Continue to support this positive reinforcement in every way you can think of. Make copies of your incorporation papers, and populate your life with them. Keep 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. Create letterhead and business cards with your company name (and a logo; see pages 215–16), and take them with you everywhere you go.
This is essential. Every time you notice these, it will make you think about your business, and each thought will inspire you further and retrain your RAS. The more you do this, 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. And what we pay attention to. . .grows.
While you commute to work, as you think about the paperwork in your briefcase, you might start to imagine how your company will be structured, who will manufacture the product, and who the ideal customers will be. Your RAS takes all this on board, and before long your attention will be drawn to billboards, articles, and commercials that you somehow missed before but which now help you continue the process of reacting forward. This launches what feels like a magical process of serendipity, as things fall into place, but it is simply the power of your attention. Your RAS is helping change the 147 bits of data to include your successful company and filtering out the rest. It takes time, but it works. . .always.
Read the paperwork again before going to sleep, and your dreams might help you solve difficult problems, like how to raise finances and what the final product will look like. You might fantasize about the difference your company will make in the lives of others or even what it will feel like to sell the company for millions.
As you sit in yet another mind-numbing work meeting or are doing the laundry, sneak peeks at the incorporation paperwork. Every glance gives you a psychological boost, and every boost increases your level of self-confidence that you can make your company real. Every glance rewires your brain to a new way of thinking, builds momentum, and keeps you on the path to startup success.
The Positive Effects of Reacting Forward
I recently observed firsthand the practical effects when someone reacts forward and when they don’t. During a remodeling job at my home, I was impressed by the quality of the work of the three-person team, but Anne stood out. She was the youngest and newest to the company, but she went the furthest 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. But just as quickly the light faded in her eyes, as she said she didn’t think she could pursue her dream.
I pushed a little and asked what she had done to try, beyond just having an idea, and Anne reeled off a list of reasons why she had done nothing. She thought she did not have sufficient savings, and the economy was too shaky. She felt she might be too young and inexperienced. She lacked self-confidence, which wasn’t surprising to me given the content of her thoughts. She was stuck in negative expectations, which reinforced themselves, since her RAS obediently identified all the reasons she couldn’t start a company, rather than helping her solve the problem of starting one and taking the next step.
When I suggested that Anne incorporate her business and turn her idea into a real thing, her expression changed to confusion, then fear. This is a common enough reaction. To Anne, this sounded complicated and daunting. I explained it was neither of those things, and I described the positive psychological effects of reacting forward, but she didn’t act on the advice. Even today, she still dreams of being her own boss but has yet to take action to start her own company.
Fred demonstrated the opposite reaction. He worked as a software engineer for a well-known company, and he was always coming up with interesting product ideas. Acting on my advice, he incorporated his best idea as a company, and every time he glanced at the corporate paperwork, he became more enthusiastic. He said to me, “I started to think that perhaps it was not such a crazy idea. At first, I tried to shake the idea out of my mind. Who was I to think I could run a company? Seeing the documents everywhere I went somehow made it seem less and less crazy, until I knew I had to do it. 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, and he asked one of his best clients for some feedback. Fred really just wanted reassurance, but the client loved the idea, and as chance would have it, he also had investor friends who were equally impressed. In the end, Fred was able to attract $5 million in investor funds, and he is now the CEO of his own company. When I saw him recently, his confidence astonished me. He still has no business training, but he rewired his way of thinking, and now he thinks and acts like a CEO.
This is what reacting forward can do: It builds the self-confidence to pursue our dreams. Once we take the first concrete steps down the path, and put ourselves in motion, it reinforces all the next steps we need to take.
Other Options for Reacting Forward
There can be other ways to move forward with your winning idea without incorporating. The simplest way is to just start conducting business. When you do that without incorporating, you are what’s called a sole proprietorship, which is the simplest and most common business structure. This refers to a business owned and run by one individual with no legal distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses, and liabilities. You do not have to take any formal action to form a sole proprietorship. As long as you are the only owner, this status automatically comes from your business activities.
But like all businesses, you need to obtain the necessary licenses and permits, and regulations vary by industry, state, and locality.
A sole proprietorship, however, is legally vulnerable. As I discuss later, even sole proprietorships should take the step of incorporation, especially since the process is so simple and inexpensive.
You might also form a partnership agreement if you are going into business with one or more others, but again, this is risky without the legal protection afforded by incorporation. You will get some of the same psychological benefits by doing either of these, but I still always recommend that people incorporate their winning idea.
A winning idea is likely to require investors, manufacturers, suppliers, and other formally structured entities. These entities are typically incorporated businesses themselves, and for legal reasons, they can be restricted in working or contracting with unincorporated businesses.
The Practical Benefits of Incorporation
Still not convinced? Beyond the psychological benefits, how does incorporation help? Glad you asked.
As I say, 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, employees, banks, and investors.
For instance, consider Google’s cofounders, Larry Page and Sergey Brin. For two years they ran Google without incorporating, since they didn’t see any need to and it was an expense they felt they could do without. Then one day Sun cofounder Andy Bechtolsheim decided he wanted to become an investor, but he wanted to invest in a company, not two guys. So Bechtolsheim wrote a $100,000 check to Google Inc., an entity that