Dayna Thomas is an attorney, a business coach, and the author of Entrepreneur’s Guide To Building A Solid Legal Foundation. She joins the Atlanta Small Business Show once again to share the top three business killers that entrepreneurs should avoid, from keeping expenses low to trademark searches.
VIDEO TRANSCRIPT:
JIM: Dayna Thomas is back in our studios, here at the Atlanta small business show, to talk about what some of the business killers are when it comes to opening up a business or running a small business. Thank you so much, Danya, for joining us again on the Atlanta Small Business show. Happy to have you here.
DAYNA: Glad to be here.
JIM: As I mentioned earlier, our viewers get a lot out of your visit here.
DAYNA: Thank you.
JIM: Let’s talk about what some of those business killers are and how we can avoid them, right?
DAYNA: Absolutely. So I’ll start with one. I am a lawyer, but I’m also a business coach, so a lot of times I talk about other aspects outside of law that you need to make sure to be aware of. Something that business owners need to know is the difference between an expense and an investment.
DAYNA: If you have too many expenses, that is a business killer. So don’t think that just because you’re starting out, you need this big office. You need all of this equipment. You need a new phone line. You don’t need any of those things. The more expenses that you have, that will kill your business, and so investments are things that are going to make you more money. Expenses are things that won’t.
DAYNA: So a new line for your phone is not going to make you more money. A new printer than the one that you had is not going to make you more money. Keep those expenses, lower or else it can kill your business.
JIM: You see so many people that will run out and take a home equity loan of $50,000 or a $100,000 or even $25,000. “I’m going to start a small business,” And in two months they’re out all $100,000.
JIM: What did you do with it? “Oh, I had to have this, and I had to artwork on the walls, and I had to have that.” You’re right, at the end of the day, none of that really matters, does it?
DAYNA: No. Show yourself that you can make money first, before you start expending on expenses.
JIM: Sure.
DAYNA: Yeah.
JIM: Then make sure it’s the right expenses. A lot of businesses will jump into it and not reserve money for marketing or to get the word out there, and they’ll say, “I have no more money left, because we redecorated the officers to look perfect, but I can’t fill the offices with people, because I don’t have any money to market.”
DAYNA: A lot of times you don’t even need an office. You can go to your client’s office, you can meet at a mutual location, so keep those expenses low. You want to make sure your business survives the first year and in perpetuity.
JIM: Yeah, that’s right. That’s right. What would be next?
DAYNA: I would say, something that business owners often don’t think about until later is a trademark. In one of my other videos, we discussed trademarks a bit, but I want to bring it back up, because a lot of times we think that the most important part is doing the trademark registration. But in the beginning you should actually do a trademark search first, because you want to make sure that your brand name and logo is actually available for use.
DAYNA: If you don’t have a trademark search done to make sure that it’s cleared, that there’s no other business using that name or nothing too similar to it, what can happen is you can invest so much in marketing your business and your website, flyers, business cards, all these things, and then you might get a cease and desist letter from someone that has a trademark registration that you didn’t even check when you first started.
DAYNA: Having to rebrand is a huge investment, and that can kill your business. So do the trademark search upfront.
JIM: And it happens a lot. It’s not one of those things that people say, “Oh, that never happens.” It happens all the time.
DAYNA: It really does. It’s a lot of cleanup that trademark lawyers have to do, actually. So just make sure that you do that search upfront and soon after do the registration, because the time that you do the search and then you start with that business name, you don’t want to leave too much time in between the registration, because then someone can kind of fit themselves into registration before you actually do it.
JIM: Yeah, yeah, it’s good point.
DAYNA: Yeah. I don’t want to have to rebrand. That can kill your business.
JIM: Sure. What’s number three on the list?
DAYNA: I would say, make sure to check with the Secretary of State that you’re in good standing.
JIM: What do you mean by that?
DAYNA: Well, in Georgia, when you form an LLC or a corporation, you have to do an annual registration every year. So between January 1st and April 1st of every year, you have to let the state know that you’re still in business. That’s a simple annual registration. It’s only $50 that you do once a year, and a lot of people don’t know that.
DAYNA: I’ve gotten calls, you know, someone thinking that they’re in business for the past five years. The first thing that I always do, I go on the Secretary of State’s website and check the status of their business. I would say probably half the time those businesses are dissolved.
JIM: Really, half the time?
DAYNA: I would say, half the time the businesses are dissolved.
JIM: And they don’t even know it.
DAYNA: They don’t even know it, and the reason, 100% of the time, is because they didn’t do the simple annual registration. So if you don’t do your annual registration, the state will dissolve your company for you, and they’ll do that within a few months.
DAYNA: Although you do have a grace period, if you’re late after that April 1st deadline, you can pay a $25 fee for being late, but if you’re kind of too late, then they’re going to dissolve the company for you.
JIM: Wow. Okay, that’s great to know. When that happens, or if that happens, where the state dissolves it, does that mean that the individual is doing business without the protection of the corporation?
DAYNA: Yes.
JIM: And then now they’re doing business as an individual, right?
DAYNA: Yes.
JIM: So if somebody then wants to sue you, they go to the state and they say, “Well this person actually isn’t a corporation or an LLC, so now we’re going to sue them personally.”
DAYNA: Right.
JIM: Is that a fair statement?
DAYNA: That is a fair statement, and so we have to make sure to keep up with those business matters. Make sure you do your annual registration, but the good thing is, is that since it happens so often, the state of Georgia makes it pretty easy for you to kind of reinstate your company. You can reinstate your organization or your LLC, or your nonprofit, the corporation, whatever it might be.
DAYNA: There is a filing fee of $250, which is more expensive than even starting the company, but they give you the opportunity to do that, and once you do the reinstatement within a certain period of time, it will be as if you never got dissolved.
JIM: As far as you know, can a company pay for years in advance, so it doesn’t happen again?
DAYNA: No.
JIM: You have to do it every year?
DAYNA: You have to be on top of it. But the state does send you an email, so make sure that when you do register your company, it’s an email that you know that you’re going to check.
JIM: I’m checking my company right after this session.
DAYNA: Yes, let me know if you need help.
JIM: To make sure it’s compliant, right?
DAYNA: Absolutely, so those are definitely three things that every business owner should pay attention to, or it can kill your business.
JIM: So, trade mark search, keep your expenses as low as possible, think before you make that next purchase of something that sounds fancy. but you really need it? Great advice. And of course the Georgia registration. So those are three business killers. We hate to talk about business killers, but I think we have to.
DAYNA: It’s very real.
JIM: Yeah, it is very real, and as an attorney here in Atlanta, I’m sure you’ve seen all of those terrible stories, people coming in and saying, “Help me.” But sometimes it’s too late, right?
DAYNA: The best thing is to protect against it, but if there is an issue, I’m happy to help.
JIM: That’s right. That’s right. Well again, Dayna, thank you so much for taking the time out of your busy schedule to join us on the Atlanta Small Business Network. We really appreciate it.
DAYNA: Thank you.
JIM: Thanks.
DAYNA: Awesome.
