The Master Checklist to Review Before You Ever Start Another Business

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You have one business up and running with some success and are considering starting another business and dividing your focus. Perhaps you do not want to put all your “business eggs” in one basket. What if one business slows down, and the other one picks up, you are protected. As you know the worst number in business is one, one vendor, one client, one affiliate, one bank account…does that mean one business? Not necessarily.

First, what are your reasons for starting another business?

Here is a list of some and let’s consider them carefully:

  1. The first business is not working.
  2. You found a new product in another niche that should bring in more revenue.
  3. You want to diversify into another niche.
  4. You see an opportunity in your current niche and starting a new business (more so a new company) to service this opportunity in that niche.
  5. Your business partner was lame and you started a new company and a new business perhaps in a similar niche to move on.

The first one is fairly obvious as to the concerns, yet, many fall into this trap. The first business (which was really never up and running as a real business) was not working, and the business owner got excited by another, different opportunity (the new shiny object syndrome). The challenge is that the second business and third will not work either because typically there was nothing solid in place on the first one. They half started that business and half started another business, lacking focus, consistency, and frequency… all leading to another failure.

Finding a new product in another niche can work effectively. Most successful entrepreneurs who were successful 5-8 years ago have a totally different main profit center today then what was in their business back then. They had to reinvent themselves and more importantly change with the times and look for new opportunities with the changing times. Those who continue to ride the same horse down the wrong path will just end up with more problems. You have to act and move quickly to be successful in business today. With NCP, our international market is the biggest new profit center that was not even in our business (or very little) 5 years ago. We expect it to grow dramatically over the next 12 months.

Wanting to diversify into another niche can work and can be expensive. Typically those who succeed are the ones who are already succeeding in their current niche.

For example, top internet marketers have a system for bringing traffic to a website and converting them into leads and revenue. They can take that model to any niche, especially ones that have a great following with few good online marketers.

Armand Morin said in a seminar that he does very well in the tattoo niche. There are a lot of passionate people interested in tattoos. I do not believe Armand had any real interest in tattoos other than a lot of people do and he knows the marketing model to drive traffic and make some money.

Frank Kerns, another top internet marketer, and great copywriter has websites in the dog training niche. Again, a great marketer with a SYSTEM that already works and will adopt it to another niche where there is an opportunity for profits. What does NOT work, is someone with an ineffective system, jumping from one product to the next, hoping that it was not them or their system, but the product or niche was an issue.

This is very common in the direct sales industry where distributors jump from company to company, pointing out how the marketing system on each company did not work, yet each company has many people doing very well within that system. This is a matter of being more accountable and stop pointing the finger at everything or everyone else not working.

The main common dominator in that situation is you. If you are on the other side of the coin, and you are successful at almost every business you start, congrats, your system works! The huge profit opportunity is to realize once your system works for one niche, more than likely a similar pattern will work for another niche! You would be surprised how many top marketers have multiple streams of income (other than the ones you are familiar with what they promote).

You see an opportunity in your current niche and starting a new business to service this opportunity in that niche. This makes a lot of sense when you have created a product or service that your niche loves and they almost expect you to come out with something that adds value to your first product or service.

Complement – Does your new product or service complement the first product or service you developed? Does it give product or service A, 5 times more results or benefit? If so, that is a natural fit!

Enhance– Perhaps your product or service will enhance the product or service of your existing products or services? How about a fries with your hamburger?

Enables– If your new product or service enables you to get results you would not have been able to get otherwise, that is a natural opportunity. Your mobile phone enablers you to do different things including easy video production.

What if you could provide a product or service that will complement, enhance or enable what your competitor has already created? You are bringing in profits with less effort because your competitor spent a lot of money to sell, market and brand the first product or service the market is buying up. Now, you can come in on the backend for the easier opportunities!

