Thirty years on Wall Street has taught me a few things about being a woman in the business world that I'd like to share with the next generation of multicultural women who want to start and scale a business. In the early days of my career, I had my own personal missteps amidst numerous victories.
I always vowed that when I reached senior management, and people came to me for advice, I would provide them with the tools, strategies and pearls of wisdom honed by my own experience. That's why it is such an honor to be chair of the National Women's Business Council and have an independent platform from which to share my pearls of wisdom. Here are five of my “Carla's Pearls:"
1. Build Your “Relationship Currency"
Starting out as a woman in the male-dominated industry of investment banking, I thought working hard was enough, but quickly realized it was not only hard work, but the people who leveraged their relationships were actually the ones able to climb the fastest. My advice to young professionals and entrepreneurs is, don't over invest in your performance because it really is the 'relationship currency' that gets you the next great assignment, a piece of business that generates visibility or the ability to have access to someone that can make the difference. Relationship currency comes from spending time with people inside and outside your organization that can positively impact your career or business. Some of the most important relationship currency I amassed in my journey to becoming a major decision-maker has been from mentors and sponsors.
First, understand the distinction between a mentor and a sponsor. Your mentor needs to know you very well and be willing to give you unaltered feedback in a direct way, while also understanding your work context, and always have your BEST interest at heart. My advice to anyone, and particularly women of color is, do not be confined to choosing someone that looks like you or that works in your organization. As long as you believe that the person knows you really well, and you are able to give them the “good, bad and the ugly" of whatever your concern or situation may be, then they can be an effective mentor for you. Your sponsor is the person who will use their social and political currency to advance your career or professional decisions being made about you behind closed doors within your organization. You need to identify the person who has a seat at the decision-making table, who has the power and influence to get to an affirmative decision on your behalf. If you are an entrepreneur, then your sponsor can be the person who is using their personal connections to introduce you to sources of capital, new customers or even new suppliers.
2. Expand Your Network Far and Wide
Always be thinking of every person you already know and new ones you meet in terms of how they can help you grow your professional network. You must build your network far beyond mentors and sponsors. Make sure that you are constantly taking time to connect with new people, and also maintain existing relationships in and out of the office. Even if it's just to say “hi, how was your weekend?" or “let's catch up over coffee," these light touches can give you the basis to start building intentional relationships that can be meaningful to you and your business. The key to success is the follow-up with people.
Consider individuals such as family, friends, employees, co-workers, customers and service providers that not only know who you are, but are also connected to other people who might turn out to be helpful to you. You'll be surprised at the network of people that are available to you that you already know – your doctor, your peer or a former teacher for example. You have to start talking to people about what you are planning to do, what you need, etc.
Entrepreneurs of color should especially over invest in building relationships in order to have access to the people that could make the difference in having the capital needed to scale or the customer that could change your business in an exponential way.
3. Seek Out All Available Resources
Take the time to learn what resources are available to you. During my travels across the country as Chair of the National Women's Business Council, I found that city-by-city, there are economic development, small business and even financial resources that are not used because many people are not aware they even exist as options.
To potential, current and future small business owners and entrepreneurs, start by going to the NWBC website (www.nwbc.org) to see what resources are in your city. You can also check the state or mayor's website and the SBA website for additional resource partners in your area such as the Women's Business Centers. With a few clicks, you will find resources in your area that you should fully leverage before making the extraordinary effort to go beyond your geographical boundaries. These resources are so important because of the challenges faced by women when it comes to securing capital funding, a particularly daunting challenge for multicultural women-owned businesses.
Consider the company you are currently working at as a tremendous resource as well. Try to work for a business that is in the same sector as the company that you want to start or that is very similar to your prospective business model.
You can learn how your company put their business together, how they obtained capital financing, how they attracted customers, etc. You want to achieve the highest level of success possible, and you cannot do it on your own. Emulate the people around you working towards similar goals.
4. Consider Many Options for Raising Capital
While working, save, save, save! You want to have your own capital to put into your business. If you have a great idea, but have no capital, it will be easy for investors to have disproportionate leverage in your business.
A growing and optimal arena where women have proven to excel in raising capital is crowdfunding. Although more men use seed crowdfunding, research shows that women are more successful in this growing funding arena.
This is most likely due to women creating larger and closer social networks, which I can't stress enough is the true key. Remember that 'relationship currency!' It will help you towards crowdfunding success. Women crowdfunding campaigns have higher success rates in comparison to men, averaging to be 4.6% more successful than their male counterparts in funding a campaign.
As your business starts to grow, don't forget about human capital early. Remember to add human capital so that you have the capacity to handle the growth. I have seen so many entrepreneurs who had to walk away from a valuable business and customers simply because they had no capacity to execute the business.
5. Help Each Other Out
I am a firm believer that our young girls need our help early on with exposure to financial literacy education to inspire greater interest in finance careers and to better equip young women as budding entrepreneurs.
My grandmother, who was the first female entrepreneur that I knew, would often let me count the money from her business and by the time that I was in 8th grade, I was helping her with her bookkeeping. It gave me an early interest in money and finance and as I got older and then became exposed to Wall Street, I was all in!
In the end, women need to band together, just as they are with other social issues. Through the creation of a community, there is a place where women can exchange their ideas and their challenges. Your family, friends, mentors, employees, co-workers and customers not only know who you are, but are also connected to other people who might turn out to be helpful to you and your business. You'll be surprised at the resources that are available from the people that you already know. Be an advocate for yourself and for others to create positive outcomes for women entrepreneurs and business owners.
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Business entities can be defined as the corporate, tax and legal structures which an organization chooses to officially follow at the time of its official registration with the state authorities. In total, there are fifteen different types of business entities, which would be the following.
