The billion-dollar government contracting industry is still projected to rise in the coming years, especially with America mobilizing contractors to aid the nation’s recovery from the recent pandemic. With this great opportunity just within grasp, who wouldn’t dare jump into creating not just one company but multiple businesses!
Why should you start multiple businesses?
Starting multiple businesses is daunting and, not to mention—risky. But, what’s life without taking risks, right?
As the saying goes, “high risk, high reward.” You strengthen your financial security by diversifying your income sources when pursuing different businesses. So even if your Business A didn’t take off, you still have your Business B to rely on. At the same time, running multiple businesses simultaneously also pushes you to grow to be a better entrepreneur. With the success of your companies riding at your back, you motivate yourself to think more creatively and hone your skills to be a better version of yourself, too!
How to start creating multiple companies?
1. Research about your target industries
Just like when you establish a single company, performing thorough market research on your prospect industries is essential to achieve your goal of owning multiple businesses. Here are some of the things you know before deciding to open multiple businesses:
- Who are your clients?
- Look up federal agencies likely to purchase your products and services in this free database.
- Who are your competitors?
- Search your potential competing contractors and study their way of trade. Visit this website and see which federal agency they are currently working with.
- What are the strengths and weaknesses of your company?
- Using the knowledge you have gathered from above, it is time to evaluate your business’s unique selling points.
In this line of business, knowledge is power. So as a future CEO of multiple government contracting firms, you should avoid cutting corners when conducting market research. Otherwise, this might spell considerable losses to you and your business partners as well.
2. Know the best legal structure for your multiple businesses
There are different ways to legally structure multiple businesses, and it all depends on how you or your partners desire to manage your company. Selecting a legal business structure will affect how your company will pay its taxes and other liabilities.
Aside from the series of paperwork you have to file to register as a government contractor, you also need to consult with a business attorney beforehand to assess which business structure will work for you.
Here are some of the well-known methods you can use to structure multiple businesses:
• Establish individual LLC or corporation
For starters, LLC, or Limited Liability Company, is a type of business structure in the U.S. that protects the business owners from personal responsibilities from debts and liabilities. Depending on which state your businesses are operating in, there are no limits on how many LLCs you can form. So no matter how many businesses you have, you can all register them as separate LLCs.
• Your assets are safe from any liabilities.
The only resource you’ll risk losing should your LLC fail is your invested money in the business. Registering your enterprise as an LLC or corporation will protect your personal assets such as cars, homes, and personal bank accounts from any business debt and claims.
• Each LLC is considered a separate entity.
Registering separate businesses for LLCs means that you protect the individual business from the risks and liabilities of your other business. This means that if your first business were sued, the assets of your second business would remain unaffected. Real estate investors are the ones who usually observe this practice to shield every investment from any liabilities.
•Time-consuming and expensive.
Since each business is registered as a corporation, you have to file a series of tedious tax forms and, of course, pay a significant amount of taxes for each business.
• File your DBAs under an LLC or corporation
You can register just one of your companies as an LLC and then put up DBAs (Doing Business As) for your other business ventures compared to our previous legal business structure.
You can run your businesses under DBAs as separate entities with this structure. This means you can use different company names and implement different branding for each venture.
• You only need to file your taxes for one LLC.
This equates to fewer costs from filing and paying taxes since you do not need to pay for the individual taxes of your DBAs.
• Your assets will also be protected from business liabilities.
Similar to the first business structure we’ve discussed, you will also enjoy the legal protection of LLCs if ever one of your DBAs encounters business losses.
• Your DBA is not protected from the risk and liabilities of other DBAs.
Since only the primary company is registered as LLC, your other DBAs will be held liable for any debts and losses of your other DBAs as well. If one DBA were sued, the rest of your DBAs would be held accountable too.
• Build a business under a holding company
If you or your business partners are looking to be acquired by more prominent companies, then this method will work best for you.
If you choose this path of structuring your business, you should register your businesses as separate LLCs and place them all under a holding company. By doing this, you are subjecting your businesses to be the holding company’s subsidiaries.
• You will pay fewer taxes.
You only need to pay your taxes mandated by your state instead of filing for your taxes for all your profits compared to previous business structures. Consult your state’s tax laws and tax lawyer to know the specifics.
• You will be subjected to greater bureaucracy
The holding company, also known as the parent company, will own 50% (or more) of the company shares. Although they wouldn’t be handling your day-to-day operations, they will influence your policies and corporate decisions.
