Professor Trexler visits the Mogulettes

Jeff Trexler has a PhD in religion, is a lawyer and he teaches social entrepreneurship. Wow, talk about powerful combinations! He came to visit the Mogulettes this week to talk to us about business structures, but he gave us a whole lot more than that.

He says if you're starting out and have little liability risk (ie. there's little potential for getting sued for the product or service you're offering), it's okay to choose the sole proprietorship structure until you have a better idea of where your business is headed. It's the simplest one of all: You don't have to get registered with the state (although you may need to a license to work in your particular field) and you get taxed at the personal rate. One drawback is that you're liable for everything - in the event that you get sued, they could go after your personal assets - yikes!

It's even worse with partnerships, which is when two or more people come together to form an enterprise. With this type of structure the partner with the most money will stand to lose the most in a lawsuit. They'll go after the richer one!

With a corporation, you and your company are two separate entities. There is a legal distinction between the two, and if you get sued, only corporate assets can be seized. The problem here is the double taxation. Profits get taxed at the corporate level and then dividends get taxed as well. And you also have to maintain certain formalities, like you must hold regular shareholder meetings (even if you're the only person in the corporation!) and keep separate books.

According to Jeff, for many businesses the best choice is to become LLCs, or limited liability companies. LLCs offer limited liability to the owner and they get to report the income or loss on their tax return.

Before you make a decision, he suggests speaking with an accountant and/or lawyer to see if there's tax benefits for you associated with a particular structure. Each case is different so you must consider your own unique factors. One great resource he gave us was NOLO Press. They publish all sorts of guides written by lawyers in layman's terms to help you navigate through complicated legals issues. He says the books are so helpful that the State of Texas was at one point considering barring their sale because they took too much business away from lawyers! Jeff gave us a free copy of one of their books, "LLC or Corporation? How to Choose the Right Form for Your Business".

Which brings me to why this dashing professor holds a position of honor at our club - he also donated eight brand new books on business, so that now we have our very own lending library! Aside from the one above, we also have the following texts, all written by Rhonda Abrams, available to borrow:

Winning Presentation in a Day
Business Plan in a Day
Six-Week Startup
Finding an Angel Investor
The Owner's Manual for Small Business
Trade Show in a Day
The Successful Business Plan, Secrets & Strategies
Successful Business Research

And not only that, Jeff believes that everyone should have access to information. He says that if you want to be accredited then by all means you can attend school, but if all you want is to be better informed, then that shouldn't cost you any money. So he's planning on putting all the lessons on entrepreneurship and law he teaches at Pace University online, to make them available to all. What a guy!

Here's two more links he gave us that could save you time and money: The NY Dept. of State has a database where you can check whether the name you want for your company has been already filed by someone else. Then go over to the US Trademark Office to do a national search using their search engine.

Jeff promised to come back to talk about innovation and finding a niche, so I'll keep you posted!

Walking on red hot coals

I was in sunny Puerto Rico visiting my family last weekend but no matter where I am these days I always end up finding interesting startup stories.

While there I met with my new friend Sharon Pica for lunch and when I told her what I was up to with The Mogulettes, she shared how she had started a few businesses herself. After studying at F.I.T. and working for years as a buyer here in the states and in P.R., she decided to launch her own line of clothing. The scariest part, she said, was gathering the courage to disclose her plans to her boss, who owned a chain of stores in old San Juan. He was very supportive and allowed her to work part-time while she put together her line. Although she was great at spotting trends and knowing what designs would sell, her weak point was making patterns, so she was able to find a partner that had experience with that. Their first dress was a disaster - the pattern came out wrong and they had to throw away all the fabric. But then orders started coming in and dresses started selling. They found a very good rep and Sears and JC Penney's placed orders. Little by little the company grew. Her old boss became one of her biggest customers. After a couple of years they were making close to one million dollars in annual sales! Soon after that she and her partner parted ways and Sharon went off on her own - that's when the business really took off.

Sharon at home, getting ready for her next business adventure

It was also during that time that she felt drawn to the spiritual side of life, and after attending a few seminars she decided to start a non profit to bring all the wonderful teachers she loved to the island. Her fist event was with Wayne Dyer and 600 people showed up, then thousands came to see Deepak Chopra, Marianne Williamson and others.