- Sole Proprietorship
- General Partnership
- Limited Partnership or LP
- Limited Liability Partnership or LLP
- Limited Liability Limited Partnership or LLLP
- Limited Liability Company or LLC
- Professional LLC
- Professional Corporation
- Nonprofit Organization
- Cooperative Organization
As estates, municipalities and nonprofits do not concern the main topic here, the following discussions will exclude the three.
Importance of the State: The Same Corporate Structure Will Vary from State to State
All organizations must register themselves as entities at the state level in United States, so the rules and regulations governing them differ quite a bit, based on the state in question.
What this means is that a Texas LLC for example will not operate under the same rules and regulations as an LLC registered in New York. Also, an LLC in Texas can have the same name as another company that is registered in a different state, but it's not advisable given how difficult it could become in the future while filing for patents.
To know more about such quirks and step-by-step instructions on how to start an LLC in Texas, visit howtostartanllc.com, and you could get started with the online process immediately. The information and services on the website are not just limited to Texas LLC organizations either, but they have a dedicated page for guiding fresh entrepreneurs through the corporate tax structures in every state.
Sole Proprietorship: Default for Freelancers and Consultants
There is only one owner or head in a sole proprietorship, and that's what makes it ideal for one-man businesses that deal with freelance work and consulting services. Single man sole proprietorships are automatic in nature, therefore, registration with the state is unnecessary.
Sole proprietorships are also suited to a degree for singular teams such as a small construction crew, a group of handymen, or even miniature establishments in retail. Also, this puts the owner's personal financial status at jeopardy.
Due to the fact that a sole proprietorship entity puts all responsibilities for paying taxes and returning loans, it directly jeopardizes the sole proprietor's personal belongings in case of a lawsuit, or even after a failed loan repayment.
This is the main reason why even the most miniature establishments find LLCs to be a better option, but this is not the only reason either. Sole proprietors also find it hard to start their business credit or even get significant business loans.
General Partnership: Equal Responsibilities
The only significant difference between a General Partnership and a Sole Proprietorship is the fact that two or more owners share responsibilities and liabilities equally in a General Partnership, as opposed to there being only one responsible and liable party in the latter. Other than that, they more or less share the same pros and cons.
Registration with the state is not necessary in most cases, and although it still puts the finances of the business owners at risk here, the partnership divides the liability, making it a slightly better option than sole proprietorship for small teams of skilled workers or even small restaurants and such.
Limited Partnership: Active and Investing Partners
A Limited Partnership (LP) has to be registered with a state and whether it has just two or more partners, there are two different types of partners in all LP establishments.
The active partner or the general partner is the one who is responsible and liable for operating the business in its entirety. The silent or investing partner, on the other hand, is the one who invests funds or other resources into the organization. The latter has very limited liability or control over the company's operations.
It's a perfect way for investors to put their money into a sector that they are personally not experienced with, but have access to people who do. From the perspective of the general partners, they have similar responsibilities and liabilities to those in a general partnership.
It's the default strategy for startups to find funding and as long as the idea is sound, it has made way for multiple successful entrepreneurial ventures in the recent past. However, personal liability still looms as a dangerous prospect for the active partners to consider.
Limited Liability Company and Professional LLC
Small businesses have no better entity structure to follow than the LLC, given that it takes multiple good ideas from various corporate structures, virtually eliminating most cons that are inherent to them. Any and all small businesses that are in a position to or are in requirement of signing up with their respective state, usually choose an LLC entity because of the following reasons:
- It removes the dangerous aspect of personal liability if the business falls in debt or is sued for reparations
- The state offers the choice of choosing between corporation and partnership tax slabs
- The limited legalities and paperwork make it suited for small businesses
While more expensive than a general partnership or a sole proprietorship, a professional LLC is going to be a much safer choice for freelancers and consultants, especially if it involves risk of any kind. This makes it ideal for even single man businesses such a physician's practice or the consultancy services of an accountant.
B, C and S-Corporation
By definition, all corporation entities share most of the same attributes and as the term suggests, they're more suited for larger or at least medium sized businesses in any sector. The differences between the three are vast once you delve into the tax structures which govern each entity.
However, the basic differences can be observed by simply taking a look at each of their definitive descriptions, as stated below.
C-Corporation – This is the default corporate entity for large or medium-large businesses, complete with a board of directors, a CEO/CEOs, other executive officers and shareholders.
The shareholders or owners are not liable for debts or legal dispute settlements in a C-Corporation, and they may qualify for lower tax slabs than is possible in any other corporate structure. On becoming big enough, they also have the option to become a publicly traded company, which is ideal for generating growth investments.
B- Corporation – the same rules apply as a C-Corporation, but due to their registered and certified commitment to social and environmental standards maintenance, B-Corporations will have a more lenient tax structure to deal with.
S-Corporation – Almost identical to a C-Corporation, the difference is in scale, as S-Corporations are only meant for small businesses, general partnerships and even sole proprietors. The main difference here is that due to the creation of a pass-through entity, aka a S-Corporation, the owner/owners do not have liability for business debt and legal disputes. They also are not taxed on the corporate slab.
Cooperative: Limited Application
A cooperation structure in most cases is a voluntary partnership of limited responsibilities that binds people in mutual interest - it is an inefficient structure due to the voluntary nature of its legal bindings, which often makes it unsuitable for traditional business operations. Nevertheless, the limited liability clause exempts all members of a cooperative from having personal liability for paying debts and settling claims.
This should clear up most of the confusion surrounding the core concepts and their suitability. In case you are wondering why the Professional Corporation structure wasn't mentioned, then that's because it has very limited applications. Meant for self-employed, skilled professionals or small organizations founded by them, they have less appeal now in comparison to an LLC or an S-Corporation.