The Ice Cream Men

Who would have thought it? Two ex-hippies with strong interests in social activism would end up starting one of the best-known ice cream companies in the world—Ben & Jerry’s. Perhaps it was meant to be. Ben Cohen (the “Ben” of Ben & Jerry’s) always had a fascination with ice cream. As a child, he made his own mixtures by smashing his favorite cookies and candies into his ice cream. But it wasn’t until his senior year in high school that he became an official “ice cream man,” happily driving his truck through neighbourhoods filled with children eager to buy his ice cream pops.

In the meantime, Jerry Greenfield (the “Jerry” of Ben & Jerry’s) was following a similar path. He majored in pre-med at Oberlin College (US) in the hopes of one day becoming a doctor. But he had to give up on this goal when he was not accepted into medical school. On a positive note, though, his university education steered him into a more lucrative field: the world of ice cream making. He got his first peek at the ice cream industry when he worked as a scooper in the student cafeteria at Oberlin. So, 14 years after they first met on the junior high school track team, Ben and Jerry reunited and decided to go into ice cream making full time. They moved to Burlington, Vermont (US) —a college town in need of an ice cream parlour—and completed a $5 correspondence course on making ice cream. With their life savings of $8,000 and $4,000 of borrowed funds they set up an ice cream shop in a made-over petrol station on a busy street corner in Burlington.

The next big decision was which form of business ownership was best for them. This chapter introduces you to their options.

Factors to Consider

If you’re starting a new business, you have to decide which legal form of ownership is best for you and the strategy you plan on pursuing. Do you want to own the business yourself and operate as a sole proprietorship or trader? Or, do you want to share ownership, operating as a partnership or a company? Before we discuss the advantages and disadvantages of these three main types of ownership, let’s address some of the questions that you’d probably ask yourself in choosing the appropriate legal form for your business.

1. In setting up your business, do you want to minimise the costs of getting started? Do you hope to avoid complex government regulations and reporting requirements?
2. How much control would you like? How much responsibility for running the business are you willing to share? What about sharing the profits?
3. Do you want to avoid special taxes?
4. Do you have all the skills needed to run the business?
5. Are you likely to get along with your co-owners over an extended period of time?
6. Is it important to you that the business survives you?
7. What are your financing needs and how do you plan to finance your company?
8. How much personal exposure to liability are you willing to accept? Do you feel uneasy about accepting personal liability for the actions of fellow owners?

No single form of business structure will give you everything you desire. You’ll have to make some trade-offs given that each structure has both advantages and disadvantages. Your job is to decide which one offers the features that are most important to you. In the following section, we’ll compare three business structures – namely sole proprietorship, partnership and company – on these eight characteristics.