BOARD ADVISORS

[drtydawg]

OK, the time has come. starting my LLC next month. we are torn between have or not having a board of advisors. anyone have expeirience with this. our area has no lan/gaming center so we were thinking this would help get over the bumps with a start up since banks or investors have no idea what we are or how to characterize us. and if we do go this route, do we pay them, and if so- what do you pay a board? THANKS IN ADVANCE

[RsteeleAUG]

Guess it depends on the group and what sort of "power" they have.

On one hand a different view or opinion might help when you aren't sure about a certain part of your business.
On the other hand you'll have several "cooks" in your "kitchen".

I don't know if having a board of advisers would help define your business model to any banking or loan organizations. I still have trouble explaining what exactly we are in terms of business type.

I have us listed under everything from internet cafe to entertainment venues. I explain it as a place where internet cafe meets modern day arcade.

Around here the coin operated machine places are all but gone. They've been replaced by the ticket style small amusement parks with go carts and batting cages.

Remember if you pay these people that's an extra expense so whether you need it or not might be answered by whether or not you can actually and realistically afford it.

[drtydawg]

intergrating a board of advisors, in our thoughts, would show investors or bankers  that we are serious about our future of the business. by having an experienced businessman(LAN CENTER owner if possible), financial expert, and a business lawyer on a panel of advisors seem to speak volumes to our commitment, in our thoughts of course. not owners of the company but ADVISORS. and if this could happen, what would this community pay for such advice. or if a board like this get payed at all. hopfully i explained the idea a little better.

[RsteeleAUG]

I don't see myself paying any outside source any real sum of money for advice. I tend to try and help other owners out with problems and send any business in their area, ideas, and advice that I can for no charge at all. I've had online chats, phone conversations, face to face conversations, both giving and receiving help and advice about everything from advertising to things dealing with the PC's.

I honestly think those people (a lan center owner, financial expert, and a business lawyer) wouldn't act as members on the board with out some type of payment. The question remains where will that extra money come from. If I paid someone just to advise me on business decisions what type of choices would they help me with?

I don't see why a board of advisers is necessary unless you plan to have a chain, multiple locations with large sums of money invested, where that type of corporate structure is needed and can be afforded. However for 1 store that has 1 owner I rather like just talking to other owners and keeping it friendly and of course spending money with each other when possible.

[drtydawg]

thanks steele. for the input. and yes- at sometime in the future, we plan on taking the company to new heights- but 4now- the 1st store is what we are focused on to be successful. i think i have what i need. LIVE LONG AND PROSPER!! (gotta image me spreadn the fingers)

[Gord]

I think you're confusing the need for a corporation to have a director or directors, and outside parties looking to see an organizational tree.

Corporations require directors.  For example, PC Bang, LTD., has a single director (me) that the majority of the shareholders (me) have voted shall hold that position.  As I own all the shares in that company, it's a simple path to take.

In the event of a personal bankruptcy, I can not serve as a director of a corporation and I would need to nominate someone else.  In theory, they could do whatever they wanted, but as I own 100% of the shares I can at any time hold a shareholders' meeting and replace them.  So they would be basically a proxy voter.

With companies I am involved in with partners, it changes.  In some companies, each shareholder gets to nominate a single director.  In other companies where they are 50/50 splits, the person fronting the cash will request that they get to nominate two directors so that they can effectively outvote the cash-poor partner even though that persons own 50% of the company. 

A directors' vote in a smaller company is basically a shareholders' vote with less paperwork.  Imagine if a major company (eg: Coke) required that every company decision be made by polling every shareholder every time.   It just isn't practical, so the shareholders vote to have directors represent the interests of the company.  In theory, if a majority of the shareholders want to replace the board, they could hold that vote at any time.  Though because there are so many shareholders, votes on director confidence are organized into annual events.

[Skyshark]

Gord,

That's a great explanation of the corporate process. 

Additionally, a board of directors isn't normally needed for a small business with less than $1,000,000 of assets/investment capital.  Investors and start-up companies with more to lose by failing have a board to ease the minds of shareholders that their large investment isn't squandered on the whims of one or two people.  Also, you may be the most knowledgeable person on gaming, entertainment venues, marketing etc...but your board may include lawyers, CPA's, and other people that are taking a fixed salary to consult on your business periodically instead of regular billable hours.  You benefit from their other areas of expertise...and they may gain some clout with prospective customers in the field by saying "I serve on a board of directors in a similar business...so I know exactly how to best serve you."   

