Before you establish a new business, you must review our master business checklist to determine if a new business or entity is necessary.
You have one business up and running with some success.
You 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?
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 the start of the business master checklist. Let’s consider them carefully:
- The first business is not working.
- You found a new product in another niche that should bring in more revenue.
- You want to diversify into another niche.
- You see an opportunity in your current niche and starting a new business (more so a new company) to service the opportunity in that niche.
- 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.
Here is the pattern.
The first business (which was never up and running like a real business) was not working. The business owner got excited by another, different opportunity (the new shiny object syndrome).
The challenge here is that the second and third businesses will not work either because there was nothing solid in place for 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 than what their business had back then.
They had to reinvent themselves and, more importantly, change with the times and look for new opportunities.
Those who continue to ride the same horse down the wrong path will 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 for leads and revenue. They can take that model to any niche, especially ones with a great following with few good online marketers.
Armand Moran 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 many people do, and he knows the marketing model to drive traffic and make money.
Frank Kerns, another top internet marketer and great copywriter has websites in the dog training niche. Again, a great marketer with a SYSTEM already works and will adopt it to another niche where there is an opportunity for profit.
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. That, as you know, is typically not the case.
This is very common in the direct sales industry, where distributors jump from company to company, pointing out how each company’s marketing system did not work. Yet, each company has many people doing very well within that system.
This is really a matter of being more accountable and accusing everything or everyone else of 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 incomes (other than those they promote that you are familiar with).
You see an opportunity in your current niche and start a new business (more so a new company) 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. They almost expect you to come out with something that adds value to your first product or service.
There are three ways to look at your second product or service (many times, this makes sense to turns into a new company…especially if you have a partner on the first company and your partner does not want to also invest in the second concept; you may go it alone).
- Complement –Does your new product or service complement the first product or service you developed? Does it give your original product 5 times more results or benefits? If so, that is a natural fit!
- Enhance-Perhaps your product or service will enhance your existing products or services? How about fries with your hamburger?
- Enabler –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. The Ipad has several enablers to allow you to do different things, including working with pictures from your digital camera.
This becomes a very different way to look at your competition. 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 easier opportunities!
Your lame business partner got in the way. Like many marriages, when they start, all great businesses 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 become profitable (if at all), and the expenses are, many times, 2-3 times what you and your partner expected. This can damper 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 same 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:
- Is your purpose compelling?
- Why do you believe you will be successful in this new business? It is always important to note your current beliefs and compare them within 3-6 months to see if they are on track. If they aren’t, what is different? The key is to 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 second one’s learning curve?
- Are you motivated and excited to start another business?
- Do you have the energy to start another business?
- 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™ 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?
- 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 will be key?
- Do you have the ability for extra reserves from a personal loan or line of credit, in case sales are off and expenses are more than you thought?
- Have you or 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 for each product line or service you offer?
- Do you have plan B and C if 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?
- 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 create a system that allows you to work on the other business?
- The key resources to make any business opportunity easier are other people’s money and resources (including contacts, clients/customers).
- Do you have skills with joint ventures to leverages other people’s resources? Specifically, the host-beneficiary relationship, where your business is the beneficiary, and someone else’s business are the host. That means they will promote your business at no cost to your company. That is massive leverage when you are starting a new opportunity!
- Do you have the key relationships within the niche where you need support? If not, who do you know who can access key people who can help you in your niche?
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.
- You will raise money for the new business and want to keep the assets of the first business separate.
Starting a new business and entity 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 our business master checklist should be in place before you start a new business.Tags: Adding Value, Armand Morin, Business Checklist, Business niche, capital, checklist, Complement, Enhance, entrepreneurs, Legal Structure, niche, opportunity, product, Profits, Purpose, Resources, start business, time