Tuesday, December 11, 2012

Is Buying a Shelf Company a Good Strategy?

As a startup business owner you might find yourself overwhelmed by all the new information you need to assimilate. This is especially true if you have designs incorporating your business and eventually taking it public. Just because you’re starting a business doesn’t automatically mean you need a business degree, but it will help to familiarize yourself with the basics. One business model concept you should be looking into is whether or not to buy a Shelf Company as part of your business strategy.

So, what exactly is a Shelf Corporation?

A Shelf Corporation or Aged Corporation is an official corporation that has been created but is not being used by that creator. There are many reasons why a corporation could still be idle but that doesn’t mean they don’t have any inherent value. Think of these as “instant” corporations as it pertains to helping your business start up. How can your business benefit from taking over a Shelf Corporation? Consider the following:

·         Time Saver

Buying a Shelf Corporation allows your business to get up and running a lot faster. The incorporation process can often drag on for months. With a Shelf Corporation that work has already been done. It would be like stepping into a franchise business. All the equipment and supplies have been purchased; you’re just taking over control.

·         Faster Access to Credit

Many vendors would prefer to do business with an established corporation. Therefore, a new startup might find obtaining lines of credit a challenge. An additional hurdle for a new business is being asked to provide a personal guarantee for loan. That could greatly hinder your chances to secure immediate financing. A Shelf Corporation can establish the kind of corporate longevity that can open up a lot more credit possibilities.

·         Instant Credibility

A Shelf Corporation allows your business to obtain instant credibility. This is important to potential investors. You’re not fooling anyone because the history of the corporation will be a matter of record. Instead, you’re stepping up your professional game and establishing your credentials.

·         Access To Government Contracts

Depending on your business, you might have the opportunity to do work for the government whether that is a local municipality or on a national level. These can be a very lucrative asset for your business. However, some government agencies require a business to be already be operational for a specific amount of time. You can meet that requirement with a Shelf Corporation.