Either way...when you have the problems of needing a board of directors...you should already be very successful in your game center(s).

[drtydawg]

thank yo all for yor comments. wasnt sure if i would go sole proprietorship, or LLC. had a talk with others also, and for now SP is the way im going to go. the lure of the limited liability was what attracted me to the original question. ill just hold off till the business grow to what i would like it to be. thanks guys

[Skyshark]

You might want to reconsider the SP.  Even if you're a single owner lan center...the protection of LLC and S-Corp prevents a customer/vendor/etc from suing you and risking your personal assets.  It also makes some of the income/tax procedures simplified but separable since LLC's and S-Corps have stock options to return revenue into more investment. 

I'm sure others on here would agree...although a hassle with up front fees, documentation, and more complexity, the LLC or S-Corp will payoff in the long run.

[drtydawg]

i know ,right! that was my whole thinking for LLC. the protection from being sued- the company take the hit- not the owner. but i was told Florida require LLC and SCorp to hold board meetings. I really dont want to pay a business lawyer a fee just to ask a question about the Florida rule on holding these meetings, but then a guy i know with a PHd in finance told me to rethink LLC because my company was small. so many different opinions. can make a guys head spin. thats why i was asking about a ADVISORY board, not an actual board, if a volutary board of advisors ever been put together to satisfy the rule. still have a couple of weeks to weigh and ponder this. decisions decisions.....

[Skyshark]

Even though you have to have a shareholder/board meeting...you can still simplify it.  I know an owner of a martial arts studio that's setup us as an LLC with him as the majority and one other person as a shareholder.  As required, they hold a meeting at Applebee's or Beef O'Brady's...talk about the business and file the minutes summary as required.  We've all seen too many movies with old people in lavish board rooms. 

An LLC or S-Corp will also make it easier for you to do other things, such as add investors later, add/remove partners, sell the company to someone else, and protects your personal credit if you suffer hard circumstances due to no fault of your own (recession, disaster).

Usually the toughest decision is LLC or S-Corp...and both have the liability protection...but there are different advantages to both.  S-Corp requires that all shareholders are US Citizens.  LLC's don't require US citizenship and can have up to 100 unique shareholders.  LLC's can also issue different types of stock (common, preferred) allowing you to have regular capital investors for one price and preferred stock holders which you can choose to reward with annual dividends. 

There's a wealth of information on the Business organization and may be worth looking into SBA.gov or your local SCORE chapter before organizing.  Planning the business organization is just as important as your game center layout, game selection, location,etc....if not more important.

Which part of Florida are you setting up shop?

[Alomax]

My favorite board meetings are the one where we all stand around drinking beer and shooting video game monsters.

[needsLITHIUM]

I would also be curious where in Florida you are starting up...

I, personally, live in Broward County (specifics are SECRET - SHHHH!)

if you are anywhere near there, once you get running, I might stop by, or if you are interested, we might work together

Not implying any part ownership deals, just simply cooperation and collaboration...

who knows, maybe we can help each other out, or learn something from one another

also, @ Gord, PC Bang??  There used to be a "PC Baang!" near me, but it changed owners and became known as "LanLair"... would you happen to have anything to do with that lol?
if so, you are responsible for my interest in lan centers...  The only reason it closed was they went so long without power after 2 sets of hurricanes, one of them being Katrina (pre-New Orleans), and I think that year Wilma hit as well... it threw them under the bus, as they did not have enough capital to sustain being without income for a month and a half/2 months, in addition to VERY slow business for the remainder of the year (due to people spending all their resources on repairs).  They closed in Early February of '06, and my parents bought one of their computers as a gift for my birthday that same month... I think the only people who benefit from it all were construction people such as  my dad, who is a General Contractor with his own business...  My dad won the bids on 3 separate high profile repair jobs for cities that year, including the Boardwalks and Piers for both Deerfield Beach AND Pompano Beach.

Great, now I am all sad from memories   Bittersweet, because on the one hand, my dad's business gained some prominence, but on the other hand it killed the best LAN center in town.