Your lame business partner got in the way. All great businesses, like many marriages when they start are full of excitement, dreams, and hope…that many times, during rocky times turn the other way quickly. Most businesses take 2-3 times as long to get up to being profitable (if at all) and the expenses are many times 2-3 times what you and your partner expected.

This can dampen the enthusiasm quickly for the business opportunity and many partners bail early or worse, damage the credit of the company and or another partner before they leave. In this case, it would never make sense to save a few dollars to use that some entity structure you shared with your disgruntled partner. Even if you thought they properly resigned, it never makes sense to have them sit on the sidelines and years later find out they still own 50% of your company. Forming a new entity makes sense in this case.

Here is the Master Checklist (Questions) to Review Before You Ever Start Another Business:

PURPOSE

  • Is your purpose compelling?
  • Why do you believe you will be successful in this new
  • business? It is important to note your beliefs now to compare them within 3-6 months to see if they are on track or if not, what is different. Learn from your successes and failures.
  • Do you have a passion for the new business?
  • Are you starting another one because the first one did not work?
  • Are you able to leverage resources from the first business to shorten the learning curve of the second one?
  • Are you motivated and excited to start another business?
  • Do you have the energy to start another business?

NICHE:

  • Is there a deep and passionate niche for the new business?
  • Is there a low barrier to entry to acquire market share in the next niche?
  • Do you have access to joint ventures to help you get off to a fast start to profits TM in the new niche?
  • Is there pain in the niche and you can provide the solution to solve their pain?
  • Do you have a plan to develop CREDIBILITY for your business within your niche? Do you know how to do that with the business credit bureaus?

CAPITAL:

  • Do you have the capital to start up another business? Meaning…
  • Do you have a 2-5 year business plan?
  • Do you have financials with a business and cash flow for the first year (especially the first 90 days, which will be key)?
  • Do you have the ability for extra reserves from a personal loan or lines of credit, in case sales are off and expenses are more than you thought?
  • Have you or, if not, do you plan to separate your personal and business credit to get your business in a position to secure more capital?
  • Do you know the cost of goods sold of each product line or service you offer?
  • Do you have plan B and C, in case plan A does not work with the amount of capital you thought?
  • Is your new company building business credit with vendors that report to the business credit bureaus?
  • If you are looking for investors, do you have a good securities attorney to help you follow the law as you look to raise money?

TIME:

  • Do you have the extra time to commit to starting another business?
  • Do you have the time management skills to make this happen?
  • Are you able to avoid the pattern of overwhelm to keep focused and successful?
  • Are you working ON your current business and not just IN it so you are creating a system that allows you to work on the other business?

 

RESOURCES:

  • The key resources to make any business opportunity easier are others people’s money and resources (including contacts, clients/customers).
  • Do you have skills with joint ventures to leverage other people’s resources? Specifically, the host-beneficiary relationship where your business is the beneficiary and someone’s business is the host. That means they will promote your business at no cost to their company? That is massive leverage when you are starting a new opportunity!
  • Do you have the key relationships within the niche you need support? If not, who do you know who has access to key people that can help you in your niche?

LEGAL STRUCTURE:

  • When starting a new business it often makes sense to form a new entity if the following are true:
  • The first business is profitable and the new business may bring unnecessary liability to it.
  • The second business has a high degree of liability and should be separated from the primary business.
  • The asset class of the second business is different, safe assets vs. risk assets.
  • You have a partner for the first business and not the second, and vice versa.
  • The first business has financial problems.
  • For marketing reasons to help create a new entity and separate brand. You can have more than one brand in one company, and many times it makes sense to keep it separate.
  • If you are going to raise money for the new business and want to keep the assets of the first business separate.

Starting a new business can be exciting and an opportunity for a fresh start to grow and add value.Remember, the ONLY purpose of a business is MASSIVE PROFITS! If the business does not have a viable way to develop MASSIVE PROFITS, don’t do it.

That may take a couple of years, but the basic fundaments should be in place before you move forward to start a new business.