• You will be handling more complex financial statements and legalities
Since your companies are now under a parent company, you have to fulfill more complicated financial and other operational documents than before. Get in touch with a tax adviser or attorney to know how to navigate through it.
As you can see, structuring multiple businesses requires you to go through a tedious process. You must ensure that all your documents satisfy the legal requirements to avoid future problems.
3. Build your multiple businesses close to each other
Setting up your companies within a central location will save you valuable resources compared to running multiple businesses in different places. If you are still starting up, you can rent adjacent office spaces in the same building for your businesses.
By doing this, overseeing your ventures personally will be easier and efficient too. Additionally, you can encourage your personnel from your different companies to interact with each other and even get them on board for collaboration projects.
4. Be on top of your business’ financials
Most serial entrepreneurs might think if they somehow overspend in one business, they can just offset your expenses by reallocating assets belonging to your second business. In some emergency cases, this move might be acceptable. But doing this frequently may spell disaster not only to one business but to an entire chain of business ventures.
As a multiple business entrepreneur, you should set clear boundaries between your businesses and treat them as separate corporations to keep sufficient resources to pay off their necessary expenses.
To help manage your corporate finances, you should seek financial advice from a trusted expert then prepare a comprehensive business plan around a specific budget range.
5. Learn how to prioritize
It is probably common sense, considering you manage more than one business, right? But sometimes, most entrepreneurs tend to spread themselves thin—and business owners like you can only handle so much. So, take a step back, evaluate which of your businesses have the most potential to grow, then prioritize it.
But, that does not equate that you will neglect your other businesses. You are still maintaining the rest of your ventures; you are just dedicating more of yourself and your resources to a business that is more likely to succeed.
6. Hire a team of experts to take a load off your plate
Asking others to come on board in running your enterprise that you’ve dedicated your blood, sweat, and tears can be daunting.
But, it is a necessary step to take, or you’ll risk hindering the growth of your businesses. Remember: one of the qualities of a good leader is knowing how to delegate tasks. It is impossible to be an expert in all aspects of your business, so entrusting some aspects of running your business to seasoned professionals will set up your corporation to success.
Additionally, having a team of experts and co-founders supporting you will safeguard your businesses from snags you will probably overlook if you try to run everything yourself.
7. Foster a healthy working environment
Once you have hired a solid team to fill in the ranks, you should now strive to create a healthy space and conducive work environment for them. Keeping up with the rapid growth of your businesses, especially during its early stages, is undeniably stressful for you and the rest of your employees too.
As you grind to success, make sure that you don’t overlook the welfare of your staff because they, too, are human. A healthy working environment encourages high-quality productivity and instills loyalty among your employees.
8. Maximize online productivity tools
Owning multiple businesses can be overwhelming, especially if you are not equipped with the right tools to stay on top of every task. Fortunately, recent tech innovations gave birth to these online tools that can help boost your staff members’ productivity and streamline your operational processes as well.
Here are some online tools that many entrepreneurs trust and rely on for their day-to-day activities:
To manage a successful business, you have to be a master in time management. Fortunately, this online collaboration tool helps entrepreneurs like you keep everything in place. See projects and deadlines at a glance, communicate and collaborate with your staff, and easily access important files with just a few clicks.
Made by the known tech giant, Google Workspace is a collection of cloud-based productivity and collaboration tools. They offer different business plans depending on your needs.
Like other entrepreneurs still managing their team remotely, this employee monitoring tool will help you keep track of your team members’ activity and productivity levels.
This video conferencing tool has become a staple in every online workspace, especially with COVID-19 still keeping businesses confined in a work-from-home setup. They offer a free version and business plans for unlimited video call times.
9. Always keep a pen and notebook handy
Entrepreneurs who run multiple businesses will never run out of ideas—may it be a new business concept for a specific target market or a creative solution to improve the business’s hiring practices. These lightbulb moments usually come without a moment’s notice, so you should always keep a notebook on your person whenever, whenever. Who knows, maybe the next big idea for your new venture might come any time soon!
10. Take a break
You might find yourself reminiscing the more relaxing times when you’re still a business owner managing small businesses. So we’re ending this article with our most important tip: never forget to take a moment to step back from the stress of owning multiple businesses.
Your sole focus shouldn’t only be running a business as a serial entrepreneur. You should also set your sights on how you can live your life to the fullest from the fruits of your hard work.