JOURNAL ARTICLE

Should Your Start-up Be For-Profit or Nonprofit?

  • Published In: Harvard Business Review, 2023, v. 101, n. 3. P. 136 1 of 3

  • Database: Business Source Ultimate 2 of 3

  • Authored By: Brumme, Cait; Trelstad, Brian 3 of 3

Abstract

The article focuses on the critical decision social entrepreneurs face when choosing between for-profit and nonprofit legal structures for their ventures. It explains that the traditional distinctions between these forms have blurred, with many nonprofits competing commercially and for-profits pursuing social impact through impact investing. Founders are advised to make an early, deliberate choice based on four key factors: market readiness, customers’ willingness to pay, availability of capital, and the ability to attract talent and resources. The article highlights that hybrid structures often increase complexity and that changing legal forms later is difficult, emphasizing the importance of aligning the enterprise’s mission, market conditions, and funding sources from the outset.

Additional Information

  • Source:Harvard Business Review. 2023/05, Vol. 101, Issue 3, p136
  • Document Type:Article
  • Subject Area:Business and Management
  • Publication Date:2023
  • ISSN:0017-8012
  • Accession Number:162966657
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