Maybe you’ve been running your small business for several years, and you’re ready for the challenge (and the revenue) that launching a second business will bring. Many entrepreneurs successfully manage multiple businesses, while many fail at it.
Before you take on something of such magnitude, ask yourself the following questions to see if it’s a smart decision for you right now.
- Can you juggle more than one business?
Consider how demanding your current business is, and then imagine adding not only another business and all its responsibilities, but also the extra level of attention and energy you have to put into a brand new business. Do you have the stamina to do both?
Your first business might be one you don’t have to do much with, like selling information products online. In that case, you probably do have time and energy to invest in something new. Just be realistic about what will be required to launch an entirely new business before jumping in.
- Would one business complement the other?
Let’s say you own a coffee shop, and you’re thinking about opening a book store next door. These two businesses would complement each other; each could send the other business, and you could co-market them together. On the other hand, if you own a plumbing company and are thinking of opening a florist shop, doing so might not be as easy, since they’re in two disparate industries.
- What’s your goal?
Are you simply bored with your first business? Or are you struggling and worried that you won’t do well financially with the business you’ve already grown? In this case, you might be better off putting more energy into the business you have to make it a success rather than starting a second endeavor that isn’t guaranteed to succeed.
If you’re looking to dabble in an area different from the one you’ve been working in, and you’re up for the challenge, help yourself!
- Do you have the capital?
If you’ve been in business for a while and have done fairly well, you probably are in a good position to get a loan or other financing for your second business. Just know what you’re getting into; create a budget for the first year of expenses, including those higher upfront costs and your salary.
- Do you have the manpower?
If you would have to split your time between the two businesses, how will you manage it? Can you afford to hire a manager for one or both businesses so that you know it’s being looked after in your absence?
- Could your family stomach another business launch?
Entrepreneurs have to keep in mind the impact that launching a business (especially when you’re already running one) has on their families. Likely, a new business would keep you away from home quite a bit initially. Is your family up for the time they’ll give up with you?
- How experienced are you for this second business launch?
As I indicated in number two, you’ll find an easier time of launching a second business if it’s in an area complementary to your first one. It also helps if you have experience in that industry. Otherwise, you’ll spend a great deal of time and energy ramping up to become an expert and get your business on its feet. This can sometimes be the death of a business, especially if your time to learn is limited due to you being tied up with the first business.
- Is there a need?
You might think you have a genius business idea you must act on, but first do research to determine if there’s even a need for that type of business in the marketplace. It’s imperative that you understand who your customers would be, and whether they would even pay for the products or services you want to sell.
- What could your first business teach you?
You’ve likely learned a lot in growing your first business that could help you make fewer mistakes the second time around. Consider where you make errors and ruminate on how you could do better this time.
- What’s the big picture?
If you start a second business, what’s your exit strategy for both businesses? Maybe you want to launch a second business so that you can phase out the first over time, or maybe you want to launch one you can build quickly and then sell. Understanding where you’ll be in five or 10 years with both businesses can help you craft your business plan in that direction.
Launching a second business while continuing to run your first business may be a challenge that you’re up for. Just carefully assess the situation to ensure that you’re set up to make it a success.