First Steps for Small Business Start-Ups

Don’t make these costly small business errors.
Every other month or so I have a client come to my office ready to throw down a credit card and start the logo design process and launch their business idea. They are big-eyed and full of motivation, ready to leave the gate at full force. They have “researched” the availability of their new small business name via the Law Firm of Google and Google and think they are all set and ready for the design process….But Eerkkk….these entities need to stop right there.

Unfortunately, it’s not enough to verify name availability through a preliminary search via online or social media. The first step in the small business start up process is to verify with the state, that you have the legal authority to use the business name. Under section 5.053 of the BOC, an entity or small business cannot have a name that is the same as or deceptively similar to an entity previously filed with the secretary of state. Filing your name not only clear you of your rights to use the name, but also puts others on notice that it’s in use and protects your entity. In addition, if the name is slightly similar, a filing business cannot have a name that is similar to an existing name on file with the secretary of state unless the existing entity or business, consents in writing to the use of the similar name.

We actually ran into that same issue when filing our name, “Austin Logo Designs” years ago. I was using my last name, of Spanish origin originally and it was just too confusing and didn’t clearly portray what we did as an entity. I fell in love with the name “Austin Logo Designs” and after originally filing with the state ran into a snag because there was a small church community with the name, “Austin Logos Church”. I would have only been granted the authority if the other business church owner signed off. It was a pretty stressful week until he so graciously signed off and we were on our way. I never would have known this, had I not gone through that legal process first.

We dodged a bullet in that regard, but unfortunately I’ve had a few clients that weren’t so lucky and lost thousands of dollars. About 4 or 5 years ago here in Austin; 2 passionate partners starting up a killer business with athletes in mind, providing training tips, large screens for performance evaluations. It was going to be very interactive and original in terms of fitness and technology. I had assumed that they were clear to use the name they chose. We created a stainless steel, metal and red logo design that we were all in love with. Cards were made, website was up and running with stunning photos, captivating copy, and a brick and mortar storefront was leased. The wheels were in motion. Then, we found out they received a cease and assist letter from a major athletics apparel company, which may or may not rhyme with “wonder farmer”. The name was too similar to theirs and they threatened to sue. They probably had 20 lawyers and it was a “David and Goliath (minus the slingshot) type scenario”, so my client had to back down and drop its name and close shop because their name was not originally cleared for legal use. All of the time and energy and funds spent on the logo design, shirts, branding, site, cards, etc were a loss.

Also of note, it is extremely important to decide your business classification, LLC, DBA? Most entrepreneurs form an LLC because it has all the benefits of a Corporation without the disadvantages like double taxation. However if you’re trying to take your company public or raise substantial outside capital, you should probably form a Corporation. It’s best to determine which is best for your business via a trademark attorney. (I prefer the ones you can meet for lunch vs. online sites.)

Once your brand is registered as a legal entity, you can then get familiar with your state tax codes and develop a business plan, even if its a rough one, and open a business account.

Next step, I’d advise it so make sure you purchase the domain name that clearly reflects your business name. Back in the 90’s, plenty of domains were readily available, but now, its rare to be able to find a domain that has your perfect name available, with a “.com” attached. Make sure you snatch it up via godaddy.com or another site. I also advise using a webmail address with your domain name attached so it looks more professional on cards.

Once you have cleared the legal portion of your business name and classification, then proceed with meeting with a local, graphic designer in person, and go over your ideas and conquer the world. Good luck!

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