Oct312012

“Only when your business stands on its own two feet can you reap the rewards of the blood, sweat, and treasure you’ve poured into it.”

Nina Kaufman
Nina Kaufman
Kaufman Law PLLC
Ask The Business Lawyer

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Nina Kaufman is a small business champion—not just your ordinary business attorney. Forbes Magazine calls her “One of the 25 Most Influential Women Tweeting about Entrepreneurship.” The U.S. Small Business Administration named her their regional Women in Business Champion of the Year for her creative approaches to educating and advocating for small businesses. In over 15 years in business, Kaufman has helped thousands of entrepreneurs in the generation of tens of millions of dollars by working diligently to help her clients save time, money and aggravation with business law issues. As a trusted thought leader, Kaufman reaches over 2 million readers each month on Entrepreneur.com.

When asked, “Why did you become a lawyer?” Nina quips, “Because I saw “To Kill a Mockingbird” at an impressionable age.” But there’s truth behind the (attempted) humor. She wanted to be Atticus Finch when she grew up. Still does. Someone wise, trusted, and decent who helped solve people’s legal problems with integrity.

Couple that with the fact that she’s a bookworm, a ham, and an avid writer—it’s no surprise her business has evolved as it has. She’s an educator at heart, and her beat is entrepreneurship and small business law. Her mission is to help women business owners escape self-employed slavery by positioning them to build self-sustaining, multi-million dollar companies. That’s reflected in her multi-faceted approach to legal services, writing, professional speaking, and the resources she has created for business owners. She wears many hats, but then, so do her business clients.

MO: I love that Atticus Finch from “To Kill a Mockingbird” influenced your early interest in law. Now, that you’ve established a very successful law career, who inspires you today?

Nina: I’m inspired by entrepreneurs who “play to win.” As a lawyer, I was trained to evaluate every “what if,” every contingency, every risk. And law school does not really provide you with entrepreneurial training–much less how to think like an entrepreneur. Rather, you’re taught to “play not to lose,” to take a more cautious approach when advising clients (especially so that you CYA). That attitude stunts your growth if you want to create a business that makes an impact and serves the larger community.

As examples, I look at the stories of Mary Kay Ash, founder of Mary Kay Cosmetics. She got fed up seeing men that she trained repeatedly get promoted above her and earn a much higher salary. She built a hugely profitable business from scratch that created new opportunities for women to achieve their own financial success. Suze Orman, too, started with nothing and built an amazing media presence, making the heady and intimidating issue of personal finance intelligible for millions. Richard Branson is a model for building not just one company (and a huge one at that) but for building wealth through a portfolio of companies. As people, are they perfect? No. Do I agree with all the choices they’ve made? No. But there’s something I can learn from each one of them.

MO: Why have you made it your mission to eradicate self-employed slavery for women business owners by positioning them to build multi-million dollar companies?

Nina: More and more, women are–and need to be–an economic force in this country. They can’t do that if their earnings barely enable them to keep their heads above water. I’ve made it my mission to eradicate self-employed slavery for women business owners because I have seen the wasted time, money, and potential that results from playing small. I experienced it myself when I had to close my first law firm in 2007. For all of our efforts, my business partner and I never achieved leverage within our law business. Given the lack of scale–or anything saleable about our company—there was nothing we could do but shut our doors when the firm unraveled.

That’s why building a self-sustaining business– one that can function without the owner’s active involvement–is so crucial. It’s like raising a healthy child: at some point, she has to be able to feed herself, dress herself, and function independently of you, or else you’ll stunt her growth. Only when your business stands on its own two feet can you reap the rewards of the blood, sweat, and treasure you’ve poured into it: Cash flow, to contribute to your family and your community. Support, with staff and alliances so you don’t have to go it alone. Options for meaningful work, instead of trudging along until you can’t any longer. True freedom, so that you can shape your life as you choose and control your destiny. A business with the potential to “scale” can provide these aspirations of entrepreneurship.

