First a quote from Steve Jobs: "Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart."
The first step is to develop your central idea. What has driven you to start your new enterprise. For Ah Goo Baby this came from my wife, Karin. Karin had been an entertainment executive for over 10 years prior to our getting married and having our first child. She chose to stop working and be a full time mom. From the day-to-day needs of our kids, she realized there were a number of things simply not offered for her kids that she really wanted and had been looking for. After our second child got into the toddler stage, she realized that she wanted to get back into the business world, but in a way that allowed her to still have control over the time she still wanted to spend with our children. We spoke about her starting a baby products company and the various ideas she had.
Before engaging in any of the ideas, we concentrated on what the central "feel" she wanted to convey in her company. Given her background in the entertainment industry and the Los Angeles style and fashion surrounding that industry, she wanted her company to bring that style, fashion, and celebrity to motherhood. Her focus was the "yoga-mom" rather than the soccer mom. That was the brand identity that she wanted to permeate her company.
Now that company brand identity needed to be capsulated into a name. She felt strongly that the company reflect something directly related to children, yet unique to be memorable. As most new parents do, she did a lot of reading from the experts on child rearing. A few books referenced the phonetic "Ah Goo" as the first organized sound that comes out of a new baby's voice. Ah Goo ... cool, memorable, and related to a very important memory of her (and every parent's) baby's early years. It needed a little pizazz as well as a direct reference to what we do, given the word "Ah Goo" were not traditionally recognized. So we attached "Baby" at the end, and there it was born, "Ah Goo Baby," the brand.
Next came the strategy to translate that brand into a product line. We went through a number of her product ideas and realized one rose to the surface. She found as most parents do, that in today's world she was out of her home with the kids more than inside our home. What things happen to infants and toddlers all day long? They go to the bathroom A LOT. Ironically, we spend a significant investment in the baby's nursury, and have soft and cozy changing stations, but there were no similar plush changing stations that were portable. Sure there were the free changing pads that came with the diaper bags, but they were drab, cold, and uncomfortable making quite a stressful changing experience for the baby and the mom. Especially for parents on the go, this situation happens a lot when you consider road trips, airplanes, hotels, restaurants, the park, pool, for Grandma when she takes the kids, and the list goes on. She wanted something with fashionable style fabrics, luxury comfort for her baby, and portability so that it could fit in a traditional bag.
So now we refined the company brand identity with a product concept. Similarly we needed to come up with a name for that brand. Something simple, memorable, and cool. And the "Plush Pad" was born. We went with 5 styles to suit a variety of mother's tastes, each of which having it's own sub-brand: "Paradise" with a beachy aloha print, "Rascal" with a leopard/fuchsia prints, "Jungle" with a camouflage and sage prints, "Vintage" with a pink and chocolate damask print, "Cha-Cha" with a Palm Beach feel of lime, orange, baby blue and chocolate stripes, and "Retro-daisy" using pinks and chocolates with a cool retro daisy print. I'm sure you can think of mom that would fit one of the above!
- Limit your liability -
- Formalize your company structure - Any company having vendors, and that sells to the public will have liability. Protect your personal assets by securing layers of protection. One of those ways is by incorporating. See an attorney about which type of company structure works best for you, but most small businesses will find a Limited Liability Company structure to be best. It has no limit to ownership, no limit to annual revenues, and it is taxed as a flow through to your personal taxes, so you won't be "double taxed" for corporate income. It also legitimizes you with banks, vendors, distributors and investors. Follow the rules that expect you to treat your company no different than larger companies are treated. The general rule is that you don't co-mingle company funds and expenses; treat this no differently than you would as an employee in some other job.
- Get a company bank account - make sure that all payments are made and deposited into the company bank account and not directly into your personal bank accounts. You don't want to show direct co-mingling of assets or you could lose your corporate protection. If you have to pay for something with a personal credit card or check, have the company reimburse you via a journal entry on your books. If your company needs more capital to work than you have coming in, make a journal entry as a capital contribution or loan and pay it back. Be sure to check with your accountant about your specific situation to determine how you should journal added capital from time to time.
- Get a company credit card - be sure to make all payments with that card as it will help you organize yourself for taxes. You can also find cards that give points so that it can help you earn free flights and hotel stays.
- Design Patent - As a lawyer there are a number of protections that can be utilized to secure intellectual property. Here our intellectual property was a patentable design that utilized a special way the product was folded and rolled along with a memory foam pillow insert that allowed the product to be over 2 foot square when opened, yet was only 3 inches x 10 inches when rolled. So we went the extra step and had the product patented. Although expensive - approximately $10,000, with no absolute guarantee a patent would be granted, we decided as a small company it would act to help us with the future possibility of licensing our product and preventing knock-offs; it also would act as a selling feature in legitimizing our claim of the product being novel and unique in the marketplace.
- Trademarks - Securing separate exclusive ownership of the brands "Ah Goo Baby" and "Plush Pad" were important and necessary steps prior to exploiting the names and investing in the sales and marketing of our company and product. Trademarking the names prevents others from having the right to use them. Here, the names were novel enough to be trademarked solely by the words alone. Federal trademark protection (see US Patent and Trademark Office) is one of the best ways of doing that. They make it generally easy enough for you to do this part on your own through their on-line step-by-step process. For approximate $250 per trademark, you receive 5 years of protection to that name once approved, and your protection is across all 50 states. Ah Goo Baby secured our company name that we will associate with all of our product designs, and Plush Pad as our first product. Although both are associated with one another, they are also mutually exclusive of one another, so they required 2 separate trademarks. We utilized the patent in conjunction with the trademarks as a part of the clear design to maximize the value and association of our brand to the product. This is similar to what Polo did on their shirts; although there are a lot of shirts that look the same, none can use the polo trademark / logo and that is what makes them unique. That is what makes their demand. That demand is a reflection of their branding.
- International protection - although long arm statutes arguably give you protection in the US for international infringement of patents and trademarks, it is highly recommended to patent and trademark your intellectual property internationally as well. This is something a small company will need to weigh as it is costly (patents are approximately $5,000 in costs per jurisdiction in legal fees and filing costs) and need to be filed in many jurisdictions for full protection. Then comes enforcement which is very expensive when suing in foreign jurisdictions with judgments less heavy than in US courts. On the other hand, not having those protections in place PRIOR to placing them into commerce in those jurisdictions could forever lose your rights to secure them at a later date when your company and / or product becomes more valuable. There is no real right or wrong answer regarding the extent to which you choose to protect your intellectual property overseas and is ultimately a business decision for each company on a case-by-case basis.
- Web URL. Be advised. Before you register ANYTHING secure your URL. Even if it is a unique name like Ah Goo Baby was, there are companies that crawl new listings of patents and trademarks and company names and they take the name, requiring you to pay them a premium to buy it from them. Get the name first, and park the name for use later.