But everything changed when her daughter Gabrielle was born. Sharon put both businesses aside to become a full time mom after realizing she couldn't breast feed and buy fabric and book spiritual events at the same time. That was 9 years ago and now she's ready to get back into action with one of the many new business ideas she's cooking up in her very creative head.

Sharon had a great story about how she overcame her fears when she launched her first business. A week before making the decision, a friend told her about a training that taught people how to walk on coals to work out their fears - Anthony Robbins-style. She agreed to go but once there, she was so terrified she went to the end of the line and was the last one to step into the red hot ashes. Well not only did she walk through the smoldering coals once but then went back and did it again, and again! After that she felt that if she could walk on fire she could do anything - it was a great 'rah-rah!' moment for her. And that's how she found the courage to start her business...

Do you have a 'rah-rah!' moment you'd like to share? I'd love to hear it!!

Legal Eagles

Are you unsure about what business structure to choose for your company, or have doubts about a lease or contract you're about to sign? Maybe you've spent all your budget on marketing and have little left for consulting with a lawyer before making decisions such as these...

Well if you live in or around New York City, you're in luck. The Neighborhood Entrepreneur Law Project (NELP) was created exactly for this reason. They assist low to mid income business owners in Manhattan with legal issues - at no charge. Akira Arroyo is their program director and she graciously agreed to attend this week's meeting to talk to us about their services. They have partnered with volunteer attorneys that can advise you on whether your business should be a corporation, partnership, sole proprietorship, etc. They'll also review your lease or sales contract before you sign it, plus they'll give advice on protecting trademarks and copyrights, and on what licenses and registrations your company will need. They also offer seminars and legal clinics - like right now they have one on commercial leases. She can be reached at 212-382-6633. (That's her below)

Here's 2 other free legal services offered by the New York City Bar Association: the legal hotline (212-626-7383, Mon.-Fri. 9:00am-12:30pm, or www.lawhelp.org/ny) which is part of the City Bar Justice Center, the pro bono arm of NYCBA, and the Monday Night Law Project, a clinic held on the 1st Monday of every month where you get speak to an attorney who will help you assess your legal issues (you'll need to schedule an appointment in advance: call 212-626-7373). One caveat: both of these services only cover family law, landlord/housing, consumer fraud/credit issues. For small business issues your best bet is NELP.

After Akira's presentation we all had a chance to chat and catch up on things. Fellow Mogulette CarolynTownes shared that she now has 4 blogs that she's posting to! This fabulous fempreneur is a Spiritual Life and Leadership Coach who also runs a inspirational group entitled Becoming a Woman of Purpose. Her most recent post is about how to deal with gremlins. Yes, gremlins, those pesky killjoys that shoot down your ideas and rain on your parade.

What's in a name? That which we call a rose...

This week the Mogulettes and I attended a seminar on Trademarks and Copyrights sponsored by the Neighborhood Entrepreneur Law Project and the Field Center for Entrepreneurship at Baruch College. I was surprised to find out that you don't neccessarily have to register a trademark for the name of your company -simply by using it you own it - unless of course, someone else came up with the name before you did, in which case, they own it.

It's really important to do a thorough search to see if the name you want to give your business is already taken. It could end up costing you mucho dinero if you have to change your logo and reprint all your you marketing materials because someone else owns the name! A trendy Manhattan restaurant now called Serafina had to change it's name from Sophia at the height of its popularity for that same reason. They not only had to alter the logo on the outdoor signage, the menus, the business cards, etc. - then there was also the question of whether their clients would accept the new name and if they would recoginize the brand.

Here's a few places to check:

Register.com or GoDaddy.com for domain names

US Trademark Office database for business names

Your local County Clerk's office to see if there is already a business registered under your name

Here's a few good tips from "A Girl's Guide to Starting Your Own Business": check with a lawyer or accountant and have them run a city, state and national search to make sure that no one else has claimed it. Then once you know the name you want is available, run it by a professional or personal circle to get feedback. Make sure it's broad enough to encompass any future areas your company may expand into.

Check out this set of articles from Entrepreneur.com on domain names:
Find the Perfect Domain Name
Protecting Your Business Name Online
Keeping Your Domain Current