, which means that if you went out of business, creditors could target your personal assets such as your home or vehicle. Perhaps most people do not realize that, but when America is such a litigious society, why risk the possibility when you can protect against it? When you incorporate, you are only responsible for what you have invested in the corporation. Clearly that advantage alone is worth the few dollars it costs for protection through incorporation.

2) Essential for Exit Strategy

That asset protection is important if you ever decided to sell your company. The purchaser will not be personally liable if the seller did something unlawful, whereas if someone buys a sole proprietorship they can be held liable for what happened in the past at the company. Many successful small businesses are purchased by larger businesses, so the investment in the paperwork is essential to make that a smooth transaction. I have clear exit strategies in all my companies, so incorporating early is essential.

3) Tax Savings

There are several tax advantages to incorporation. Your company becomes a distinct legal entity, even if it just remains no more than a file on your desk, like mine did for years. Then some home office costs, when you are working on the business, are a deductible tax expense.

4) Credibility

Having the letters INC. or LLC. after your company’s name, adds a touch of professionalism and credibility especially with customers and lenders. Image is important and customer confidence is tied to their perception of your company.

In the next activity we will talk about the different types of corporation and the simple process required to get started.

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I think Dell’s story contains many nuggets of wisdom. I like the fact he was an introvert, which is also a label I would give myself. I like that he avoided hierarchical structures and that he learned all aspects of the business. Of course, I especially like that he chose the process of incorporation. Our only difference of opinion may be that I suggest incorporating the idea right away because the RAS goes to work immediately. The legal benefits of incorporation in any company far outweigh the inexpensive investment. Why do you think people are so leery of doing it?

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