9 tips for owning multiple businesses

When you’re ready to take the next step in your entrepreneurial journey, you might consider opening another business. Having multiple companies can provide additional streams of income and diversify your portfolio. But remember: Creating a new company takes careful planning to ensure it’s a fruitful venture.

Whether you’re opening a side venture in addition to your main company or creating a brand-new organization, here are some tips for how to own and manage multiple businesses successfully. 

What you’ll learn:

• To successfully own multiple businesses, it’s helpful to plan ahead to find balance and synergy between your companies.

• Some ways to help you manage multiple companies are setting business goals, creating business processes and assembling a solid team.

• When juggling multiple companies, it’s critical to carefully monitor your businesses’ cash flow and keep clean records.

• To help conserve resources across different companies, you might invest in tools to promote efficiency and outsource certain responsibilities.

When you’re creating multiple businesses, review the various types of legal structures available to determine which works best for your companies. Here are some common ways to set up multiple companies:

If your companies are in different industries, you might consider separate LLCs, S corporations or C corporations. Because each company is its own entity under this structure, each LLC or corporation would require its own tax return. 

Separating your LLCs or corporations can be beneficial because they don’t have any impact on each other if legal action were to be taken against one entity. That means that if something were to happen to one business, the rest can continue operating smoothly.

A DBA or “doing business as”—sometimes called a fictitious name or a trade name—allows a company to operate under a name different from its legal name. This structure allows multiple LLCs to operate under one DBA, without forming separate entities.

Owning multiple DBAs under one LLC can be faster than setting up separate business structures. Plus, you only need to file one tax return. However, if one DBA were to fail or face legal action, the entire LLC—including the other companies—could be at risk.

A holding company—also called an umbrella or parent company—is a type that’s structured to purchase and hold a controlling interest in other companies, which are listed as subsidiaries. The other companies become assets and the holding company is the owner of these assets.

This type of structure can have advantages because you can use subsidiary losses to reduce the tax obligation on your other businesses. But because the assets are typically separate, if one of the subsidiaries were to fail, the others wouldn’t be affected. Keep in mind that this structure doesn’t work for all business types and industries, and it can be more complicated and costly to set up.

When you own multiple businesses, it’s essential to set clear and actionable business goals. By creating and defining business goals, you can set expectations, improve productivity, boost employee morale and better execute your overall strategy. There are different types of business goals you can set depending on the outcomes you’re looking to achieve, such as:

• Financial goals: These goals focus on business elements such as profitability, revenue and sustainability. For example, you might aim to increase your second company’s revenue by a defined amount within a one-year period. 

• Process goals: These goals place an emphasis on internal business processes like employee retention and satisfaction, productivity, and company culture. For example, if one of your businesses has a strong company culture, you might focus on building and improving the culture in the other business to boost organizational engagement. 

• Customer goals: When setting goals for your businesses, you might focus on elements such as market share, brand awareness or customer satisfaction. For example, you could set a goal to increase brand awareness for your new business by tapping into resources within your current organization.

Having multiple businesses requires robust organizational and time management skills. This is why it’s important to have set processes in place to keep operations running smoothly across all your companies. When creating a business process, you can start by pinpointing your company goals and formulating a business plan. From there, you can develop a process map, which helps lay out the steps needed to achieve your desired outcomes.

Once you have a plan in place, you can start delegating tasks to your team and begin testing your new process. You can measure effectiveness by using your business goals as a benchmark to track progress and performance.

You can’t be in two places at once. That’s why it’s imperative to build the right team of people to support your efforts when owning multiple companies. Having employees with experience and the proper skill set for each role you’re trying to fill allows you to focus your time and resources on each business’s main priorities. 

During the hiring process, look for prospective candidates who are adaptable and willing to grow with the business as it gets up to speed. Once you’ve hired and developed a solid team, finding ways to effectively lead and maintain a positive company culture across different businesses can help you successfully operate multiple companies.

Monitoring your business’s cash flow helps you keep track of resources, streamline operations and identify areas for financial improvement. Not only is it a good idea to review each of your companies’ cash flows and other financial records independently, but you should also compare them to determine if one needs more resources than the other.

Whether you’re starting a small business or creating a new company to add to your portfolio, look for tools that can help improve efficiency and productivity. Here are some examples of different tools you might consider:

• Task management tools: You can use these types of tools to help with organization and project planning across multiple businesses. 

• Communication tools: These types of tools—like messaging apps or videoconferencing platforms—can help you keep in contact with internal teammates as well as external customers and clients.

• Design tools: Design and content creation tools help you and your teams work together and develop visual content as you expand your business. 

• Collaborative tools: Tools to facilitate file sharing, document editing and project collaboration can help facilitate teamwork across multiple businesses and departments.

When you’re overseeing multiple businesses, you might look for external help to keep things running smoothly. For example, you could hire a company to help promote your business or hire an accountant for additional tax support, allowing you to focus on the areas where you’re most needed.

To stay involved in multiple business ventures, sharing a workplace could be a smart option. While this might not work for all business models, it can help reduce commute time and allow you to observe both businesses on a day-to-day basis.

When managing more than one business, you’ll likely have multiple revenue streams and expenses. And depending on the structure, you could have separate tax obligations as well. That’s why keeping accurate financial records is crucial. To accomplish this, you might consider the following:

• Applying for a business credit card that offers benefits like purchase records and year-end summaries

• Documenting shared expenses

• Maintaining individual files for each entity

• Having separate bank accounts for each business

Having more than one business requires strong management skills and ample time spent planning ahead. But having the right tools and processes in place can help all your companies thrive. If you’re considering opening a business credit card to help support your growth, you might get pre-approval from Capital One to find a card that meets the unique needs of your companies.