Once you light your entrepreneurial spark, you might find that it ignites in you a passion for business ownership. Congratulations: you’re a serial entrepreneur! Owning multiple businesses is an ambitious and often rewarding pursuit, but during economic downturn, the challenges are frequently compounded.
Luckily, there are ways you can prepare yourself and all your businesses to weather any economic climate and set yourself up for success (upon success). Here, we offer seven ways to manage your multiple businesses through a poor economy.
1. Pick the best structure for owning multiple businesses.
There are numerous ways to operate multiple businesses, each with their own benefits. You may already have one or more entities and are looking for ways to grow and expand. Choosing the right option for several businesses will help you keep all your entities operating as smoothly as possible, even when the economy gets bumpy.
- Series LLC: A series LLC has all the same benefits as its traditional cousin, but allows you to house numerous LLCs under one umbrella. A series LLC will protect the assets of each business separately, so if an economic downtown impacts one business negatively, the assets of the others will not be impacted. Find out how to convert to a series LLC.
- Multiple DBAs: If you don’t want to create a series LLC, you can opt to designate multiple DBAs under your traditional LLC. DBA stands for “doing business as” and is also known as a fictitious, assumed or trade name. A DBA can help you save money up front by reducing filing costs, but beware: the assets of your DBAs will not be separate, so in the case of economic hardship, they will all be equally at risk.
- Holding Company: If you find that your companies exist in states that do not offer a series LLC, a holding company may be your best option. In this scenario, each business would exist separately under its own LLC, but would be protected under the holding company. Costs for creating a holding company and separate LLCs are high, so it may not be a smart option in the midst of economic struggle. However, if you set it up when finances are secure, it could be a big help. It will reduce risks and protect each business’s assets if another downturn is looming.
2. Select a centralized mission control for all your businesses.
Having a single office or home base for your companies is not only more efficient when it comes to daily operations, but it will also reduce overhead and lessen expenses. This could mean the difference between sinking or swimming in challenging economic times. Having a combined headquarters will cut back on rent/lease costs, eliminate commuting expenses and allow you to share the resources you have between all your businesses. For even more monetary savings, operating your businesses remotely can eliminate expenses such as rent and utility costs.
3. Diversify the products and services your businesses offer.
This is smart whether you operate a single business or many, but it may be easier when you have multiple entities that reach different consumer bases. Diversifying your offerings gives you a broader reach and allows you to be more flexible and adaptable in tough economic times. However, it pays to do your research: know before you expand whether you have the resources and finances to sustain product/service diversification, and choose your new offerings wisely.
4. Share assets and resources across your multiple businesses.
When the economy shifts for the worse, it’s important to have a plan in place to leverage your resources and use them wisely. Consider ways to streamline administrative responsibilities like payroll and purchasing to increase efficiency and reduce costs. You may also want to seek out vendors, shipping companies and warehousers that will help you manage all your businesses while minimizing contracts, contacts and hassle.
5. Hire the right people for the job(s).
If you have multiple companies, you may need to hire multiple employees. A large staff can be a hindrance in a bad economy, but if you make smart hiring decisions, and avoid common hiring mistakes, you’ll likely find that you can scale down and leverage a smaller team across your businesses. Look for candidates with multidisciplinary skills who exhibit autonomy, confidence and adaptability. You want to be sure the right people are in place to handle economic uncertainty and that they’re comfortable working across all your entities.
6. Market smarter, not harder.
Combining your businesses under an umbrella brand (think Unilever, Kraft or Coca-Cola) can align your businesses, build trust and increase brand recognition and awareness. It can also help you streamline your marketing efforts by eliminating unnecessary costs. A single email marketing provider, social media management tool or web host can be more cost-effective, with the added bonus of building a more cohesive and consistent brand.
7. Be ready to cut ties.
Optimism is key to surviving economic hardship, but so is a good dose of reality. If one of your businesses is floundering, face the possibility that you may need to cut and run. It’s not ideal, but it may be what saves your other businesses from succumbing to a down economy. Prepare for this scenario in the prosperous times, so you won’t be making tough decisions in the heat of the moment, and learn the steps you need to take to dissolve your business. Carefully evaluate why the business is struggling and how much cash flow you’ll need to turn things around. If it can only happen at the expense of your other businesses, it’s time to cut that one loose.
With all the added stress and responsibility of managing multiple businesses, it seems easier to ignore the status of our economic climate. However, by following these tips, you’ll be ready to face the ups and downs of the economy and multiply your success.