Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

On Trying to Start Two Businesses At Once 4

Do you recognize this question: “Do I start two businesses at one or just one at a time?” I received it over the weekend from my ask-me form on my website. And I have two completely contradictory answers and then an explanation.

First, the question (leaving out parts of it that would identify the person asking it):

I am about to start a business called [omitted] a digital marketing agency. But I also want to start another one, a mining research consultancy company called [omitted]. I am passionate about both but just wondering if I should start both at the same time or start one then use the profit from the first one to start the second one.

Before I answer, I have to enjoy the optimism there. How nice to be wondering whether to fund the second success with profits from the first.

My answer: Focus. It’s going to take a lot of work to start up either one of these. Don’t dilute your efforts. Choose one. It’s going to be harder than you think. Do a business plan for it, then execute, and review and revise the plan constantly.

The contradiction: I’m right now doing exactly the opposite of what I recommend. I’m working on a social media business and a mobile apps business, both of which I’m doing with co-founders, without staff,  and without outside investment.

The explanation: It’s dumb, but I get up in the morning, like the idea, and I can’t resist. I have patient co-founders.

So I’m hypocritical, yes. Do what I say, not what I do.

Image: Vlue, shutterstock.com

  • Tay

    Hi there Tim! So I’m in a semi similar situation. I am ready to approach investors with a pitch on my completed business plan for a health club. Thing is based on the financial forecasts, I won’t make tons of money and the loan is set to be for 10 years. I never wanted to start this health club in the hopes of becoming “rich” but I do want to become wealthy and the health club won’t even be profitable for 10 years. And thats me not getting paid a huge salary, if any.

    My questions are:
    1. Would you advise pursuing a second business concurrently once I get my health club up an running? (the second business will focus more on cash-flow and will likely be a franchise or an already established business)
    2. Will banks, investors, venture capitalists issue second loans for a second business prior to the first loan being paid back? Is there a way for them to not know I have existing loans if I take the loan out in my business name and not my personal name?

    I’m not trying to scam or do anything like that. I just want to be smart about things. Because If I have to wait until one loan is paid off in order to secure the next, seems like I should just pursue a cash-flow opportunity prior to making a long commitment with the health club…..

    *sigh* please give me any suggestions. Thanks!

    • http://timberry.com Tim Berry

      Tay, as you can tell from the post here, I have mixed feelings on this and I believe you should focus but I haven’t done that well at it myself. Although I will say that during the years I was building Palo Alto Software from zero to established, I was very focused on just the one business. So I’m full of contradictions.

      On your question 1, I’d advise making sure the health club is up and running, solid, and well past critical mass before dividing your focus between than and something else.

      On question 2, the only investors you’ll have — if any at all — will be outside the normal startup investors because a health club doesn’t have scalability or product leverage and isn’t as interesting to the normal startup investors. Not that you can’t find investors, but they’ll be more like friends and family than angel investment of venture capital.

      Here’s more background on what I think about that:

      http://timberry.bplans.com/2012/05/do-you-have-what-investors-want.html

      Banks will lend or not depending not on your business plan but on your assets, collateral (pretty much the same thing as assets) and financial track record.

      I hope that helps,

      Tim

  • Emma

    Hi there, thanks for the wealth of info you provide on this site. But say that I’m going to do what you do and not what you said above :).

    I’m thinking of setting up one DBA to engage in 2 completely unrelated business ideas that I’m passionate about (consulting & specialty clothing line) for maybe 1 yr. Then I’ll pursue the one that has the most promise & drop the other one.

    Question: Do IRS rules allow engaging 2 unrelated business activities under 1 legal entity?

    • http://timberry.com Tim Berry

      Emma, I know what I don’t know, and I’m the right person to ask about tax rules or the IRS. That’s for an attorney or CPA. And a good first stop is your nearest Small Business Development Center. Tim

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