What to consider when running more than one business
If your current business has proven successful, starting a second business may be next on your to-do list.
The blessing and curse of being an entrepreneur is that once you launch a business, you begin to see opportunities everywhere. You may even get the urge to pursue one of those opportunities in the form of a new business; that’s how "serial entrepreneurs" are created. If you want to be economically independent and occupationally intrigued, you can diversify and start another business.
However, starting a second business while taking care of your first one can be a juggling act. As you contemplate launching business number two, take note of the following considerations.
1. Take care of your existing business first
Your first priority is always your existing business, particularly if you have customers and employees who depend on it. You will know your existing business can survive without your full time and attention when you have systems in place to handle the following:
Production. Have reliable processes and personnel to handle the production of your product or service. If your business fails to consistently get quality deliverables out the door, it is not ready for a sibling.
Customer Service. There must be dependable, effective systems to assist your customers beyond their purchase. If your products have warranties or customer satisfaction guarantees, you need a system for customers to be able to request and receive support. You want the certainty that your customers will be satisfied, so they a) come back for more, and b) don't share negative reviews online.
Sales. Your existing business must continue to grow its customer base. If you are the only salesperson, and you're not actively selling, your existing business cannot acquire new customers. So, either allocate enough business development time and energy for this task or hire someone who can do it for you.
Collections. You must, must, must have a system to bill and collect from your customers. Collections require persistence and cannot risk being compromised by your focus on a separate venture.
Tech. Whether it's computers, printers, plumbing, internet, mail — things can go wrong. You need something, or someone, to reliably and efficiently fix your tech snafus so all your companies can keep moving.
2. Don't cannibalize your first business
It may be smart to set up an entirely new entity, such as an LLC, to house your new business so that the liabilities of your "Newco" don’t impact your "Oldco." Further, your new business shouldn't compete with your first business, especially if you have partners from your Oldco that don't join you in your Newco. Financially, that situation could cut off revenue from your old business and legally, you could be liable to your old partners for taking an opportunity that belonged to the first venture.
3. Write a new business plan
Just like in your first venture, you must produce a business plan that maps out your offerings, target customers, production, and budget. If you tie the operations of your Newco to your Oldco, make sure you employ a management and service agreement that maintains the separation of your two businesses — otherwise, you may risk the limited liability shield of both companies.
4. Protect your most important asset — yourself
It's necessary to budget time to take care of yourself — for exercise, sleep, family time, and leisure. As a human, you have finite energy and health, and you are your best asset. Resist the urge to work around the clock, which could lead to diminishing returns and burn out.
Whether you're creating a new business or expanding an existing one, continue learning about additional considerations around gaining buy-in, assessing your current capacity, and securing financial backing before taking the next step.