There are a number of ways you could wind up running multiple businesses, which can ultimately lead to great financial success or terrible failure. This is because there is now twice (or three times or four times) the work, responsibility, risk, and potential for profit. So if you should find yourself in this situation, be sure you are ready for the responsibility.
The most common ways people wind up running multiple businesses is by splitting a service into two separate entities. For instance, a mechanic who starts a repair shop may decide to start doing bodywork, as well. This is a great opportunity to enter a related field and increase revenues, however, the owner may not want to put the current, successful repair shop in jeopardy with the new opportunity. So instead of simply beginning to do bodywork, he may establish a separate entity which pays separate employees and collects separate income from patrons. This will both allow him to track successes and failures in the two businesses and protect him should the body shop fail.
Another common way people wind up owning multiple businesses is by entering a new space which entitles them to passive income. A business owner who decides to buy several rental properties, for instance, will likely establish another business for the purposes of collecting rents, paying obligations against the properties, managing repairs, and so on. These businesses, while completely separate, will both require attention and careful accounting to ensure proper record keeping.
No matter how you wind up running multiple businesses, the keys to success are consistency and separation. Keeping the finances separate and avoiding using one business to support the other, will help protect them from each other. If one starts to fail, you don’t want it to drag down the others. Similarly, you don’t want to have a clouded view of the successes and failures of each due to inconsistent and erroneously maintained records.
Having consistent accounting practices will help with this. Consistency across businesses in processes will also help. By doing certain tasks which are required of all the businesses the same (such as payroll, merchant processing, handling accounts payables, etc.) will help you to expedite the time it takes to do these tasks for each business. The less you need to focus on remembering specific processes, the easier your life will be.
By staying organized and keeping everything separated between your businesses while maintaining consistent processes, it can be possible to manage multiple businesses effectively. And when done right, it can lead to unexpected profits.