Question

Suppose the business you plan to start becomes wildly successful over the next several years, but you then have the opportunity to start another business compatible with the current one. How can you take advantage of the new business opportunity and yet stay involved in the existing business?

Answer 1

Following are the benefits of taking advantage of new business opportunity and yet stay involved in the existing business

• As the existing business becomes wildly successful there are many advantages of staring new business which will be compatible with it.
• The successful business will already have built up its own brand. It will be helpful to build a brand of new business as well.   
• Advertisement of new business will be much easier. It will easily attract customers for new business.
• Getting loan from bank and raising equity for new business becomes easy because of success of existing business.
• Also creditors will agree to provide more credit facility as existing business will have already proved its creditworthiness. Getting vendors becomes easy.
• As it will be compatible business with the existing one, it’s easy to run new business and earn profit
• New source of income will be generated and it will also help to increase profits of current business

Here are the ways to handle multiple businesses at same time

• For starting new business and yet to stay involved in existing one you need to consider following factors
• You need to prepare business plan which will give clear idea as how business will run.
• Conduct thorough market research to understand your target customer.
• Find out NPV of new business. Capital budgeting is important to find out NPV and to decide whether new business will become profitable or not. Perform breakeven analysis.
• Also calculate the impact of new business on the profitability of existing business
• Hiring the right team and delegating work is important. Also appoint experts to handle certain aspects of business. Work with management team to help balance the workload of running multiple businesses
• Keep reports of each business to monitor results and maintain accountability. Data analysis in required.
• You need to manage both businesses in such a way that they benefit one another and helping grow each other. eg Sharing common accounting or IT department, sharing office same space etc. This will result in cost saving.