MO: Why is a strong sense of community so important to small business owners?

Nina: Human beings are herd animals. We are hard-wired to want community, to want to fit in. But entrepreneurship is often a lonely ride. Most people would never take the risk of starting a company and being totally, completely responsible for bringing in their own income. They’d rather have a job. Therefore, you are usually surrounded by far more naysayers and “nervous Nellies” than cheerleaders.

Being actively engaged in an entrepreneurial community is crucial for small business owners. First, it provides access to skills and resources–no one person can know everything there is to know about running a business profitably. You need a team. You need advisors. You need fresh ideas from others who understand the entrepreneurial journey, but maybe in a different industry or take a different approach. Second, because they are often surrounded by well-meaning family and friends who just don’t “get it,” business owners need the mental and psychological support to keep fighting the good fight. I found that some of the women business owners I first met through networking have now become some of my closest friends.

MO: What are some of the reasons that although women own 30% of privately-held businesses, they account for only 11% of sales?

Nina: Small-business owners (women especially) choose to keep their companies small so they keep control. With all else going on in their lives, they want their business to be “manageable.” They think manageability gives them freedom and flexibility. But that’s a hallucination. Although women entrepreneurs revere relationships and collaboration in business, nearly 70% of them fly solo. And in reality, if they don’t work, they don’t eat. If they take time off, their pipeline dries up. A manageable business is a stunted business.

It’s like a plant stuck in a too-small pot: the roots eventually choke it to death. And that’s what happens to small businesses—they choke on their inability to grow, or “scale”—because they insist on staying on the same small container. Small wonder that nearly 80% of them earn less than $50,000 per year (58.7% for men). Not exactly manageable if you need to feed a family of four, or you live anywhere near a metropolis.

MO: What are some steps that all entrepreneurs can take to minimize their business risks?

Nina: One important step to minimizing business risks is for entrepreneurs to have a laser focus on the mission of the company, whom they intend to serve, and what they will be providing. Not that this can change over time, but when you’re focused, use wonder fewer resources. It’s also easier to determine which opportunities are truly a profitable fit and which will suck your time and money. Another step: have a clear understanding of the story your financials are telling you–or hire someone who can interpret them. Many business risks have more of a financial than a legal component, and understanding your financial statements helps with smarter and more strategic decision-making.

Finally, think of your business like a championship football team: team meetings are essential. No head coach, no matter how brilliant a tactician, can have his own finger on the pulse of all the factors and facets that need to be assessed before a game. He needs daily meetings with all of his coaches to get a full, complete assessment of his team and its capabilities. Likewise, business owners need to create and consult with their team—whether the members are in-house (like employees), outsourced (like attorneys, accountants, or other strategic advisors), or part of their brain trust community (customers, strategic alliance partners, industry colleagues).

MO: Can you explain the importance of choosing the right business partner and some tips to clarify what could be a complex process?

Nina: As business owners dream about growing their companies, their thoughts often turn to taking on one or more partners as additional owners. Business partners bring a great deal of promise. They may provide expertise where you lack experience. Or give your business access to potential clients and customers you can’t reach. Or bring additional capital to grow.

The worst thing you can do is treat business partners like high school dating. You don’t want to say “yes” just because somebody asks. You’ll first want to get clear on your own goals for the company. Do you really need a business partner to get you there? Or can you achieve the same results with additional staff or outsourced expertise?

Next, you’ll want to “date before you marry.” Take your time to get to know your potential business partners. Do you have communication and leadership styles that mesh well? Do you share values and vision for the company? Do you have similar financial and exit strategy goals?

Finally, you want to “look under the hood.” Consider background and credit checks. Work on some smaller test projects together so that you can experience first-hand whether they “walk the talk.” And if you get green lights along the process, put your understanding in writing so that you can, literally and figuratively, be “on the same page.”

 

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